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Manhattan’s availability at highest level in decades; $57.3 billion worth of inventory potentially up for repricing or repurposing
In the fourth quarter, the rapid addition of both direct and sublease space pushed overall market availability to 15.1%, up 400 basis points over the year. With office properties trading at a market average of $837 per square foot (psf) during the fiscal year preceding COVID-19, and 68.4 million square feet (msf) of space currently available, a potential $57.3 billion worth of office space may need to be repurposed to fit current tenant demands or have rental rates marked-to-market in order to relet in the current environment. A shift to further flexibility is undeniable. Even before the pandemic's onset, occupiers were focused on incorporating a flexible range of workplace product offerings and locations for agility and resilience, estimated at 10%30% of total space needs. With surging sublease space (18.6 msf currently available), occupiers will be able to further leverage an abundance of shorter-and flexible-term options, as well as opportunities to explore premium product at a discount. Owners with abundant direct availability will need to find a way to compete.