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Sublease Offices and direct lease inventory has increased in 2018. The most significant factor behind this is the opening of new commercial towers in the Hudson Yards, World Trade Center and elsewhere in Manhattan. In the second quarter of 2018 there was 3,051,211 square feet of office space under construction. A second contributor is the “densification” of office premises. In plain terms this means that businesses are reducing the amount of square feet that is leased and allocated to each employee.
As supply of office space increases, pricing per rentable square foot has begun to decline. Costar reports that the average quoted rent for DIRECT LEASES was $60.26 per square foot at the end of Q2 2018. This represents a $0.87 PSF decrease compared to $61.13 in the first quarter. The vacancy rate in the second quarter was 8.1%, up over the prior quarter’s 7.9%. Detailed information about office space in 20 neighborhoods can be found HERE.
At the end of Q2 2018 the amount of SUBLEASE space in NYC increased to 4,828,513 square feet compared to 4,821,279 in the prior quarter. Although pricing for subleases is not published, in most cases they provide a significant cost savings when compared to direct leases. Other tangible benefits may include the following:
(1) Subleases are typically rented in a pre-built condition which can reduce the waiting time needed to move-in.
(2) Many subleases include furniture, an IT network and phones. This amounts to large cost savings.
(3) The length of a sublease term may vary widely from as short as a few months (called “swing space”) to ten years.
(4) Because the transaction expenses associated with a sublease are usually less than a direct lease, the Security Deposit requirements may be reduced.
Cogent Realty Advisors was engaged by a business services company to identify discounted sublease office space in the 7,500- 10,000 rentable square foot size range in Midtown with a lease term under five- (5) years. The offices needed to be in close proximity to either Grand Central, Penn Station or Port Authority because the staff made frequent use of these transportation hubs. A partial list of our findings follows:
|Call (212) 509-4049 for information about SUBLEASES:
• Any Manhattan neighborhood
• Sizes from 500 RSF and up
• Term 6 months and longer
• Discounted rent
ABOUT COGENT REALTY ADVISORS
Cogent Realty Advisors is an independent and licensed NO FEE Realtor with over 15 years of experience representing businesses that lease NYC office space. Our goal is to help you find the right office at the right price. For information, phone Mitchell Waldman at (212) 509-4049.
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