NYC’s Best Sublet Deals June 2024

“… The credit belongs to the (wo)man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; …who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Theodore Roosevelt, as abridged and very modestly revised

With apologies to Miami Heat coach Erik Spoelstra, what better way to start this newsletter than with a salute to the Knicks – our men who are literally and figuratively in the arena. The wonderful playoff adventures (victories and defeats alike) of this hardy band led by the great Jalen Brunson transfixed us for a month, until so many players were injured they could barely form a team of five players. On a personal note, after the final Knicks loss to Indiana our Eric was so disappointed that he wouldn’t leave the house for days (wait a minute, he never goes anywhere anyway).

Turning to business, as with much of life and sports there was some good news and bad news. On the plus side, Oxford Economics released its first Global Cities Index rating of 1000 cities worldwide. It was no surprise that NYC ranked number 1 in the Economics category which includes GDP size, growth, and economic diversity. New York may not be the easiest place to live, but it is the most robust economically.

In the middle, the Partnership for New York City issued its quarterly survey which found that 56% of Manhattan office workers are at their workplace on an average workday. That equated to 78% of pre-pandemic attendance, which it characterized as “the new normal” and doesn’t seem so bad. Further, the partnership found that 60% of employees have a hybrid schedule in 2024, further supporting its conclusion that the change in office life is here to stay.

I wrote in a recent blog that we have now entered the second phase of the office revolution, which is the finance phase. This month brought more evidence of that including the following items:

• Starwood Real Estate Investment Trust, which has $10 billion in assets under management, reduced the limit on the amount of investor redemptions it would pay out from 2% to 0.33% of its net asset value. CEO Barry Sternlicht justified the decision in a letter by saying that limiting redemption was better than selling assets to raise liquidity when asset values are depressed. Additionally, Sternlicht stated at the Milken Institute annual conference in early May that “the Fed is very aware that it has a teetering regional banking system that loads [originates] about $700 billion of real estate loans in a low interest rate environment, and the small borrowers are going to have a hard time refinancing.”
• In the CMBS space, Bloomberg reported that buyers of the AAA portion of a $308 million note backed by a mortgage on 1740 Broadway took a significant hit when the senior portion of the loan was sold for less than 3/4 of their original investment. That was the best outcome as five lower tranches were wiped out.
• Famed short-seller Hindenburg Research issued a report questioning the value of the real estate loan portfolio of Axos Bank and the quality of its borrowers, resulting in a fall in the bank’s stock price.

Returning to good news, if you are a tenant there is a wide canvas available to paint your office picture. Terrific bargains, particularly in the sublet category with significant discounts to direct space, continue to abound and astound. As a result, your company can be moving and grooving in great new turnkey space without delay.

Below is a listing of the best deals currently available in NYC. Please tap the expertise of Wharton Property Advisors if you are looking for a new space, seeking to dispose of excess space, want to renegotiate your existing lease, or just have questions. We always represent our clients with creativity, integrity, independence, and diligence.