This real estate headlines say it all: “Manhattan Office Vacancies Soar to a Record With Leasing Frozen.” And, with many companies uncomfortable asking their employees to return, it has left a massive problem for many of them. What to do with office space you are not using, but are paying for?
For many, the first step was reaching out to their advisors to understand their options, which as you are aware from reading my blogs, started with conversations about this around deferrals, abatements, and in some cases, lease buyouts. In some cases, companies were successful at achieving one of the first two, and in most cases not achieving the latter, inevitably the next question becomes, what is our next move?
Some reports state that available space is more than 19 million square feet, or 25% of all available space, and on its way to exceeding the 2009 highs of 30%. Read here: Manhattan Sublease Space at Record High after 47% Jump!
In my role advising companies with their real estate, I see a lot of sublease space, both from the perspective of tenants looking for opportunities and from tenants looking to sublease their own space. I understand what is important for companies, the questions they inevitably ask, as well as, the pain points associated with their decision-making process.
The first hurdle is getting a tenant to even consider your space. And in most instances, it is their advisor who is reviewing available options first, so you need to make it easy to be found.
So, let’s get down to business. How do you make your sublease stand out?
The Correct Marketing Material
Flyers are crucial and they must have the right information. This includes floorplans, appropriate descriptions of the space including office count, open space count, conference room space and how many it accommodates, and clear pictures of the space. I cannot tell you how many times I have been looking for space for clients and I come across space listed without any information. Creating that hurdle for an advisor creates more of an opportunity to be overlooked and not seriously considered. Make sure to spoon-feed the market the information. Ask your advisor to see what their marketing material looks like and for examples.
Create a Virtual Tour
The current environment has accelerated the demand for virtual showings of space. While a company is unlikely to make a final decision, they are getting more and more comfortable using virtual tours to do their initial search and due diligence. It is frankly more efficient as well. So, make sure your advisor has the technology available to them to create virtual tours. This can take the form of Matterport, VTS, Virtour NYC, Fast Office, or any other number of emerging technologies that capture a space and help a potential tenant feel like they are walking the space without physically being there initially.
Then it is about getting them to see it:
Spruce It Up
Your space may be old, but it does not have to feel that way. A coat of paint and some new carpeting can do wonders. No one wants to feel like they are working in someone else’s space so it is important to do what you can to help them feel like it is fresh and clean. Who does this type of work? Well, a few months ago I sat down with Richard Colucci of Distinctive Offices, an affiliate of Benhar Office Interiors, as the writing was on the wall that this type of service would be in high demand. Have a listen to what he had to say here.
Once they are interested:
Price It Well
Every market is different, and the dynamics vary based upon the time that you decide to list your space. There could be tight supply, there could be a ton of supply. It is important to understand the supply/demand dynamics of the current market that you are in to have a handle on the “competition”, aka the other space that is available in the market. If you price it poorly, it sits and becomes stale, and at some point, the market starts to wonder what is wrong with the space and why it is taking so long, creating more leverage for the potential subtenant, and more importantly, less leverage for you.
I know you are saying this sounds like a lot of heavy lifting and potential headaches. Therefore you should:
Hire an Advisor
I am your outsourced real estate team. I’ll collect all the relevant information, create marketing materials that best represent your space, come in and create a virtual tour so that potential subtenants can consider it. I’ll then survey the market to guide you correctly on pricing, make it my mission to let every tenant in the surrounding area, and other advisors active in the market, know about your opportunity through proactive outreach, and then show your space. Finally, I’ll negotiate the sublease proposals you receive ensuring that you obtain the most favorable terms.
I hope this helps you as you consider the option of subleasing your space, and how you can be most successful in the process. Reach out to me with any questions or if I can help you in any way.