Office sublease availability in Manhattan has soared to its highest percentage since 2010 as companies are squeezing into smaller spaces and moving to new buildings before their leases end.
A Savills Studley report shows 3.5 million square feet of sublease space has been added since June 2016 — a surge of 44.7 percent year over year. Meanwhile, the firm ’s Jeffrey Peck says the new standard for space occupancy has dropped from a range of 200 to 225 square feet per person to just 125 to 135 square feet per person.
“Companies … are doing more with less and fitting into less space,” Peck said.
Confirming the trend, CBRE found subleases rose to 2.4 percent of the market compared with 1.8 percent one year ago, which appears to have marked the low point for the last dozen years.
Cushman & Wakefield also found sublease space in Midtown spiked 19.2 percent in the first quarter of 2017 but, since then, increased by just 6.7 percent in the second quarter.
Peter Turchin of CBRE is not concerned about the number of subleases, calling them “direct space, a few months premature.”
According to a new Skyline report from brokerage JLL, buildings with large sublease space include 399 Park Ave., 520 Madison Ave. and 540 Madison Ave.
“A lot of the subleases are staying on the market longer, and I see the brokers offering incentives for completed transactions,” added Jon Rudes of the Vortex Group.
Despite the increase in sublease space, Cushman & Wakefield found strong second-quarter leasing caused direct available space in Manhattan to decline by 4.7 percent, so year-to-date absorption is still a positive 2 million square feet.