4 Market Shifts We Saw in 2023
We’re not saying office leasing market shifts broke the internet nearly as much as other 2023 headlines (Taylor Swift’s new boyfriend, anyone?) but 2023 saw a lot of new and relevant shifts that will impact you as you make office space decisions in 2024.
Landlords are competing with a hot sublease market by offering short terms, full builds at their expense, and furniture included.
Subleases and coworking aren’t the only options for "plug and play” space in NYC anymore. With direct spaces sitting on the market for months, many landlords have pivoted to attract tenants with short terms, full builds at no cost to the tenant, and furniture included. Some will even go the extra mile to buy you out of your existing lease, cover IT expenses or pay for your move.
Why does this matter to you? If you’re like most tenants in the market and looking for ready to go space, you don’t have to narrow your search only to subleases (especially important now when sublease space is scarce). Many direct landlords will do similar deals.
Amenity space has gone from a nice-to-have to a must-have.
“Does the building have amenities?” became a common question with clients for the first time this year. Now that working in the office is no longer a given, decision makers know that enticing talent back to the office means creating an office experience more so than just an office. In: beautifully designed soft seating areas, conference and Board rooms, outdoor terraces and roof decks, fitness centers, golf simulators, bars, and yes, we’ve even seen a gelato machine.
Why does this matter to you? Landlords across NYC are investing hundreds of millions of dollars into their buildings in response to this growing demand. If you’re thinking about how to use office space as a tool to excite your teams about coming back to the office, boost collaboration and creativity and attract top talent, buildings with amenity centers are a great way to do that.
High growth companies are favoring short term subleases > coworking to give their team a better office experience.
For high growth companies, there’s always "the question” – should we take coworking or sublease space? The key drivers are price and flexibility, and many times because coworking offers lower prices for the same amount of people (e.g. cramming more people into a smaller space) and solves for extreme flexibility, it’s often the winner. But this year, with the influx of discounted short-term subleases evening the playing field between the two, we saw many high growth companies favoring short term subleases instead, citing that having their own space was important to their teams to boost collaboration and creativity while in the office.
Law firms led the charge in taking space in 2023.
In recent years, it’s been all about tech gobbling up space in the NYC market. This year, law firms led the way in taking the most amount of space, with Kramer Levin leading the way at 765,000 square feet, while tech companies like Meta have significantly decreased their footprint and others like Spotify, Twitter and Microsoft are actively subleasing part of their space.
Why does this matter to you?
If you’re not a law firm: As of now, more than 33% of available sublease space in Manhattan comes from technology and creative companies – and sublease space is dwindling. If you’re looking for creative tech space to excite your team without high space costs, you’ll want to start the search now before the competition swoops in.
If you’re a law firm: many of the law firm deals this year were large companies taking large spaces; if you’re a law firm looking for 20,000 square feet or less, landlords holding on to office intensive spaces in this size range are eager to make discounted deals and save the up-front costs of transforming their spaces.