Subleases spike in number as SF startups downsize | Hacker News Reader

Subleases spike in number as SF startups downsize

techcrunch.com

48 pointsdismal212 comments

It 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.

Right. 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.

One 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.

I 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_...

This article is over 2 weeks old now

Has the situation changed in 2 weeks?

Totally fine now. The invisible hand did its thing.

The magic market fairy gave me another unicorn.

Is there any noticeable impact on the residential rental market though? My assumption now is that demand will still far outstrip supply.

Whatever slack is created by tech workers no longer in the residential market will be picked up by Chinese buyers searching for safe asset havens.

Too bad Ireland can't get back in the game there to take off the pressure.

Seriously. I love Dublin compared to SF (or even the more rural parts are nice as well).

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