Manhattan

Sublease
Space
Overview
Q3 2020

Danny Mangru
Research Director, New York & Tri-State Region
Manhattan Sublease Space - Executive Summary
• Pre-COVID-19:
• Available sublease space was already surging, gaining 4.2 MSF between Q4 2018 and Q1 2020.
• 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, and sublet space accounted for 26.2% of total available space.
• 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 Q3 2020, sublet supply now totals 16.1 MSF, and accounts for 26.7% of total available space–
nearing its peak levels of 16.3 MSF and 30.3% of available space seen in 2009.
• Over the past year, available sublease space has increased by 46.8%, up from 22.0% of total available
space as of Q3 2019, while available direct space increased by just 13.7%.
• 37 blocks of sublease space exceeding 50,000 SF have been or are expected to be added to the market,
accounting for 3.2 MSF of newly available space.
• TAMI industry tenants account for almost half (44.7%) of newly added and expected sublet blocks.
Financial Services & Insurance (19.2%) and Retailers & Luxury Brands (10.4%) follow.

• Looking Ahead:
• With many organizations planning to operate remotely into 2021, sublease space will continue to drive
supply-side increases as more tenants look to shed space.
• By the end of 2020, available sublease space will likely exceed peak Global Financial Crisis levels.
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Pre-COVID-19: Large Sublease Additions (Q1 2020)
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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Pre-COVID-19 Sublease Additions Industry Breakdown
Sublease Additions By Sublessor Industry

TAMI
15.4%

Financial Services &

31.6%
6.0% Insurance
Retailers & Luxury 57.6%
Brands More than half of Pre-COVID-19 Sublease additions are by
Legal Services tenants within TAMI & Financial Services industries
13.1%

Personal Services

7.8% Other
26.0%

Source: Savills Research, CoStar

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Post-COVID-19: Large Sublease Additions (Q2 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 83,700 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: Large Sublease Additions (Q3 2020)
Quarter Address Square Feet Sublessor Submarket Industry
Financial Services and
Q3 2020 399 Park Avenue 190,900 Starr Companies Plaza South
Insurance
Q3 2020 113-133 West 18th Street 156,000 WeWork Flatiron Coworking

Q3 2020 1 Hudson Square 146,600 Omnicom Group Hudson Square TAMI

Q3 2020 5 Manhattan West 113,000 R/GA Hudson Yards TAMI

Q3 2020 1325 Avenue of the Americas 132,100 McGraw- Hill Education Columbus Circle TAMI
Penn Plaza/Times Square
Q3 2020 1250 Broadway 102,500 Zillow TAMI
South
Q3 2020 636 Eleventh Avenue 91,900 WPP plc Times Square TAMI
Personal Services and
Q3 2020 675 Avenue of the Americas 75,600 Weight Watchers Flatiron
Recreation
Financial Services and
Q3 2020 One World Trade Center 75,300 Moody's WTC/Brookfield Place
Insurance
Q3 2020 55 Water Street 68,700 Hugo Boss Financial District Retailers & Luxury Brands

Q3 2020 1 New York Plaza 68,300 WellCare Financial District Healthcare

Q3 2020 237 Park Avenue 66,400 WPP plc Grand Central TAMI
Donnelley Financial Financial Services and
Q3 2020 55 Water Street 64,900 Financial District
Solutions Insurance

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Post-COVID-19: Large Sublease Additions (Q3 2020, Cont’d)
Quarter Address Square Feet Sublessor Submarket Industry

Q3 2020 200 Fifth Avenue 58,000 Yelp Flatiron TAMI

Q3 2020 620 Eighth Avenue 57,900 Troutman Pepper Times Square Legal Services

Q3 2020 3 Park Avenue 56,000 Houghton Mifflin Harcourt Park Avenue South TAMI

Q3 2020 130 Fifth Avenue 53,200 Zillow Flatiron TAMI

Financial Services and
Q3 2020 1633 Broadway 53,000 Allianz Columbus Circle
Insurance
Q3 2020 390 Madison Avenue 51,400 Hogan Lovells Grand Central Legal Services

Q3 2020 One World Trade Center 50,700 DAZN Group WTC/Brookfield Place TAMI
Financial Services and
Q3 2020 399 Park Avenue 50,100 Epoch Investment Partners Plaza South
Insurance
Financial Services and
Q3 2020 151 West 42nd Street 48,800 Hedgeserv Times Square
Insurance
Q3 2020 345 Hudson St 47,600 iNDEMAND Hudson Square TAMI

Q3 2020 101 Avenue of the Americas 44,900 Digital Ocean Hudson Square TAMI
Construction, Engineering
Q3 2020 1 Liberty Plaza 44,400 AKF Group WTC/Brookfield Place
and Architecture
Q3 2020 51 Astor Place 42,200 1st Dibs Greenwich Village Retailers & Luxury Brands

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

13.4% TAMI

Financial Services &

5.9% Insurance
Retailers & Luxury 44.7%
6.4% 44.7% Brands almost half of Post-COVID-19 Sublease additions are
Coworking by tenants within TAMI industries

10.4%
Healthcare

Other
19.2%

Source: Savills Research, CoStar

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Previous Cycles Provide Context for Future Availability Growth
Manhattan: Sublet Space Has Led to A Significant Rise in Availability Since 2018
Dot-Com Crisis Global Financial COVID-19
9/11 Crisis
• Current jump in sublet available 70 50.0%

Square feet in millions (msf)

44.2%
space is outpacing the increase
45.0%
of direct available space on a 60
percentage basis. 40.0%

50
• Since Q4 2018, sublet available 35.0%
space has increased at 1.1x the 30.3% +5.9
30.0%
rate of direct available space 40 MSF
growth 25.0%
30
• Sublet available space also rose 26.7% 20.0%
faster than direct available space + 12.7 + 15.6
during the Dot Com Bubble 20 MSF MSF 15.0%

10.0%
Shaded area represents trough 10
to peak phase for sublet +15.6 +6.6 5.0%
+10.6
available space during economic MSF MSF
0
MSF 0.0%
cycles

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

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Manhattan Sublease 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 +6.6

Square feet in millions (msf)

space even before COVID-19 17.5
18 MSF MSF 16.3 MSF
MSF 16.1
MSF
• Sublet available space has 16
MSF
increased by 6.6 MSF since
Q4 2018 14

• 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 Sublease 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
9/11 Crisis
• Sublet available space has increased 14
+9.0 +8.1 +3.3

Square feet in millions (msf)

by 3.3 MSF since Q4 2018
MSF MSF MSF
12
• Over a seven-quarter period
between 2007 and 2009, sublet 9.8 9.0
available space jumped by 8.1 MSF 10 MSF MSF

• Sublet available space increased by 8

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

Sublet Available Space

0

Source: Savills Research, CoStar

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Midtown South Sublease 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 +2.1

Square feet in millions (msf)

by 2.1 MSF since Q4 2018
4
MSF MSF MSF MSF
• Over a four-quarter period between 3.6
2008 and 2009, sublet available 4 MSF
space jumped by 1.6 MSF
3
• Sublet available space increased by 2.3
3
4.1 MSF during a 10-quarter period MSF
between 2000 and 2002
2

Shaded area represents trough to

2
peak phase for sublet available
space during economic cycles 1.5
1 MSF

1 0.7
0.2 MSF Sublet Available Space
MSF
0

Source: Savills Research, CoStar

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Downtown Sublease 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 +1.2

Square feet in millions (msf)

by 1.2 MSF since Q1 2019
MSF MSF MSF
6 5.7
• Over a seven-quarter period MSF
between 2007 and 2009, sublet
available space jumped by 1.8 MSF 5

• Sublet available space increased by 4 3.5

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

Source: Savills Research, CoStar

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