Fire Sale on Park Avenue

NYT explains:

Financial companies are trying to sublet space that they are no longer using in some of the most desirable office buildings in Midtown Manhattan, and the rents they are asking are heavily discounted compared with what landlords are seeking for similar space across the street — or even in the same buildings.

It started last fall, during the financial turmoil that was unleashed after Lehman Brothers collapsed. Many large financial companies dumped hundreds of thousands of square feet on the sublet market, with much of that space in prime Midtown locales near Grand Central Terminal, Rockefeller Center and the Plaza Hotel. Now, the sublet space that is still on the market is being offered at rents much lower than rents for space that can be leased directly from landlords in the same submarkets...

On average, the owners of Class A buildings in Midtown Manhattan are now asking $72.03 a square foot, compared with $55.68 for comparable sublet space, according to Cushman & Wakefield. So tenants willing to sublet can get a 22.7 percent discount in Midtown.

The discount was 12.6 percent a year ago. Last fall, landlords were asking $95.62 a square foot, on average, for Class A space in Midtown, while similar sublets went for $83.06.

There can be no signal as clear that commercial real estate is in trouble in NYC.