Making Deals Work

One of the lesser used metrics of a market’s overall office fundamentals is the level of discount that sublease space needs to be reduced in order to compete with direct space, says Younger Partners Director of Research Steve Triolet.

This discount rate can vary dramatically by submarket, with the overall vacancy and the number of large blocks of space (both direct and sublease) having the greatest impact, which is most evident in both the Dallas CBD and Fort Worth CBD.  In the Dallas CBD, for example, the total vacancy rate is 22.2% and there are several large blocks of space available, one of the largest being a 570,000-square-foot sublease at Energy Plaza for $9.50 (FSG) per SF.  This is a 62% discount below the average CBD direct asking rate for direct space.