City Sublease Availabilities Keep Falling

SAN FRANCISCO-Sublease office availabilities here have been on the decline and now stand at 2.25 million square feet, 61% (1.37 million square feet) of it currently vacant and about one-fifth of it expiring over the next 12 months, according to a new report from Colliers International. The total has been declining since August, when it peaked at 2.72 million square feet. To date this year, 1.8 million square feet of space has been listed for sublease, with about 40% of it coming to market already vacant.

“There definitely appears to be more demand for it, especially shorter-term subleases on the part of the tech sector,” Marty Melbardis, a first vice president with Colliers who represents both tenants and building owners. “They are looking for great economics but they prefer the two- to three-year term, or even less in some cases, because it fits their business model, which typically call for rapid growth.”

There are currently 308 sublease office listings in the market. The average sublease size is 7.316 square feet. The average term is 33 months and the average time listed is approximately nine months (260 days). About 20% of the total sublease listings (63) and about 20% of the sublease space (473,023 square feet) is tied to leases expiring within the next 12 months.