BOSTON–Boston’s Central Business District and Cambridge are bearing the most fallout from the pandemic’s impact on the market, according to Newmark’s How is Sublease Space Affecting Demand for Direct Office Space?
Newmark report said that sublease listings in Boston-Cambridge had surpassed 5.2 million square feet or 6.8% of office inventory across the two submarkets by the end of 2020.
“The quick signing of sublease spaces is enhancing market momentum, although tenants continue to reassess their space needs for a post-pandemic environment. If more companies decide to reduce their office footprints, sublease availability could increase again in Boston,” the report said.
Over the course of 2020, roughly 480,000 square feet of subleases—or 25.4% of total CBD leasing volume, excluding renewals and extensions—were executed by Boston tenants.
On a percentage basis, this ranks Boston third behind only San Francisco and Manhattan, according to Newmark.
Many Boston tenants are considering sublease space for several reasons – shorter terms, minimal capital output, more favorable economics and flexibility are key factors.
Tenants seeking high-quality sublease space, however, are facing a competitive landscape. Nominally, active office requirements focused on sublease space have risen by 37.1% from June 2020 to February 2021 in Boston’s CBD and now account for 10.5% of total requirements, according to Newmark report.