Some of the Big Recent Office Sublease Stories
The sublease market has grown ‘substantially,’ says Trepp.
Office sublease space availability has been up virtually everywhere in the country: up 7.7% between Q3 and Q4 last year, according to Newmark, as a second wave of availability kicked off in the last quarter of 2022.
In January, JLL noted that more than half of recent sublease additions came out of the computer industry — not surprising given the level of layoffs. TechCrunch, which follows the high-tech scene, put the number in the first quarter of 2023 at 158,314. But more than half means almost half came from other industries.
Over a recent four-week period Trepp watched sublease activity in for 50,000 square feet in major and secondary metros and put together some of the bigger examples.
For example, in San Francisco, Salesforce put its almost 1.41 million square-foot space in the eponymous Salesforce Tower up for sublease. Also in the Bay Area, Bank of America will forgo renewal of its lease of 300,000 square feet at a location that once held 2,500 employees and the bank’s west coast data center. The government of California plans to drop 1.16 million square feet of office.
Calabrio is heading out of 120,000 square feet at the Steelman Building in Minneapolis. Uber’s taking a lift out of 50,000 square feet in Chicago’s Old Post Office on top of the 83,000 that TrueBlue put up last fall. Over in New York City, Lyft is subletting its space. Twitter is also moving out of nearly 200,000 square feet in Manhattan, the entirety of its lease that’s over in 2030.
In 2018, Philips Respironics announced that it would take 200,000 square feet at the reworked Bakery Square in Pittsburgh; now the company has put up 74,000 square feet of that space up for sublease.
Amazon reportedly could be giving up another 140,000 square feet in the Seattle Market out of the total 190,000 square feet in the Met Park North Tower building.
American Airlines no longer needs a Massachusetts space it once used as a reservation center. That’s on top of the nearly 102,000 square foot space in Winston-Salem, NC that the carrier dropped as 575 employees shifted to home-based work.
The impact on property owners is one aspect. Another is the potential impact on CMBS debt that is backed by loans on a building going out for sublease.