NYC’s Best Sublet Deals 

January 2025

“Opposites are not contradictory, but complementary.”

Niels Boehr, Nobel Prize-Winning Danish Physicist

The good news is office leasing in New York City was up substantially in 2024 by 33.3 million square feet, which is the best year since the pandemic. The bad news is that this improvement is still 20% below the total square feet leased in the last pre-Covid year which was 2019.

Look under the hood of the statistics and you will see more contradictions. For almost five years, I have been saying that there is a bifurcated market in New York, which is a tale of two cities. However, the gulf between trophy and class A buildings which have undertaken renovations on the one hand, and all the remaining buildings on the other, is wider than ever today.

In fact, there is a shortage of top-shelf office space in Manhattan with 212 new leases with rents over $100 per square foot and 28 leases drawn at over $200 per square foot. At the same time, vast swaths of the class B and C buildings in the financial district are going begging at much lower price points. As an example of this dramatic dichotomy, there is very little space available in One Vanderbilt and Hudson Yards, while there have recently been defaults and legal proceedings at the venerable Chrysler and Helmsley Buildings, which lack the amenities of the modern buildings that deep-pocketed tenants demand.

As a result, the average rent in Manhattan remains roughly the same at just under $75 per square foot. Further, the office availability is slightly lower at approximately 18 percent, which partially reflects the fact that approximately 8 million square feet was taken off the market due to conversions from office to residential buildings. In addition, the 18 percent availability rate does not include the over 20 million square feet available for sublet which increases leasing opportunities for tenants, often at well below market prices.

Other significant forces are also at work in the market. The latest news about work from home is that now JP Morgan Chase with 300,000 employees has joined the group of large employers that are demanding a full-time return to the office. However, notwithstanding this trend, hybrid work is solidly entrenched and WFH Research led by remote work guru Nicholas Bloom of Stanford found that 27.8% of work days were remote last year, a 400% increase from before the pandemic.

The battle of the office between employer and employees continues apace. The Wall Street Journal reported today that employers may have a bit more leverage as the pace of hiring white-collar has slowed somewhat, providing employers additional leverage in demanding employees return to the office if alternative jobs offering remote work are harder to find.

On a related note, a Gallup survey released today found that employee engagement in the United States fell to its lowest level in a decade in 2024, with only 31% of employees engaged in their work. Two of the major reasons cited by Gallup for their findings were significant declines since March 2020 in the percentage of employees that felt someone at work cared about them as a person and that someone was encouraging their development. Accordingly, it seems to me that this disaffection is clearly connected to the rise in remote work.

Equally important, the drop in engagement was most pronounced for employees under 35 and in the finance, insurance, transportation, technology, and professional services. Again, that trend is easily interpreted. Four of those five sectors are almost exclusively office with high rates of work from home, and many young people coming up in business lack the personal ties to their companies to develop their skills. These developments are a clear red flag for the future of American companies and business in general and with apologies to Arthur Miller, attention must be paid. The diminution of the office may hold long-term implications for the quality of the workforce.

The year-end statistics and trends discussed above beg the question of what they mean to our clients and friends who are tenants. The answer is simple. Unless you are in the market for a large block of office space at the top of the market, great bargains remain on offer and will continue to be for the foreseeable future. As a result, your company can be moving and grooving in splendid new space without delay. Wharton Property Advisors can help you do that, and while there may be the occasional impasse in negotiations, moving is definitely not as hard as nuclear physics.

For those on the hunt for new digs in the New Year, below are the best bargains currently available in NYC. Please feel free to tap the expertise of Wharton Property Advisors if you are looking for new space, seeking to dispose of excess space, want to terminate your lease or just have questions. We proudly represent our clients with integrity, creativity, independence, diligence and good humor.