Office space is flooding the market in Manhattan, as companies look to cut costs during the pandemic.
Tenants put 2.5 million square feet (232,258 square meters) up for sublease in the third quarter, more than double the space a year earlier and the biggest quarterly increase since the end of 2008, according to a report by Savills.
Manhattan offices, which emptied out when the pandemic hit in March, are still largely vacant. And with workers staying home, employers in New York are rethinking how much space they need.
The sublease space added in the third quarter brought the supply to 16.1 million square feet, just 200,000 shy of the high from 2009, when the financial crisis battered New York City.
The new space on the market has weighed on asking rents, which dropped 3% to $80.29 per square foot. It was the first time since 2017 that rents have fallen by more than 2%, said Danny Mangru, research director at Savills.
Read: Manhattan Office Rents Seen Plunging 26% in Prolonged Downturn
A handful of large deals includingFacebook Inc.’slease atVornado Realty Trust’s Farley Building helped boost the market in the third quarter. Still, overall leasing was down 45% from the same period last year.
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