Manhattan

Sublet
Overview
Q2 2020

Danny Mangru Lesley Kamnitzer Will Joumas

Research Director, Senior Research Manager Senior Research Analyst
New York and
Tri-State Region
Manhattan Sublease - Executive Summary
• Pre-COVID-19:
• Available Sublease space was surging, increasing by 4.1 MSF since Q4 2018.
• In Q1 2020, 12 blocks of sublease space exceeding 50,000 SF were added to the market, accounting for 1.1
MSF of newly available space.
• Over the past year, available sublease space has increased by 37.9%, up from 20.9% of total available
space as of Q2 2019, while available direct space increased by just 13.6%.
• During the Dot Com-9/11 Crisis, available sublease space reached as high as 44.2% of total available
space.

• Post-COVID-19:
• As of Q2 2020, available sublease space (13.6 MSF) currently accounts for 25.4% of total available space.
• 20 blocks of sublease space exceeding 50,000 SF have been or are expected to be added to the market,
accounting for 1.8 MSF of newly available space.
• TAMI industry tenants account for more than half (52.1%) of newly added and expected sublet blocks.
Financial Services & Insurance (15.2%) and Retailers & Luxury Brands (14.0%) follow.

• Looking Ahead:
• With cost control imperative across many organizations as a result of COVID-19, sublease space will drive
supply-side increases through the remainder of the year and into 2021.
• By the end of 2020, available sublease space will likely exceed 30% of total available space.
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Pre-COVID-19: Large 2020 Sublease Additions
Quarter Address Square Feet Sublessor Submarket Industry

World Trade
Q1 2020 225 Liberty Street 221,400 Time, Inc. TAMI
Center/Brookfield Place
Financial Services and
Q1 2020 410 Tenth Avenue 151,400 First Republic Bank Hudson Yards
Insurance
World Trade
Q1 2020 1 Liberty Plaza 140,100 Cleary Gottlieb Legal Services
Center/Brookfield Place

Q1 2020 787 Eleventh Avenue 83,000 Nissan Columbus Circle Retailers and Luxury Brands

Financial Services and

Q1 2020 28 Liberty Street 70,000 JP Morgan Chase Financial District
Insurance

Q1 2020 160-170 Varick Street 65,400 MDC Partners Hudson Square TAMI

Personal Services and

Q1 2020 125 West 25th Street 64,500 Peloton Flatiron
Recreation
Business, Professional, and
Q1 2020 40 Wall Street 61,000 Thornton Tomasetti Financial District
Consulting Services
World Trade Financial Services and
Q1 2020 225 Liberty Street 56,200 Oppenheimer Funds
Center/Brookfield Place Insurance

Q1 2020 233 Spring Street 53,300 Juul Labs Hudson Square Manufacturing

Q1 2020 315 Park Avenue South 51,200 Bustle Digital Group Park Avenue South TAMI

Penn Plaza/Times Square Associations and Non-profit

Q1 2020 307 West 38th Street 50,500 GMHC
South Organizations

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Post-COVID-19: Large Sublease Additions (2020)
Quarter Address Square Feet Sublessor Submarket Industry

Q2 2020 55 Water Street 163,000 Emblem Health Financial District Healthcare

Financial Services and

Q2 2020 33 Whitehall Street 104,500 Fitch Ratings, Inc. Financial District
Insurance

World Trade
Q2 2020 195 Broadway 83,680 Moda Operandi Retailers & Luxury Brands
Center/Brookfield Place

Q2 2020 1700 Broadway 52,500 ViacomCBS Columbus Circle TAMI

Penn Plaza/Times Square

Q2 2020 350 Fifth Avenue 51,700 Global Brands Group Retailers & Luxury Brands
South

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Post-COVID-19 Sublease Additions Industry Breakdown
New and Expected Sublease Additions By Sublessor Industry

5.6% TAMI
5.4%

7.7% Financial Services &

Insurance
Retailers & Luxury 52.1%
Brands More than half of Post-COVID-19 Sublease additions
14.0% 52.1% Healthcare are by tenants within TAMI industries

Coworking

15.2% Other

Source: Savills Research, CoStar

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Previous Cycles Provide Context for Future Availability Growth
Manhattan: Sublet Space Has Pushed Up Total Availability Since 2018
Dot-Com Crisis COVID-19
Global Financial
9/11 Crisis
• Current jump in sublet available 60 50.0%

Square feet in millions (msf)

space outpacing the increase of
44.2% 45.0%
direct available space
50
40.0%
• Since Q4 2018, sublet available
+1.6 35.0%
space has increased at 2.5x the MSF
40 30.3%
rate of direct available space
30.0%
growth
30 25.0%
• Sublet available space also rose
faster than direct available space 20.0%
during the Dot Com Bubble 20
+ 12.7 + 15.6
MSF MSF 25.4% 15.0%

Shaded area represents trough 10.0%

to peak phase for sublet 10
available space during economic +15.6 +10.6 +4.1 5.0%
cycles MSF MSF MSF
0 0.0%

Sublet Available Space Direct Available Space Sublet Percent of Total Available Space
Source: Savills Research, CoStar

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Manhattan Sublet Available Space
Sublet available space was increasing before the COVID-19 pandemic
Dot-Com Crisis Global Financial COVID-19
9/11 Crisis
• Large amount of sublet available 20
+15.6 +10.6 +4.1

Square feet in millions (msf)

space even before COVID-19 17.5
18 MSF MSF 16.3 MSF
MSF
MSF
• Sublet available space has 16
increased by 4.1 MSF since 13.6
Q4 2018 14 MSF

• Over a seven-quarter period 12

between 2007 and 2009, sublet
10
available space jumped by 10.6 MSF
8
• Sublet available space increased by 9.5
15.6 MSF during a 10-quarter period MSF
6
between 2000 and 2002
4 5.7
MSF
Shaded area represents trough to
2 1.9
peak phase for sublet available
MSF Sublet Available Space
space during economic cycles 0

Source: Savills Research, CoStar

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Midtown Sublet Available Space
Sublet available space remains elevated and is expected to rise due to long-term effects of COVID-19
Dot-Com Crisis Global Financial COVID-19
• Sublet available space has increased 9/11 Crisis
14
by 2.3 MSF since Q4 2018 +9.0 +8.1 +2.3

Square feet in millions (msf)

MSF MSF 11.4 MSF
12 MSF
• Over a seven-quarter period
between 2007 and 2009, sublet 9.8
MSF
available space jumped by 8.1 MSF 10

• Sublet available space increased by 7.9

8 MSF
9.0 MSF during a 13-quarter period
between 2000 and 2003
6
Shaded area represents trough to
peak phase for sublet available
4 5.6
space during economic cycles MSF

3.3
2
MSF
0.8
MSF Sublet Available Space
0

Source: Savills Research, CoStar

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Midtown South Sublet Available Space
Sublet available space was rising and has been pushed even higher by the impacts of COVID-19
Dot-Com Crisis Global Financial COVID-19
9/11 Crisis
• Sublet available space has increased 5
+4.1 4.3 +1.6 +1.2

Square feet in millions (msf)

by 1.2 MSF since Q4 2018
4
MSF MSF MSF MSF
• Over a four-quarter period between
2008 and 2009, sublet available 4
space jumped by 1.6 MSF
3 2.7
• Sublet available space increased by 2.3 MSF
4.1 MSF during a 10-quarter period 3 MSF
between 2000 and 2002
2
Shaded area represents trough to
peak phase for sublet available 2
space during economic cycles
1 1.5
MSF
0.7
1
0.2 MSF
MSF Sublet Available Space
0

Source: Savills Research, CoStar

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Downtown Sublet Available Space
COVID-19 has further contributed to rising sublet available space
Dot-Com Crisis Global Financial COVID-19
9/11 Crisis
• Sublet available space has increased 7
+4.8 +1.8 +0.8

Square feet in millions (msf)

by 0.8 MSF since Q1 2019
MSF MSF MSF
6 5.7
• Over a seven-quarter period between MSF
2007 and 2009, sublet available
space jumped by 1.8 MSF 5

• Sublet available space increased by 4

4.8 MSF during a seven-quarter 3.1
period between 2000 and 2002 2.7 MSF
3 MSF
Shaded area represents trough to
peak phase for sublet available space 2
during economic cycles 0.9 2.3
MSF MSF
1
0.9
MSF Sublet Available Space
0

Source: Savills Research, CoStar

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