More Manhattan Office Space Up for Sublease Than in Pandemic’s Early Months
Report says sublet availability has crested at 22 million square feet despite return-to-office push
By Nicholas Rizzi April 3, 2023 1:53 pm
reprints
Even with an increased effort to get more workers back in their seats, the amount of sublet space on the market in Manhattan hit new highs this year as companies and other entities continue to try to shed offices.
The volume of space available for subleasing reached 22.1 million square feet in the first quarter of 2023, topping the pandemic high of 21.16 million square feet in July 2021, according to a report from Colliers (CIGI).
Meanwhile, February and March each saw availability rates of 4.1 percent, the highest since 2003, according to Colliers. All told, Manhattan’s sublet rate increased 13.8 percent year-over-year and 85.7 percent since March 2020, Colliers found.
And it wasn’t just sublet space breaking records. The total availability rate for the borough was 16.1 percent, a record high, according to a report from JLL (JLL). And even with a growing number of office-to-residential conversions in the works, Colliers said it isn’t clear how much of a dent such conversions will make in the numbers.
“Leasing volume dropped off in February and March, resulting in supply continuing to outpace demand and providing numerous opportunities for value-seeking tenants,” Franklin Wallach, executive managing director of research and business development for Colliers, said in a statement. “The first quarter also noted several cases of excess supply converted to non-office use or acquired by owners-occupiers. Although, it remains to be seen how much relief this trend will ultimately provide to the market.”
Big tech companies — which buoyed the Manhattan market during the pandemic — have been dumping office space left and right amid a period of massive layoffs. Twitter put the majority of its New York City offices up for sublease, while Facebook parent company Meta plans to drop at least $2.9 billion through this year to shrink its office footprint globally.
Of the Manhattan areas tracked by Colliers, Downtown had the largest availability rate in the first quarter at 20.5 percent, just shy of the record high 20.6 percent reached in November 2022. Of that vacant space, 28.2 percent of it was made up of sublets.
Midtown South ended the quarter with a record-high availability rate of 17.2 percent — with 24.5 percent of that being sublet space — while Midtown had a 15.6 percent rate, with 20.8 percent of that from sublets, according to Colliers.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
