It’s old news now. But if you have been out looking for office space or to renew your existing lease in San Francisco for the 1st time in five or so years, rents are now double. And for some submarkets and product types rents have tripled in that time.
Tenants head to Oakland, they downsize, work more remotely, or just get smaller to take up less space.
But there’s another way to impact the new higher rents. And that’s to be more open to subleasing. Direct rents can run up to $100/rsf/yr. for Class A space. Even Class B space in some of the City’s submarkets run over $70/rsf/yr.
Brokers don’t like to show you sublease space. Just think about the enthusiasm they showed last time you toured a sublease space with them. Very low. Everything was probably wrong about the space.
Why? Well maybe everything was wrong with the sublease space. Or maybe they are hiding the commission impact on you. A 2-year sublease versus a 6-year direct deal means the tenant broker only makes a 1/3 of the fee they would make on a 6-year lease.
So instead of a $250,000 commission (or as we call it, the reason they got in the business), they make $83,000. And that differential can often make everything wrong with a sublease space.
Our company looks differently at subleases, we love them. Rent discounts can be 5, 10, or 25%+ below market rates.
There are currently 27 Class B Subleases between 10,000rsf and 50,000rsf available in the City. Three of them are great subleases for prospective subtenants. One is near California and Battery, has a longer term on it and is asking just over $55/rsf/yr. FS. There’s also a great deal to be had on a 15,000rsf sublease on Townsend. A similar space on Sacramento is asking $59/rsf/yr.
Contact us if you actually want someone to really search hard for the best sublease deals. We love to.