Office Sublease Space Flooding the Market Nationwide, and More Than Half Tech Companies Plan to Get Rid of Space

Office subleases are hitting the markets bigtime, from New York to San Francisco, Boston, Houston and many other major markets. Millions of square feet of excess space, with millions more expected to follow. Companies are finding that they can not only survive with working from home, many are thriving, despite the absence of corporate culture, the training and mentoring that can be greatly enhanced only by physically being in the office. In a recent report by Savills, a tenant rep firm, 250 technology companies were surveyed and 82% anticipate needing less space over the next 12 to 18 months, and 55% plan to dispose of existing space over that time period. Examples of this include Zillow putting 150,000 sf on the market in New York as well as Yelp offering 58,000 sf for sublease. ”Before the pandemic 7% if the tech companies said they had more than half of their employees working remotely. Now, 22% of the companies said they expect to keep more than half of their workforce remote for the long term, even after a vaccine is available.” As an office leasing specialist in my 43^rd year in this industry this is most depressing news!  What may happen is this flood of sublease space, much of which may not be sublet, will eventually lead to leases not being renewed adding to greatly increased direct vacancy with a diminishing demand for office space by tenants. We could see a flood of office foreclosures, less demand for new office development, and perhaps, and I shudder to think, less demand for us office brokers…