* Tech tenants finalized
sublease agreements an average of 8.8 months after a space was listed, while non-tech firms took nearly 2.5 months longer on average to acquire their space;
For many landlords, who have seen the phenomenon surge into a major market force over the past two years, the prevalence of
sublease space is the equivalent of competition with an ongoing fire sale.
The dot-com bust has sent
sublease markets soaring.
"I think that the tenant world has become very astute," Turchin said; instead of offering up the back office, tenants looking to
sublease are now offering the most marketable space they can, and they're offering more appropriate terms and build-outs.
The
sublease recognition, subordination and early termination provisions of the ground lease should be carefully reviewed to ensure that the Subtenant's rights are not extinguished upon termination of the ground lease.
Why was there such a vast increase in vacant
sublease space?
Riguardi, president of the New York Region of Jones Lang LaSalle, said the
sublease market would decline this year due to attrition, rather than new leasing activity--the type of
sublease decline that will benefit the market.
According to Krasnow, the most significant impact on vacancy rates throughout 2003--in addition to the surge in
subleases and renewals--was an influx of larger transactions.
Quinn Emanuel Urquhart and Geometry Group both signed for space on the 17th floor, with the term of the
sublease expiring in slightly more than three years.
Exemplifying this trend, we have been marketing three floors of raw space at 535 Fifth Avenue for
sublease. Recently we introduced the option to deliver the premises built according to tenants' specifications.
* Marketing and negotiations by the real estate broker to
sublease the excess space or sell the surplus assets--This portion of the transaction allows the trade credit company to provide the goods and services to improve financial results.
Subleases, thus, fell 2% from June to September to 954,960 SF -- still 18% of all availability.
