It’s a good time for companies looking to sublet their office space.
Office sublets have emerged as one of the winners in Trump’s trade war, as companies in need of office space look for cost-effective options that don’t require expensive buildouts. Tours are picking up at sublets that had been languishing on the market, and lease negotiations are ramping up, according to brokers.
Sublets also offer a temporary solution for tenants to ride out the economic uncertainty since lease terms are usually shorter than a direct lease. While some are opting to stay put in their current spaces, others are turning to sublets as a stopgap until things settle down.
“Anecdotally, from repping tenants and landlords, there’s been 100 percent more demand [for sublets],” said CBRE broker Evan Fiddle.
“They’re tenants who are considering both direct and sublease alternatives,” he said. “I think as companies are focused now on ‘what do tariffs mean, what’s going to happen with the economy,’ whoever is running the finances are really encouraging companies to consider capital-light alternatives.”
Offices emptied out during the pandemic, flooding the market with sublet supply. Those numbers are finally shrinking, thanks in part to return-to-office policies. Sublease deals have continued to accelerate since Trump’s chaotic tariff rollout. There were 17.4 million square feet of available sublet space in Manhattan at the end of 2024, according to CBRE. That number shrank to 14.9 million square feet as of May 1.
Tenants inked deals for about 1.2 million square feet of sublet space in the first quarter, compared to 729,000 square feet during the same period a year earlier, according to JLL. Those include Amazon’s 193,000-square-foot sublease at 237 Park Avenue, Mizuho Financial Group’s 151,000-square-foot sublease at 1285 Sixth Avenue and WeWork’s 112,000-square-foot sublease at 5 Manhattan West.
Commercial Observer reported on Wednesday that Bank of New York Mellon is in talks to sublet 200,000 square feet from Conde Nast at 1 World Trade Center while it wraps up a renovation of its nearby headquarters, possibly marking another massive deal.
Fiddle has five floors of sublet space on the market at Paramount Group’s 1325 Sixth Avenue made available by the educational publishing company McGraw Hill. There’s been a sharp uptick in interest as the economic outlook has become more uncertain, and he’s now in negotiations with two potential tenants, he said. At four sublets he recently toured with tenants, two already had offers and one has received a proposal since then.
Pre-built spaces offer an alternative to expensive renovations, which often require tenants to shell out money for wiring and furniture. Some want to avoid those costs.
“Tenants are more loath to do construction than ever,” said broker Ruth Colp-Haber of Wharton Property Advisors, who specializes in sublets. “It’s a result of tariffs on steel and aluminium, inflation and an impending labor crisis. All these things have made the cost of construction go up dramatically, and no one wants to do it.”
Colp-Haber said high-quality sublets are being scooped up faster than ever, but large sublet blocks with shorter lease terms are still sitting on the market. Meanwhile, some tenants are opting out of the market altogether and extending their current leases.
Attorney Mark Rottenberg’s firm Rottenberg Lipman Rich will be looking to sublet next year when its lease comes due. Its current space in RXR’s Helmsley Building needs improvements, so Rottenberg will be looking elsewhere.
“It’s kind of crazy to spend a lot of money on a buildout right now when there are so many sublets and prebuilt spaces on the market,” Rottenberg said.
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