Sublease disaster winding down in latest signal of NYC workplace recovery
The wind’s gone out of the great sublease balloon that supposedly spelled doom for the metropolis’s workplace market.
Manhattan workplace sublease availability has fallen to less than in 2019, according to Transwestern — down to just 11.8 million sq. ft in the third quarter, in comparison with 12.3 million before the start of the pandemic and a high of 23 million in early 2023.
But wait — wasn’t the sublease “glut” going to wreck the progress that was made since COVID-19 ravaged the financial system?
Paramount Global yanked 92,5000 sq. ft of sublease availability at 1515 Broadway last month. Anne Wermiel/NY Post
CoStar News in April 2023 cited a Savills warning that, “Companies putting spaces up for sublease reached an all-time high of 22.4 million square feet in the first quarter,” or 24.6% of all Manhattan workplace availability at the time.
An even gloomier essay posted on The City in May 2023 described Big Apple workplace market “deterioration” resulting from “scores” of empty buildings, high rates of interest, $16 billion in excellent debt, sublease quantity, and the regular bogeyman of work-from-home.
Now, however, Transwestern studies that sublease choices have fallen to 18% of Manhattan availability. Most areas still up for grabs had been smaller than 25,000 sq. ft, although a few large blocks remained.
“We’ve been keeping an eye on the sublease levels for a few years now, first as they ballooned during the height of the pandemic, and with optimistic expectation as they slowly subsided over the past few quarters,” said Transwestern research supervisor Corrie Slewett.
Blackrock has absorbed over 193,000 sq. ft from Meta at 50 Hudson Yards. J.C. Rice
“It’s a notable milestone that Manhattan’s available sublet space has settled below the pre-pandemic levels,” Slewett added.
Recent, large sublease deflations included Paramount Global, which last month yanked 92,5000 sq. ft from availability at 1515 Broadway.
Large absorption offers included Blackrock’s 193,000 sq. ft from Meta at 50 Hudson Yards; Robinhood’s 125,400 square-foot sublease from MSG at 2 Penn; and Sixth Street Partners’ 103,400 sq. ft from Pfizer at The Spiral.
CBRE global brokerage head Stephen B. Siegel commented, “The market is on fire and the absorption of sublease space is a natural by-product of that. The reduction is attributable both to tenants expanding and others deciding to keep space they previously planned to give up.”
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