NYC Office Availability at a High Putting Tenants In Driver Seat
Manhattan Office Availability at a 7-Year High
Manhattan office availability is reported to be at a 7-year high, with leasing activity down substantially year over year and subleases accounting for 23-percent of Manhattan availability, the highest since 2010. August is traditionally a slow month for listing subleases, so we expect that share to increase in the coming months. While the average asking rent was down only 2.5%, we’ve seen a willingness to accept prices below ask at multiples of this and expect we haven’t seen the trough of asking rents just yet – give it another 6-12 months.
This is not the most fantastic news for landlords. But you’re not a landlord, so what does this mean for you and your business? It means you — the tenant — are in the driver’s seat and should take advantage of the down market now while uncertainty lingers.
So, the real questions become: how can you take advantage of the down New York City real estate market? How does the right move differ according to where you are in your lease and your future plans?
Suppose you want to stay in your current space. In that case, you can extend your lease (whether it’s expiring soon or three years from now) in exchange for immediately lowering what you currently pay (and taking advantage of free rent and a real estate taxes reset to $0) – what we call a ‘blend and extend‘ lease.
If you have an upcoming lease expiration and want to leave your space, you can leverage one of the many subleases on the market–or find a direct space with a substantially more favorable ask (and take price) than you may have seen in the past. If you’re trying to move away from a traditional lease and leaning towards a long-term remote work strategy, you can leverage smaller, short term space options – think renting out a furnished conference space for the day for a team or Board meeting.
You can also get creative for restaurants and retail clients by striking a percentage lease, where you pay the Landlord a negotiated % of gross sales for the next [insert negotiated time frame here] in place of a fixed rent. At this point, the rent reverts to a fixed monthly number for the rest of the term.
As a tenant, the good news is that you have the upper hand right now. Though some NYC Landlords still haven’t wrapped their heads around what’s happening, most understand and are anxious for tenants to stay and new ones to sign a lease; in other words, they understandably want to avoid being just another vacancy at all costs. Like anything, you won’t get what you don’t ask for. If you have a good relationship with your Landlord, reach out to them and open the dialogue –we’re here to help if you want guidance or a suggested solution. We’ll see what they say and go from there. If you have a more distant relationship with your Landlord (or have tried communicating with no luck), we’re here to reach out to them on your behalf. As tenant-only reps, our team is here to help get — and keep — you in the driver’s seat during this down NYC real estate market.
