Reduce Overhead Costs with Commercial Subleasing and Short-Term Leases

For many companies, the traditional 10-year lease model no longer aligns with their evolving space needs. Instead, businesses are using subleases to secure premium office space at reduced rates while also embracing shorter leases and flexible workspace options to maintain agility.

Below, we will explore how leaders are navigating today’s office market by leveraging sublease availability and hybrid-friendly lease structures.

Leveraging the Sublease Market for Premium Space at Lower Cost 

One outcome of widespread downsizing is a flood of sublease space hitting the market – and savvy businesses are taking advantage. Subleasing (leasing space from the current tenant, not the landlord) has become a key strategy for firms seeking high-quality offices at discounted costs. Here are 5 ways the sublease trend is impacting organizations: 

1. Abundant Options (Peak and Decline)  

After 2020, many companies put large blocks of unused space up for sublease, driving sublease availability to record highs in 2021–2023. For instance, major tech firms like Meta and Google listed excess campuses to cut expenses, contributing to tens of millions of square feet of sublease supply nationwide. By mid-2024, U.S. sublease availability was more than double pre-pandemic levels (over 95 MSF in top markets, vs. ~45 MSF in 2019). This gave businesses unprecedented choice to pick up second-hand space.  

Recently, as some subleases expired or got withdrawn, the tide has started to turn – nearly 80% of U.S. markets saw sublease volumes decline in the past year. Much of the best space was quickly absorbed by new occupiers, and fewer new subleases are coming online in 2024. Still, sublease availability remains elevated overall, and continues to offer opportunities for cost savings through 2025. 

2. Discounted Rents 

The big appeal of sublease space is below-market rents. Companies shedding space are often willing to sublease it out at a loss just to recover some rent, which translates into bargain rates for subtenants. Nationwide, sublease asking rents can be anywhere from 10%–50% lower than the same space would cost via a direct lease from the landlord, depending on the urgency of the original tenant. This means a organization can potentially occupy a Class A office for a Class B price by taking over another firm’s lease obligation.

Cost-conscious companies leverage subleases to secure prime locations and fit-outs that might otherwise be beyond their budget. In some markets, the availability of sublease space has given smaller firms entry to prestigious buildings that only big corporations could afford pre-COVID. 

3. Plug-and-Play & Shorter Terms 

Subleased offices are typically “plug-and-play” – already built-out and furnished by the prior occupant – which saves the incoming company on upfront buildout costs. Many subleases also come with shorter remaining terms (perhaps 1–3 years left on the lease), aligning well with companies’ desire for flexibility. Tenants can test out a space or market without a long commitment.  

This flexibility, combined with lower rent, makes subleasing very attractive in uncertain times. For instance, a startup might sublease a few thousand square feet in a Class A tower for 2 years at a low rate, rather than signing a 7-year direct lease. If headcount needs change, they aren’t locked in for a decade. Subleases have thus become a useful tool for businesses to scale up or down quickly. 

4. High-Quality Space on the Sublease Market 

Importantly, many of the sublease availabilities are in trophy and Class A buildings – space originally leased by major firms in top-tier properties. JLL reported that in Q2 2024, “higher-quality subleases have attracted new tenants quickly,” noting that 75%+ of subleases signed that quarter were for space listed in 2023/2024 (recently vacated, presumably high-quality offerings). In other words, when a desirable office space hits the sublease market, companies are jumping on it.  

Subleases are effectively allowing a “back door” into premium buildings: businesses can assume space from someone else and benefit from existing buildouts (like polished interiors, conference facilities, etc.) without paying full freight. In markets like Columbia, SC, brokers observed that the sublease inventory gave tenants “a lower-priced leasing option for higher quality space,” directly filling the gap in quality supply. 

5. Using Subleases to Offset Costs 

Many companies are listing portions of their offices for sublease to cut overhead. This is especially true for firms that signed large leases pre-pandemic and then adopted hybrid work, leaving them with too much space. Rather than continue paying for empties, subleasing can recoup some cost and avoid the penalties of breaking the lease.  

While finding a subtenant can be challenging in a soft market (and often requires offering that bargain rent), success means the firm effectively shares its rent burden. In practice, we’ve seen Fortune 500 companies sublease entire floors or satellite offices, using the savings to focus spend on their primary, utilized spaces.  

Bottom line: the robust sublease market has been a win-win for cost management – companies with surplus space can offload it, and others in need can lease upmarket space on the cheap. As long as sublease supply remains available, it will continue to be leveraged as a cost-efficient path to quality offices. 

Flexible Lease Structures: Short-Term Leases, Co-working, and Hybrid Solutions 

Uncertainty about future space needs and the rise of hybrid work have also driven companies to pursue more flexible leasing arrangements than the traditional 10-year office lease. Key trends on this front include: 

Shorter Lease Terms 

Companies are hesitant to commit long-term, given the fast-evolving workplace norms. Many office occupiers are signing shorter leases or temporary extensions. In the U.S. during 2023, the average term length for new office leases dropped to around 5–6 years (roughly 60–74 months) , which is notably shorter than historical norms. Renewals, in particular, skew shorter as businesses often roll forward for just a couple of years while “wait-and-see” on market conditions.

Growth of Co-working & Hybrid 

Another major development is the surge in demand for flexible workspace solutions (co-working centers, serviced offices, and other on-demand space). During and after the pandemic, many companies that gave up conventional offices turned to providers like WeWork, Industrious, and others for ready-to-use offices and meeting space. Even larger enterprises are using co-working memberships to complement their core office: for example, allowing remote employees access to a network of flex offices or establishing project teams in a co-working hub for a few months.  

Portfolio strategy is changing – real estate directors plan to maintain a smaller permanent footprint and fill in needs with flexible options as necessary. Drivers of this shift include the continued prevalence of hybrid work, the need to scale space up or down quickly, and cost-effectiveness (flex space often operates on a pay-per-use or short-term contract basis).  Co-working also offers the benefit of turnkey amenities – office goers can enjoy high-quality workspace (with shared lounges, coffee bars, conference facilities, etc.) without investing capital or signing long leases. As a result, the flex office market is growing: global co-working locations are projected to reach ~42,000 by end of 2024, and flexible office demand was up ~13% in the first half of 2024 versus the prior year. We’re seeing landlords respond by integrating flex offerings in their buildings (either partnering with providers or creating their own spec-suite and shared space programs) to cater to this preference. 

Landlords are responding by integrating hybrid-friendly flex offerings in their buildings, either partnering with providers or creating their own spec-suite and shared space programs to cater to this evolving preference. Many are also designing spaces that support seamless transitions between in-office and remote work, ensuring companies can adapt their footprint without long-term commitments. 

Conclusion

With rising real estate costs and shifting workplace trends, businesses are seeking smarter leasing strategies to maintain a high-quality office environment without unnecessary expenses. Subleasing and short-term leases offer the flexibility to adapt, scale, and save, giving companies the ability to stay agile in an unpredictable market.