Sublessors are often looking to lease out all or part of a space that is already under a lease obligation and as a result, they offer a discount relative to market rent.
Over the past three years, subtenants in Manhattan were paying between 5% and 14% below direct lease rents, on average. During the same period, rents for office space in Manhattan kept on climbing, most significantly in Midtown South. In the past year, subtenants in Midtown and Midtown South were paying rents that were 13% and 17% lower than the direct lease rent. These discounts were steeper than the three-year average discounts for the two submarkets (5% and 14% , respectively.)
On the other hand, subtenants Downtown received, on average, a minor discount of only 3%, much lower than the three-year average Downtown discount of 9%. The explanation can be attributed to the wide range of rents that are offered in Midtown and Midtown South, as opposed to more unified rent level downtown. Subtenants looking for a sublease in Midtown and Midtown South enjoy a variety of options, giving them more room for negotiation.