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Subleases spike in number as SF startups downsize
- lquist 11y agoOne data point: we signed a sublease 3 months ago at 18-20% lower than market. This was a 10k+ sqft space in a Class A building in FiDi. Also notable: other subleases at the time were ~10% off.
- samcheng 11y agoI don't know your particular situation, but if your master tenant signed their lease a few years ago, 20% under market rate could still represent a good outcome for both parties. After all, commercial rates have roughly doubled since 2010. (See link below) For sub-leases in particular, other (non-monetary) factors are important, for example willingness of the sub-tenant to vacate at certain timetables, sub-tenant palatability to the landlord, and existing prior relationships with the master tenant. http://my.paragon-re.com/Docs/General/SixtyFortyImages/7-15_Invest_SF_Office-Rents_by-Qtr.jpg http://my.paragon-re.com/Docs/General/SixtyFortyImages/7-15_...
- shostack 11y agoIs there any noticeable impact on the residential rental market though? My assumption now is that demand will still far outstrip supply.
- toomuchtodo 11y agoWhatever slack is created by tech workers no longer in the residential market will be picked up by Chinese buyers searching for safe asset havens.
- astrodust 11y agoToo bad Ireland can't get back in the game there to take off the pressure.
- toomuchtodo 11y agoSeriously. I love Dublin compared to SF (or even the more rural parts are nice as well).
- jorts 11y agoIt may not all be doom and gloom. Landlords have been forcing long term leases (7 years+) on tenants to get space in the city. Once a company outgrows that space they're still on the line for that lease, so they sublease it out and not at a major discount.
- samcheng 11y agoRight. In fact, last year at least, many companies were able to profit on their subleases, as the long-term (4+ year) lease was at a lower rate than the going price. Another common situation is landlords happy to terminate a couple-year-old lease, because they know they can easily get a higher rate on the open market.
- ylhert 11y agoThis article is over 2 weeks old now