Can Sub-leasing an Office be a Good Idea?
Posted on August 30th, 2011 by admin
Can Sub-Leasing an Office Be a Good Idea?
The sublease market has been one of the few ‘growth’ opportunities in the office sector during the past few years. In most cases, the reason sublease office space becomes available has nothing to do with the real estate market. Most likely a company has decided to downsize, change geographic locations, sell off divisions or subsidiaries, or otherwise restructure company operations.
A sublease can offer solutions for both tenants seeking office space as well as tenants looking to be out from under a lease.
For a tenant looking for an office, subleases can:
- Offer space at a deeply discounted price.
- Allow tenants a short term lease.
- Provide tenants with the opportunity to rent high-end space at lower than average prices. For example: Say a tenant wants a 5 year term in a building that costs $20/sq.ft/yr. If the tenant finds a 2.5 year sublease in that building at $10/sq.ft./yr and negotiates an additional 2.5 year term, they pay an average of $15/sq.ft/yr. That’s a $5/sq.ft discount and a huge costs savings!
- Subleases often can provide furniture and data systems either in the price of the rent or at a steep discount.
- Utilities can often be negotiated into a sublease.
For the lease-holder tenant, subleases can:
- Provide financial reflief from the full expense of the lease.
- Allow a downsizing opportunity.
- Provide the tenant an option to relocate.
- Offer a solution for a quick dispense of furniture and equipment that may otherwise be difficult, expensive or time consuming to hold or sell.
- Allow the tenant a way to maintain a good relationship with the landlord and prevent any legal issues from arising.
If you are either a tenant seeking an office, or a tenant looking to sublease space, contact Olivia Czyzynski and Kevin Baran to help you. They can provide a search of all available subleases in the market place and help you negotiate beyond the sublease term if such an option is of interest; or they can help you professionally market the space you have avaialble for lease.
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