Office Sublease Space May Soon Flood U.S. Markets
A number of regions are reporting an avalanche of new office sublease space. I was on an SIOR national broker call and my associate in Dallas, Texas said they had 4.6 million square feet of new office sublease space come on the market in just the past three months. She reported that in one day over 200,000 square feet of sublease space hit the market. In New York as of July 28, 2020 there is 14 million square feet of office sublease space, making up 25% of all available space. San Francisco has over 5 million square feet of office sublease space, and this trend is happening in major cities across the country. Smaller cities in some cases report limited excess space, so I am not sure if this is just a factor in the big towns. Companies for the most part have not returned to the office, and in many cases are allowing employees to work from home now and into the future. In almost all cases the tenant trying to sublease is keeping their rent current and is not in default, which protects the landlord, but at some point their lease will expire and the vacant space will then return back to the landlord. Is it possible we may have a tsunami of future office foreclosures when this occurs?
