Turnkey sublease agreements allow small businesses to move quickly to New York

Sublets are the holy grail for any business looking to expand globally. Often, sublets allow a company to obtain better office space for below-market rents – sometimes fully furnished – while the original company receives cash flow as they move out.

During the pandemic, millions of square feet were quickly added to the market as businesses feared the sky was falling and workers would never leave their sofas again.

Instead, after taking deep breaths and booster shots, employers reassessed their needs and decided to reoccupy some or all of their space.

One of the city’s biggest sublet opportunities of the year comes from Japanese advertising company Dentsu.

They had 324,000 square feet inside Morgan North at 341 Ninth Ave. by Hudson Yards but have never occupied it.

One of the largest subleases on the market is Japanese advertising company Dentsu’s 324,000 square foot office in Morgan North.
Tishman Spire

Now, it could soon be absorbed by KKR, according to unnamed sources.

They say the financial firm is negotiating not just to take that space, but also for the remaining 310,000 square feet of the Tishman Speyer project, which is topped by a 2-acre rooftop park and is expected to open as soon as it’s ready. for tenant accommodation. .

Exterior of 150 E. 42nd St.
Dentsu is also ready to reach an agreement for its 112,328 square foot sublease at 150 E. 42nd St.
Helayne Seidman

Dentsu is also trying to move out of its 112,328 square feet at 150 E. 42nd St.

They are not alone. According to Transwestern, there are 21.4 million square feet of subleases currently available in Manhattan, including 53 over 100,000 square feet and another 100 over 50,000 square feet.

Incoming tenants often receive all the furniture and fixtures that can keep them running quickly, especially as supply chain issues continue.

Brandon Charnas, co-founder of Current Real Estate Advisors, noted that it took one of his clients a year to move into a 20,000 square foot space simply because he couldn’t get his furniture.

Interior of the Lab offices.
The Lab is offering a fully fitted and furnished 50,000 square foot sublease at 175 Pearl St. with an asking rent of $60 per foot.
The laboratory
Exterior of 175 Pearl Street.
Current Real Estate Advisors co-founders Brandon Charnas and Adam Henick describe the Pearl Street space as “incredible.”
The laboratory

He and co-founder Adam Henick are now offering a 50,000 square foot sublease of lab space in Dumbo at 175 Pearl St. which is fully built.

“It’s an amazing space,” he said, with asking rent in the $60 per foot range. The brokers marketing the space are also looking for 100,000 square feet with another client.

Meanwhile, Peloton is still trying to sublet a third of its 312,000 square feet in Hudson Commons at 441 Ninth Ave. A Newmark brochure says the interconnected fourth and fifth floors are fully furnished and wired on a lease until 2035.

Exterior of the Platoon building.
Peloton hopes to unload a third of its space at Hudson Commons.
Erik Pendzich/Shutterstock

According to Colliers, the amount of sublease space has increased by 66% compared to March 2020, when the pandemic began.

“It’s gotten tighter, but there’s still a ways to go,” said Michael Cohen, president of the Colliers Tri-State Area, as the amount of sublease space was down slightly in August.

“You still have significant tenants putting space on the market and for each of them construction costs will play a significant role,” said Gabe Marans of Savills, a firm that only represents tenants.

Marans says companies must weigh staying in their own, sometimes 10-year-old offices, building new space at a cost of $400 per foot, or taking someone else’s space through a less sublease. expensive and save $300 per foot.

“One consideration is both the cost and the time it takes to build and therefore he prioritizes space already built as a quality sublet or where the landlord has pre-builds,” Marans said.

Additionally, Marans warned that while most building owners can build the majority of spaces faster and cheaper than tenants, construction still takes up to twice as long compared to before. that supply chains do not go haywire.

New York Post

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