12 Questions to Ask When Leasing Office Space
Whether you’re navigating the office space market for the first time or you’ve moved your business before, it’s crucial that you ask the right questions throughout the leasing process to... Read More
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February 3, 2020 | by
Reviewed by real estate expert Jonathan Wasserstrum
If you’re renting office space but not using all of it for your business, why let it go to waste? Much like apartment renters use Airbnb to rent out their extra rooms, businesses can sublease office space for extra money.
Why should your business consider subleasing office space? Under a typical leasing situation, you as the tenant rent the space from the landlord. When you sublease your office space, you become a sublessor, and those renting from you become your subtenants. The subtenants sign an agreement with you and pay you the rent directly. Then you pay the entire rent to the landlord. Businesses choose to sublease some or all of their office space for many reasons, mostly revolving around trying to avoid breaking their current lease and paying the associated costs (usually losing your security deposit and paying an additional fee). Entrepreneurs, freelancers, startups and small companies are usually the ones looking to sublease properties because they don’t need or can’t afford to rent an entire office space outright.
Let’s talk about some common reasons for subleasing office space. And finally, we’ll walk you through the subleasing process. Get ready to start saving money on your rent!
Reason #1: You have space you’re not going to use. This is the most straightforward reason to sublease. Maybe when you first leased the space, the office was just the right size, but you’ve downsized since then. That means you’re paying for space you don’t use. Maybe that was OK for a while, but company sales are down, and you’re hurting for cash. Instead of letting the extra space go to waste, you may choose to find a subtenant to offset the overall rental price.
Reason #2: You have space you don’t need yet. It’s important to choose office space that allows for company growth. That’s why you may find yourself renting a building with extra private offices or usable space that you can’t fill with new employees until a year or so down the road when the company generates more revenue. In this case, you might find some short-term subtenants to help you pay rent until you can afford to hire additional employees.
Reason #3: You need to move to another office. Most leases last at least three to five years. If your company grows faster than expected or you want a change of scenery, you may find yourself considering breaking your lease. However, subleasing your old space to some subtenants while you move into a better space may be a less messy and more cost-effective solution. If you want to avoid the three to five year lease term altogether and instead opt for a flexible, shorter-term office solution, you may benefit from FLEX by SquareFoot.
Before you start subleasing your office space, realize potential drawbacks exist. Read through this list of considerations to make sure subleasing is right for you before you start sharing your workspace.
You’re responsible for damages.
You must ensure subleasing is practical.
Keep privacy in mind.
The office environment could potentially change.
If you have carefully weighed the pros and cons of subleasing and dutifully screened any potential subtenants, you’re well on your way to saving money on rent—and gaining some possibly interesting office neighbors. The bottom line is this: subleasing is a popular way to save money, but always do your homework first.
Don’t go it alone—get assistance finding the right subtenants to share your space. Maybe you need help drafting a sublease that benefits you and your subtenants and covers all of the legal details. Or, perhaps you want suggestions for new office spaces your company can move into while you sublease the old space.
Contact us, and we’ll put you in touch with one of our tenant brokers. We look forward to answering all of your subleasing-related questions.
SquareFoot is a new kind of commercial real estate company. Our easy-to-use technology and responsive team of real estate professionals delivers the most transparent, flexible experience in the market. Get in touch to start your search today.