Project Description

Subleasing Commercial Spaces

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There are pros and cons of subleasing commercial spaces. To get the most out of subleasing, its best to shop around, always make a counter offer, and make sure you carefully go over the sublease and even the sub lessor’s original lease.

Here are the advantages of subleasing:

  • Cheaper and Easier to Get: Subleased spaces are usually more affordable than a standard commercial lease and it may be easier to qualify for a sublease rather than for an exclusive lease.
  • Starting Small: You can rent just the space you need. If your business is small and you only need six hundred square feet, you can find more options in the subleasing arena.
  • Less Complications: Subleases are generally simpler and easier to understand than other types of commercial leases. However, subleases are still legally binding and are also contingent on the original lease. One should consider having an attorney or broker view the sub lessor’s original lease, as well as the sublease before signing.
  • Ready to Occupy: Subleased spaces are usually finished so you will not have to worry about upgrades, build-outs, and moving headaches.
  • Common Area Usage: Subleased spaces can provide access to reception areas, break rooms, conference rooms, storage, and other shared spaces at a reduced cost, or, in some cases for free.
  • Amenities: Subleased spaces are part of a larger area, therefore you may not have to pay for alarm systems or Internet access if the space is already set up for these things.
  • Option to Take Space Entirely: If the sub lessor wants to move before their lease is up, they may be able to sublease the entire space to you. This can make obtaining larger spaces easier to qualify for if you have a relationship with the sub lessor. Should you wish to keep the space after the original lease has expired, you’ll be in a better position to negotiate your own lease with the actual landlord.
  • No CAM or Other Fees: In a typical sublease, you are responsible for damages you cause, but your sublessor (or their landlord) is usually required to repair and maintain common areas. Usually subleases are fully serviced leases with a flat rent. This can make budgeting easier.
  • Networking: If you work alone, you may benefit from subleasing space if you partner with someone in a similar industry. You may get business or client referrals, as well as access to resources and a person to talk shop with.
  • Administrative Support: If the space is shared, and you are not around, other sub lessees or employees of the sublessor may be able to answer phones, receive mail and packages, or greet unexpected visitors. If you ask for these services you may need to pay, but you won’t have to be married to the office all day just to get a package.
  • Services: Many sublessees are able to negotiate leases that let them access the sublessor’s photocopier or other office technology so they have less equipment to obtain.

The disadvantages of subleasing are usually logistical or legal. To mitigate your legal exposure, and protect your rights as a sub lessee, have an attorney review your sublease and the original lease before signing. Here are the disadvantages of subleasing:

  • Less than favorable lease terms can be inherited by you. If the sub lessor negotiated a bad deal with the landlord, they may pass certain fees and higher rents to you. Be sure to read both the sublease and original lease and compare your sublease terms to other comparable rents in similar spaces. This is a reason why you should look at as many other spaces as you can before deciding on a space.
  • Default by Sub lessor: If your sub lessor defaults, it could affect your sublease. You can handle this by including in your sublease, rights to recover costs and damages if you are evicted because of the sub lessor defaulting.
  • Not Your Own Space: This could affect exterior/interior signs, advertising, or present a small business feel to clients who come to your space. This is why it is helpful to sublease from someone in the same industry. For instance, an attorney should look to sublease from another attorney if they are sharing space. By aligning with other similar occupations, it can help change the small business atmosphere to the appearance of a larger one.
  • Delay in Services: If you need fixes to the property or other services provided by the landlord, you may have to go through the sub lessor to address it. This can result in delays to problems being remedied and can complicate legal action for unresolved problems.
  • Limited Design Options: Your sub lessor decides how to design the space and you have little to no say.

Subleasing offers new and smaller business owners a cheaper and easier way to get an office space. The access it provides at a lower cost makes sub-leasing an excellent choice for certain tenants.