Question-and-Answer Session
Operator
(Operator instructions). Your first question comes from Chris Kessen [ph] from Morgan Stanley.
Chris Kessen – Morgan Stanley
Good morning. Thanks for commentary on the leasing environment and on the economy. I’d like to ask you to drill in, if you could, on the competitive environment and specifically sub-leasing activity. Looking through brokers' reports, it looks like subleasing hasn't really meaningfully – submarket leasing vacancies hasn't really meaningfully improved into the third quarter. I'm wondering how competitive you see that. Looking across Boston, do you see those levels are still elevated and how do you see that unfolding into 2010?
Doug Linde
I guess, unfortunately, this is going to be sort of a self-fulfilling answer to your question. But much of the subleasing activity that or space that is available in the markets we are in is probably not as competitive with our product and our tenants as you would sort of think of from a big-picture perspective. The type of tenant who's looking to do a lease in a building like ours in Midtown Manhattan is probably looking to do a minimum of a 10-year lease. Hopefully, they do a 15 and maybe a 20-year lease.
The capital associated with doing those type of transactions is pretty significant and they are probably not able to get a landlord to provide a stub on top of a sublet. Now, there may be a particular instance where there is a seven or an eight-year sublet from a financial institution or a law firm where they can go in and they can sort of live in that space for a period of time and then say they will make another decision.
But for the most part, the tenants that we are leasing to are tenants who have much longer-term perspectives than that. That's not to say that the sublet market isn’t – it doesn't have an impact on the market; it clearly does. Sublet rents are generally 15% to 20% lower than direct landlord competitive rents. I would say, as a gross generalization, the smallest of tenant the more options there are in the sublet as well as the tenants that are less interested in having their real estate be a key component to retain and recruit their employees are more interested in sublet space because they're looking for a deal and they are prepared to potentially be more migrant users of space as opposed to people who want to have that space on a long-term basis.
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