Manhattan sublet availability may be nearing its peak, Savills report says. Here's who listed office space in Q1.

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JPMorgan Chase, PricewaterhouseCoopers and Related Cos. were among the companies that put blocks of Manhattan office space up for sublet in the first quarter this year.

That's according to a new report from real estate service provider Savills.

About 22 million square feet of office space was available for sublet in Manhattan as of Q1, according to the report, representing more than 27% of all available space. In the past year, available sublease space increased almost 62%.

Soon, the pace of new sublease space hitting the market may slow down as companies start going back to the office, wrote Savills report author Danny Mangru, research director for the New York and tri-state region.

"With many organizations planning to return to their offices in late 2021, sublease availability is likely nearing its peak. Given the current success of the vaccine rollout, some occupiers may decide to re-occupy their space rather that dispose of it," Mangru wrote.

Manhattan already had a large amount of sublet space available before the Covid-19 pandemic hit the city hard in mid-March 2020. Listings have only increased since, with more than 60 blocks of sublease space of at least 50,000 square feet added to the market from Q2 2020 through Q1 2021, according to the report.

But subleases aren't in high demand with tenants — the deals account for about 11% of all leasing activity, the report said.

Technology, advertising, media and information industry tenants accounted for 39% of the new and expected sublet blocks listed in the first quarter. Financial services and insurance companies represented 25%.

Most of Manhattan's office workers are still working remotely amid the pandemic. Office buildings in the New York metro area had an occupancy rate of about 14% as of March 24, according to an analysis of building access data from Kastle Systems, which provides security for 2,600 buildings across the country.

Companies in the meantime have been re-evaluating what the office of the future will look like and what their space needs will be.

Large Manhattan employers have said they expect about 45% of their workers to be back in the office by September, according to a recent survey by the Partnership for New York City. Even then, though, it's unlikely everyone will be back in-person for the full week — the majority of those employers said they plan to implement a hybrid model where employees work some days in the office and some at home.


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