Big-Name Firms Are Dumping Office Space Onto The Exploding Sublease Market
The largest bank in the world is one of the many firms shopping a huge chunk of its Manhattan office space, adding to the country's rapidly rising sublease supply.
JPMorgan Chase, which was the largest private sector occupier of space in the city until it was usurped by WeWork in 2018, listed 700K SF in lower Manhattan earlier this year, The Wall Street Journal reported. Yelp and PricewaterhouseCoopers are also marketing office space on the New York sublease market, per the publication.
On the national front, Salesforce is looking to shed space in San Francisco by subleasing it, as are Wells Fargo and Uber. Meanwhile, Dropbox told investors on a recent earnings call it is expecting to make $800M by subleasing real estate at a sharp discount to the rent it pays directly to the landlord. These moves indicate companies’ interest in remote work is already having an impact on real estate’s bottom line and will continue to affect leasing markets in traditional office stalwarts like New York City.
Across the country, there was 137M SF of office space on the sublease market at the end of last year, per CBRE, a 40% increase over 2019. JLL U.S. Office Research Director Phil Ryan told the Journal the pace sublet availability is rising is “astonishing.”
Overall, Manhattan saw its slowest year for leasing since the start of the 21st century, with 20.5M SF leased in all of 2020, according to Savills. Companies are trying to get rid of their space at rates not seen since the Great Financial Crisis, with sublet space making up nearly a quarter of all Manhattan office availability, Colliers International analysts told Bisnow in January.
Meanwhile, office availability in the borough is at a record 15.5%. Few companies have returned to New York City, and many do not plan to do so until after the summer. Employees are increasingly looking to have at least some of their work days spent at home even once the pandemic is over, with a recent Bisnow survey suggesting this trend is here to stay.