“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Winston Churchill quoted by Andrew Cuomo
The beginning phase of the pandemic is over, and we fervently hope the worst of the crisis is behind us. For now, the office leasing market is effectively on pause. We expect a downward repricing of office rents when the reopening of the city becomes a more realistic scenario in the coming months. At that time, we expect there will be a bifurcated market based on the information we have been developing in the last 45 days.
On one hand, landlords with direct space will try to hold the line on rents as much as possible (1) due to their relationships with lenders and (2) in order to preserve their future rent flows in the hope of better days ahead. Right now, the very few deals we are seeing are primarily short-term extensions and sublets as tenants are understandably reluctant to make long-term commitments.
In contrast, many struggling tenants will find themselves with excess space and a need for cash. As a result, we expect that many substantially discounted short-term sublets will soon be coming on the market. For tenants seeking space, these sublets will provide a very attractive option.
Accordingly, we shall be monitoring the sublet market with, particularly acute attention in the coming weeks. While Wharton Property Advisors has always had particular expertise in this niche market, it is of particular importance today as a backstop for tenants who are in need of alternatives. We are here to help you with creative solutions to your office space needs in this unique period in our history.
As a point of information for both potential subtenants and sublandlords, below are some of the new sublet spaces that have recently come on the market. Please feel free to contact us with any thoughts and comments. We shall keep you updated on future developments as they occur.