Sublease Space – Another Great Way to Occupy

Here’s a great article that summarizes subleasing perfectly:

Sublease Space: Another Way to Occupy

By Don Catalano

Like many things, leasing office space involves a trade off. If you want the flexibility of a short lease, you usually have to pay more. Conversely, if you want to save money now, you have to commit to a longer-term lease which could mean that you have to pay for space that doesn’t work in the future. But what if there was another way?

 

Enter sublease space. When a tenant vacates a space before their lease ends, they are usually still going to be responsible for paying for that space. One way to help mitigate those costs is to find another tenant — a subtenant — to take over the space, pay them (the original tenant) and help them offset their original lease cost.

Being a Sublease Tenant

Being a sublease tenant is just like being a regular tenant. You get a space. You get the keys and control over it. And you get all of the protections of the original lease — based on what is written in that lease. It’s your space for as long as the lease lasts.

Finding sublease space isn’t hard. Sometimes the leasing broker for a building will also have sublease space. Other times, the sublease will be advertised through a different broker. In either case, your tenant representative can search for sublease space.

 

What You Give Up

Choosing already-leased space isn’t without its trade offs. Since you are taking over an existing space, you get that space on the terms that are in place. So, if the initial lease was five years, and the original tenant stayed through half of it, you would end up with a two-and-a-half year lease. You also usually won’t get much, if any, money towards tenant improvements. After all, the original tenant used that money for their build out.

While you get the space to yourself, the original tenant is still involved. Sometimes, you’ll pay your rent to them. This means that you take on some risk if they don’t turn around and pay the landlord. Some leases also cancel renewal options, so you might not be able to keep subleasing the space on the same terms after the initial lease expires.

 

Why Do It

Being a subtenant has two key benefits. The first is that it might be the only way that you can get into an otherwise full building. Just because every space is leased doesn’t mean that there aren’t tenants that need to move, shrink or expand.

 

The second benefit is that subleasing is frequently less expensive than directly leasing space. The space is already built out, so if it suits your needs, you get the benefit of the tenant improvements without having to pay in for them. In addition, since the existing tenant has to absorb the entire cost of the unused space, they are usually motivated to work with you get you in and covering at least some of their occupancy costs as quickly as possible.

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