Subleases, Coworking Spaces Show Rise in Supply - Landlords Face Problems

Subleases, Coworking Spaces Show Rise in Supply- Landlords Face Problems


USA – A recent report has revealed that the supply of sub leases spaces, coworking spaces and office spaces have shown a tremendous rise but at the same time, this rise means problems for landlords. The competition is fierce for landlords now, as the supply for all kinds of other spaces increase and demand for businesses to to acquire traditional office spaces has declined.

Few weeks after David Falk of Newmark Knight Frank took the over leasing of One World Trade Center, Conde Nast, the anchor tenant of the building, dumped a whopping 350K SF on the sub-leasing market. The building, which measures 3.1M SF, is now the tallest in the United States but 25% of it is still vacant. Conde Nast is therefore, subleasing another offering for the tenants to select from.

Falk has already announced plans of launching a new marketing campaign for this building and will be showcasing the companies that are already in it. However, Falk clearly expressed that the competition or the ‘extra competition’ does not bother him that much.

“The competition is always there and you are always competing in some way or the other”, said Falk. The Conde space is already built for the users but Falk is building space in the specs in the sense of suites that will give way to more creative spaces. He added further that this is negotiable and can grow over time.

What Conde Nast is offering is not the only sublease block that is available at the moment. There are multiple options in that regard as well as at 55 Water St. Liberty Mutual Insurance Co, an offer of 130K SF is being made, whereas at the 4 World Trade Center, there are two different floors available that can be sub leased from Port Authority NY.

The sublease availability in Downtown hit a mark of 2.4% in April which is its highest since 2010. The data revealed by Colliers International also revealed that the figured dropped to 2.3% but it had not increased over 2% since 2010.

The subleasing space and numbers show that there is a high likelihood that these patterns will continue in the term to come. However, brokers have shown concerns regarding the negative impact of this on the market as a whole.

Peter Sabesan, the Managing Principal at Cresa, while commenting on the market and the underlying conditions, said, “It brings the entire market down and there are a lot of office spaces that are being put in the market”. He also said that there are many office users who feel quite uncomfortable taking space from another company.

Things seem to be weighing down on the market in the sense that there are landlords who are getting affected by the market’s behavior. They are now struggling to let go of the space that they have. Supply of subleasing space, coworking spaces and office spaces are on a rise and this will impact the American office market negatively in the near future.

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