{"id":1004680176,"date":"2023-09-27T13:02:56","date_gmt":"2023-09-27T21:02:56","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004680176"},"modified":"2023-10-07T00:28:41","modified_gmt":"2023-10-07T08:28:41","slug":"tenants-looking-for-a-sublease-can-take-their-pick","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/","title":{"rendered":"Tenants Looking for a Sublease Can Take Their Pick"},"content":{"rendered":"

Following extensive pandemic-era lockdowns, the widespread appeal of working from home and an ongoing tenant flight to high-quality, amenity-driven space, the office subleasing landscape has changed dramatically. Over the past three years, available office sublease space has doubled from 92 million square feet of available space to 189 million by the first quarter of 2023, according to an April report<\/a> from CBRE<\/strong>.<\/p>\n\n\n

\n
READ THE DIGEST VERSION<\/a><\/div>\n<\/div>\n\n\n
\"David<\/a>

David Smith. Image courtesy of Cushman & Wakefield<\/em><\/p><\/div>\n

Half of this space remains vacant, and nearly a third of it measures more than 100,000 square feet. Leasing activity, however, has increased by nearly the same proportions, with 2019\u2019s 16 million square feet of absorption growing to 28.2 million in 2022, according to the data. David Smith, head of Americas insights for Cushman & Wakefield<\/strong>, cited data pointing to a 25 percent to 28 percent increase over the last two-and-a half years.<\/p>\n

Those trends, coupled with a sobering outlook<\/a> for the office sector, makes the task of finding tenants to sublease space increasingly difficult. A key contributor has been tech layoffs<\/a> and space downsizings from such companies as Google, Microsoft and Meta, accounting for 39 percent of the space on the market, according to Savills <\/strong>2023 Tech Tenant report. This marks a 20 basis-point increase from the first quarter.<\/p>\n

\u201cBy and large, it is the tech tenants that grew very quickly, and now they do not have as much need for the space,\u201d said Matt Epple, development and brokerage partner at Weitzman<\/strong>\u2019s Austin office. In March, Meta laid off more than 10,000 employees, and announced an additional 120,000-square-foot sublease at 300 W. Sixth St. in downtown Austin, Texas, according to KVUE TV.<\/p>\n

\"iStock-611297174<\/a>

Image by IPGGutenbergUKLtd\/iStockphoto.com<\/em><\/p><\/div>\n

Shrinking footprints<\/h2>\n

Second to technology is finance and insurance, followed by business and professional service firms. Like their digital brethren, the firms have found, in the wake of the pandemic, that they can get by with a lot less space. Michael Divaris, president of Divaris Real Estate,<\/strong> has observed this trend for call centers, an industry area which is among the top employers for remote work, according to a 2022 survey<\/a> conducted \u00a0by FlexJobs.<\/p>\n

\"Michael<\/a>

Michael Divaris. Image courtesy of Divaris Real Estate<\/em><\/p><\/div>\n

\u201cWhat they have found is that they can have their associates work effectively from home, and as a result (have) tended to give up large blocks of space,\u201d Divaris explained. According to the CBRE report, call centers account for about 25 million square feet of available space.<\/p>\n

On the flip side, potential sublease customers tend to be in businesses that necessitate in-person work, as well as in high-performance commercial sectors. \u201cPrimarily, it is software companies, engineering firms that are doing construction of a new residential development, government agencies, as well as the biotech world,\u201d commented Bill Ukropina, managing director of Coldwell Banker Commercial<\/strong>\u2019s Pasadena, Calif., office.<\/p>\n

Other industries seeking to sublease reflect larger trends across commercial real estate, particularly for industries related to e-commerce<\/a>. Online sales for the sector jumped 66 percent from the first quarter of 2020 through the third quarter of 2022. \u201cIt\u2019s not too surprising that sector has also been growing, alongside its need for office space to support its operations,\u201d Smith observed.<\/p>\n

Realigned terms<\/h2>\n
\"Gabriel<\/a>

Gabriel De Jesus. Image courtesy of Foundry Commercial<\/em><\/p><\/div>\n

Like the broad array of firms putting their spaces on the market and those seeking to occupy them, the terms and arrangements of the subleases are complex. The challenges are tied closely to uncertainty about long-term shape of the office market. At present, the trends that drive subleases barely resemble those from just half a decade ago.<\/p>\n

\u201cWhat people are looking for and are able to get right now is a shorter lease, which has historically been more of a downside,\u201d Smith noted. \u201cRight now, it is actually a positive, where it gives tenants flexibility and they can make longer-term decisions down the road.\u201d<\/p>\n

One need shared by tenants across many industries is a near-term solution. Pre-furnished offices with smaller floorplates in high-quality buildings make an attractive combination. \u201cIt favors space that is turnkey, for submarkets and in locations where occupiers want to be,\u201d Smith said.<\/p>\n

\"Bill<\/a>

Bill Ukropina. Image courtesy of Coldwell Banker Commercial<\/em><\/p><\/div>\n

On a material level, this translates to constant upkeep, reliable property management, as well as pre-furnished spaces. \u201cA lot of tenants will offer their space fully furnished or with equipment in place, and in that regard they are able to attract tenants who need the space to be fully fitted out,\u201d Divaris said.<\/p>\n

Within these high-demand markets, the spaces serve as a way for tenants to both access the higher quality office and amenities in a given market, coupled with shorter, less binding leasing terms. \u201cIt\u2019s a means to get into high-quality assets, and without (having) to make a long-term commitment,\u201d said Gabriel De Jesus, a partner at Foundry Commercial<\/strong>\u2019s Orlando, Fla., office.<\/p>\n

In the fast-growing Orlando market, De Jesus has observed the majority of subleases taking place for spaces measuring 12,000 to 15,000 square feet, \u201cat a 25 percent discount.\u201d That\u2019s true even for such Orlando submarkets as Winter Park, which has a 3 percent vacancy rate.<\/p>\n

Deal discounts<\/h2>\n
\"Matt<\/a>

Matt Epple. Image courtesy of The Weitzman Group<\/em><\/p><\/div>\n

Such discounted rents serve as another incentive for tenants at a time of high vacancy. \u201cThe rental rates that we are seeing now are very low, often half, or 60 percent to 70 percent lower than the building\u2019s,\u201d Ukropina reported. Tenants will consider the terms, as well as whether the configuration of the space meets their needs.<\/p>\n

\u201cIf you can rent a room at the Ritz-Carlton for what you can rent a room for at the Best Western for a couple of years, you might do that,\u201d Ukropina quipped. \u201cBut if it is only a one- or two-year term, and the landlord of the high-rise building wants to triple what you are paying on the sublease term, I am not so sure that they are going to do that.\u201d<\/p>\n

The competition for subleases has added further difficulties to challenges for Class B and Class C office buildings. According to the Cushman & Wakefield data, those properties account for a quarter of new subleases. \u201cThe problem is that the B and C office space is not attractive to the subleasing market, or even for a direct lease,\u201d Divaris explained.<\/p>\n

Part of this is due to the ongoing tenant flight to quality, as well as the less profitable outlook for Class B and Class C office subleases. \u201cIf you are looking for a value play for a B or C class building, you are most likely to do that through a longer term, and so a direct lease might make sense,\u201d Smith advised.<\/p>\n

Read the October 2023 issue of CPE.<\/em><\/a><\/p>","protected":false},"excerpt":{"rendered":"

Fledgling companies and those looking for flexibility have a broader set of options today. <\/p>\n","protected":false},"author":3012,"featured_media":1004682503,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1521,21808,21783,21747,51037],"tags":[34693,32799,32768,32961,34107],"class_list":["post-1004680176","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital","category-featured","category-investment","category-office","category-trends","tag-coldwell-banker-commercial","tag-cushman-wakefield","tag-divaris-real-estate-inc","tag-foundry-commercial","tag-savills"],"acf":[],"yoast_head":"\nTenants Looking for a Sublease Can Take Their Pick - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tenants Looking for a Sublease Can Take Their Pick\" \/>\n<meta property=\"og:description\" content=\"Fledgling companies and those looking for flexibility have a broader set of options today.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2023-09-27T21:02:56+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-07T08:28:41+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gabriel Frank\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/\",\"name\":\"Tenants Looking for a Sublease Can Take Their Pick - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg\",\"datePublished\":\"2023-09-27T21:02:56+00:00\",\"dateModified\":\"2023-10-07T08:28:41+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/cf1bfd2d6753f6ea305911ffd020862c\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg\",\"width\":1200,\"height\":900,\"caption\":\"Trend Office. Image by IPGGutenbergUKLtd\/iStockphoto.com\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.commercialsearch.com\/news\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tenants Looking for a Sublease Can Take Their Pick\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/\",\"name\":\"Commercial Property Executive\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.commercialsearch.com\/news\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/cf1bfd2d6753f6ea305911ffd020862c\",\"name\":\"Gabriel Frank\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/05\/GF2.jpg?w=90\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/05\/GF2.jpg?w=90\",\"caption\":\"Gabriel Frank\"},\"description\":\"Gabriel Frank is a Senior Associate Editor with Multi-Housing News and Commercial Property Executive. He has a background in journalism, and is the editor of MHN's Daily and Weekly newsletters. He lives in New York City.\",\"birthDate\":\"2000-05-11\",\"gender\":\"Male\",\"jobTitle\":\"Editor\",\"worksFor\":\"Yardi Systems\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/author\/gabriel-frank\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Tenants Looking for a Sublease Can Take Their Pick - Commercial Property Executive","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/","og_locale":"en_US","og_type":"article","og_title":"Tenants Looking for a Sublease Can Take Their Pick","og_description":"Fledgling companies and those looking for flexibility have a broader set of options today.","og_url":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/","og_site_name":"Commercial Property Executive","article_publisher":"https:\/\/www.facebook.com\/CPExecutive","article_published_time":"2023-09-27T21:02:56+00:00","article_modified_time":"2023-10-07T08:28:41+00:00","og_image":[{"width":1200,"height":900,"url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg","type":"image\/jpeg"}],"author":"Gabriel Frank","twitter_card":"summary_large_image","twitter_creator":"@cpexecutive","twitter_site":"@cpexecutive","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/","url":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/","name":"Tenants Looking for a Sublease Can Take Their Pick - Commercial Property Executive","isPartOf":{"@id":"https:\/\/www.commercialsearch.com\/news\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage"},"image":{"@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage"},"thumbnailUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg","datePublished":"2023-09-27T21:02:56+00:00","dateModified":"2023-10-07T08:28:41+00:00","author":{"@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/cf1bfd2d6753f6ea305911ffd020862c"},"breadcrumb":{"@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#primaryimage","url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg","contentUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg","width":1200,"height":900,"caption":"Trend Office. Image by IPGGutenbergUKLtd\/iStockphoto.com"},{"@type":"BreadcrumbList","@id":"https:\/\/www.commercialsearch.com\/news\/tenants-looking-for-a-sublease-can-take-their-pick\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.commercialsearch.com\/news\/"},{"@type":"ListItem","position":2,"name":"Tenants Looking for a Sublease Can Take Their Pick"}]},{"@type":"WebSite","@id":"https:\/\/www.commercialsearch.com\/news\/#website","url":"https:\/\/www.commercialsearch.com\/news\/","name":"Commercial Property Executive","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.commercialsearch.com\/news\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/cf1bfd2d6753f6ea305911ffd020862c","name":"Gabriel Frank","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/image\/","url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/05\/GF2.jpg?w=90","contentUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/05\/GF2.jpg?w=90","caption":"Gabriel Frank"},"description":"Gabriel Frank is a Senior Associate Editor with Multi-Housing News and Commercial Property Executive. He has a background in journalism, and is the editor of MHN's Daily and Weekly newsletters. He lives in New York City.","birthDate":"2000-05-11","gender":"Male","jobTitle":"Editor","worksFor":"Yardi Systems","url":"https:\/\/www.commercialsearch.com\/news\/author\/gabriel-frank\/"}]}},"jetpack_featured_media_url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/09\/iStock-611297174-Image-by-IPGGutenbergUKLtd.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004680176","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/users\/3012"}],"replies":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/comments?post=1004680176"}],"version-history":[{"count":10,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004680176\/revisions"}],"predecessor-version":[{"id":1004685117,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004680176\/revisions\/1004685117"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media\/1004682503"}],"wp:attachment":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media?parent=1004680176"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/categories?post=1004680176"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/tags?post=1004680176"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}