According to Bloomberg and other national news sources focused on major business stories, supply and demand is telling an instructive tell when it comes to New York City’s Downtown commercial office space.
The reported bottom line: Big-time landlords dependent on inking lucrative lease deals are sweating, with company principals seeking coveted business space at increasingly attractive prices being elated with their current prospects.
The present spells “a great opportunity for a tenant,” says a leasing principal with one prominent development company.
Industry commentators point to a near perfect storm of coalescing factors in the commercial realm that they say are currently favoring companies looking for ever-cheaper commercial space in Lower Manhattan.
For starters, office space is growing by many millions of square feet. All that availability is favoring select would-be tenants as they negotiate for optimal lease terms.
Moreover, it is enticing many of those tenants to surrender square footage they already lease, opting to sublet it out to other business players. That leaves them, Bloomberg states, “competing with their own landlords and threatening to undercut rents.”
And they’re winning, notes one analyst, because, sublet premises are “usually priced at a discount to direct space.” Landlords seeking tenants for regular leases often need to offer rent-free periods, modify lease space for a tenant’s particular needs and make other concessions. Already existing “well-built space” available via a sublease can often be scored as a comparative discount.
Although some commentators are flatly warning that the huge amount of sublease space is a truly bad omen for landlords and downtown developers, their view is not uniformly endorsed.
“This is not a war,” says one. He stresses that “everyone is going to succeed as long as New York City is growing.”
And there is no question that – at least so far as major Downtown commercial properties are concerned – the metro is definitely growing.