CompStat: Sublease Recovery, Declining Imports, and Bridge Logistics’ LA Buy

SKIP AHEAD TO:

• OFFICE: Sublease Availability Finally Declining in Another Early but Positive Sign for  Office Market Recovery
• INDUSTRIAL: Bridge Logistics’ Properties LA County Industrial Buy Shows Value in Bulk Properties Despite Limited Near-Term Rent Growth
• RETAIL: Chicago Retail Owners See Advantage With Service-Oriented Tenants Driving Higher Rents

Economic Updates

Tariffs and Trade:

• New 2025 tariffs are clearly weighing on trade, with total U.S. imports declining month-over-month and year-over-year to $340B, and goods imports registering their steepest annual drop since late 2023. Imports from China remain near early-pandemic lows, reinforcing how sharply tariffs have dampened shipping activity.
• The Port of Los Angeles remained the nation’s busiest gateway in August following its record July, while Savannah posted its third-busiest month ever with a 9% year-over-year increase, signaling that East Coast and Gulf Coast diversion patterns remain strong despite trade softening.

Labor Market Conditions:

• The delayed September jobs report showed stronger-than-expected hiring, but the unemployment rate rose to 4.4%, the highest since 2021, indicating that labor market cooling is becoming more visible. Initial jobless claims in November averaged 225,667 per week, slightly below October but higher than a year ago.

Consumer Sentiment and Spending:

• Consumer sentiment continued to deteriorate, falling for the fourth straight month to its lowest level since mid-2022, reflecting growing concerns about affordability heading into the holiday season. Even so, real retail and food services sales rose 0.2% in August, marking a third consecutive monthly increase.
• The National Retail Federation is projecting that 2025 total holiday retail sales (November and December) will be up between 3.7% and 4.2% year over year, in a view that expects that U.S. consumers will continue to spend despite cautious sentiment about the economy overall.

Federal Reserve Policy:

• The Federal Reserve delivered another quarter-point rate cut in October, but policymakers remain divided on the path ahead, and the lack of updated data due to the federal shutdown may complicate decisions at the December meeting. 

See the full economic updates here.

OFFICE: Sublease Availability Finally Declining in Another Early but Positive Sign for  Office Market Recovery

Recent office market reports indicate that sublease availability is finally on a steady downward path. According to CBRE’s Q3 2025 national office market report, sublease availability fell year over year at its fastest pace since before the pandemic, a notable shift for one of the most challenged segments of the office market. However, even with this progress, sublease availability still remains roughly three times higher than the total square footage available in Q1 2020. 

Manhattan’s office market is showing even clearer signs of improvement in this area. Transwestern data shows that available sublease space fell to approximately 11.8 million square feet in Q3 2025, dipping below 2019 levels. This marks a dramatic contraction from the peak of roughly 23 million square feet in early 2023, when subleases accounted for nearly a quarter of all available office space. The recent rebound has been driven by leasing activity as well as lease expirations and withdrawals. This is likely welcome news for office landlords and owners: sublease space has traditionally competed aggressively with direct space because it typically offers lower rents, shorter terms, and faster occupancy options.

CompStak data reinforces just how competitive these deals have been in recent years. In an analysis of completed subleases of 75,000 square feet or larger since early 2022, sublessees secured meaningful rent discounts relative to the original leases. On average, the sublessor’s effective rent was 49.4% higher than the sublessee’s effective rent, while starting rents were 31.3% higher in the original deal. Generous concessions also played a role: the average sublease completed since 2022 spanned 90.8 months and included 14.7% of the term as free rent. Notable discounted sublease deals completed include American Eagle Outfitters’ 162,291-square-foot sublease from CBS at 63 Madison Avenue and Mizuho Financial’s 151,409-square-foot sublease from UBS at 1285 Avenue of the Americas.

INDUSTRIAL: Bridge Logistics’ LA County Industrial Acquisition Shows Value in Bulk Properties Despite Limited Near-Term Rent Growth

Bridge Logistics Properties, the industrial arm of Bridge Investment Group, has acquired two fully leased warehouses in the City of Industry for $109 million, totaling 450,000 square feet, according to Commercial Observer. Sold by Blackstone’s Link Logistics, the San Jose 2-Pack, consisting of 18305 San Jose Avenue and 18501 San Jose Avenue, sits in the competitive San Gabriel Valley, where industrial vacancies are just 2.4 percent and limited new development is driving strong rent growth. The total price far exceeded the Los Angeles County market average for bulk industrial properties of 150,000 square feet and above in 2025 of roughly $73.1 million. The $242 per square foot price came in below the Los Angeles County average of $253 per square foot, according to CompStak data, suggesting BLP secured efficient pricing for a large portfolio. With tight supply and strong tenant demand, the deal strengthens BLP’s footprint and positions the company for both immediate income and long-term value creation, according to Commercial Observer. For buildings of 150,000 square feet or larger in Los Angeles County, the current property market rent estimate for industrial space (what CompStak estimates industrial space would rent for today) currently outpaces the current rent in-place by 9.5%, indicating that near-term rental rate growth for industrial buildings of this size and geography may be limited. Overall, the starting rent for industrial leases completed in buildings of 150,000 square feet or larger is up 2.6% year-over-year comparison but up nearly 67% from 2019.

https://infogram.com/industrial-la-county-start-rentbulk112525-1h1749wqx3oql2z

RETAIL: Chicago Retail Owners See Advantage With Service-Oriented Tenants Driving Higher Rents

Chicago’s neighborhood retail market is thriving as necessity-based tenants breathe new life into smaller strip centers once considered outdated, according to REJournals. Necessity-based retail generally describes centers dominated by tenants that provide everyday goods and essential services,  such as groceries, health and wellness providers, personal care, and routine services, rather than retailers focused on discretionary or big-box shopping.

Vacancy rates have dropped to a near 30-year low of 4.9 percent, driven by demand for everyday services such as restaurants, salons, barbershops, cosmetology, pet service, and sports and recreation tenants. CompStak data shows that average starting rents for necessity retail in 2025 reached $21.55 per square foot in the Chicago metro market, slightly above all other retail at $21.20 per square foot, suggesting a slight market premium for tenants in these industries and owners of such spaces. Necessity retail experienced significantly higher growth compared with all other retail in 2021 and 2022, most dramatically in 2022 when it grew 16.27% while all other retail fell 42.88%, demonstrating resilience. For much of the period from 2019 to 2025, necessity-based retail starting rents have remained above those of other retail. For owners, this makes these space users attractive tenants in a tight market.