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According to Crain,, they have seen their biggest drop in years for corporate sublease space
While sublease inventory shrank 9% in Class A buildings last month, no real impact seen on overall rents. One reason: Fewer new office jobs than usual in this recovery so far.
The amount of available sublease space in Manhattan’s best commercial buildings sank this month by the largest amount since even before the recession began, although the reduction hasn’t relieved pressure on rents, according to a report released Tuesday by Cassidy Turley.
Sublease space in Class A buildings fell 9% to 8 million square feet this month, down from 8.8 million square feet in August. It was the fourth straight month of tightening inventory and the largest monthly decline since November 2005.
Beginning in 2007, companies in New York—especially financial firms—began shedding employees and trying to unload space they no longer needed. Sublease space offered by companies is typically much less expensive than space offered directly from landlords, so it pushes overall rents lower. Many landlords had hoped that as total sublease space diminished, rents would start to increase. But that hasn’t happened: Class A average asking rent fell to $57.37 a square foot in September, from $58.29 a square foot in August.
The reason? Tenant demand, while increasing, is still weak. Class A space that is available straight from landlords rose slightly this month, to 19.3 million square feet from 19.1 million square feet.
The problem is that most of the new jobs that have been created during the recovery are not office positions, according to Robert Sammons, director of research for Cassidy Turley. He estimates that only 20% of the new jobs are office positions, compared to 40% in previous recoveries.
Mr. Sammons still sees a lot of nervousness about the strength of the recovery and the political environment. “I think people have to get through the election before we see more hiring,” he said.
Still, he predicts that rents will start to rise at the beginning of next year in some of the Manhattan’s more desirable locations.
Some analysts say that even though asking rents aren’t rising, there are still signs that the market is tightening. Landlords are becoming much less generous with incentives such as building allowance and months of free rents, he said.
“We are definitely at the bottom of the cycle,” they say, adding that sublease space will continue to disappear from the market as companies decide to keep it for themselves instead of renting it out.
If you’re looking for office space to sublease in Montreal visit our website
www.sublease-office-space-montreal.com
If you want to sublease your space, visit
www.Sublease-MySpace.com
