The amount of sublease space in the Manhattan office market fell in the second quarter of 2013 while the number of sublease deals increased, according to Cbre Group Data Reviewed By The Wall Street Journal. The shrinking availability of sublease space could lead to a rise in rents.
The amount of sublease space available in the second quarter was 18 percent, a year-over-year decrease of 5.3 percent and a long way from the mid-2009 high of 31 percent, the CBRE data show. Leasing sublease space often results in a significant cost savings for the tenant, as sublease rents and capital costs are typically lower than direct leases.
A shortage of sublease space can help landlords raise their rents.
“There are going to be fewer opportunities,” Peter Turchin, executive vice president of CBRE, told the Journal, referring to the fact that tenants would have to dig deeper to find affordable space.
The largest sublease deal of the year so far occurred at Vornado Realty Trust’s 1290 Avenue of the Americas in May, when Morgan Stanley took 148,421 square feet, as The Real Deal reported. [WSJ] – Hiten Samtani