Available Office Sublease Space is Up 19% This Quarter and More is Coming

Need office space, but not too much? Take advantage of the glut of subleases now available nationwide to find just what you’re looking for.

In Q1 2023, 19% of total office space was up for sublease. That amounted to 189 million square feet. By comparison, only 96 million square feet, or 13%, of sublease space was on the market at the same time in 2020, according to data from CBRE.

To add to the problem, around half of the 2023 space available for sublease was reported as vacant, bringing the overall office vacancy rate to 17.8%.

The situation was worse for technology companies, where 23% of office space was up for sublease. Next worse off were finance and insurance, and business and professional services where 15% of office space was on offer for sublease. The lowest vacancy rates were for energy, life sciences, legal services and telecommunications offices.

“Small spaces comprise the greatest number of sublease availability as occupiers trim and optimize their portfolios,” CBRE reported. “Nearly 40% of sublease space blocks are between 10,000 and 20,000 square feet and nearly 80% are under 50,000 square feet.” Around 55.7 million square feet of areas larger than 100,000 square feet are ready to be subleased.

Worse yet, even more sublease space is expected to be added this year, CBRE noted.

Markets in Manhattan, Chicago, and Washington, DC – all of which have a heavy presence of technology, finance and insurance companies – are among the most affected. However, cities around the country are impacted. Cities with 5 to 9 million square feet available for sublease included Dallas/Ft. Worth, Boston, Houston, Atlanta, Seattle, Denver and Philadelphia.

Tenants are generally more interested in long-term leases of five years or more. The good news for tenants is that sublease space is typically marketed with a rental rate discount of between 20% and 40%, depending on the market, according to CBRE.