Office Sublease Space Hits 208 Million Square Feet In U.S.
A Colliers report just out compares what the ‘normal’ office sublease prior to the Covid crisis was averaging 110 million square feet and now is almost double that at 208 millions square feet. Sublease asking rents are an average of 26.7% below direct space. San Francisco currently has 8.8% of its office market for sublease. The growth of the sublease market has slowed in recent quarters, but the uncertainty of office re-occupancy due to the Delta variant has made corporations much more cautious about long-range office space commitments. Negotiating on office sublease space can be interesting. Depending on the submarket, how long the remaining term is, and whether the space is plug & play and comes with all the workstations and desks, there are often opportunities to almost ‘steal’ sublease space, with rental terms 30-50% below market. This is my 44th year as an office leasing broker, and usually, not always, the first offer on a sublease space, no matter how low, is usually the best. The longer the space is on the market the more the loss and the less time remaining reduces its leasability.
