Subleasing a space sounds like a great deal, right? Find a furnished space and move-in. Although subleasing a space sounds simple and straightforward, it is not. There are many factors to consider when entering into a sublease. A sublease will contain more paperwork than a standard lease. It will include the sublease, the original lease and addendums, and the landlord’s consentdocument.

You need to be cautious, and having a qualified a commercial real estate broker at your side will immediately give you an advantage. Your sublease is contingent on the sublessor’s original lease and it needs to be thoroughly reviewed by a professional. They have the experience to understand the documents needed for a sublease transaction and can walk you through the process.

There are many reasons a company chooses to sublease their space. They may have downsized and are trying to cut costs by subleasing the space they no longer need, or they could be outgrowing their space and the landlord is not able to accommodate them in their current space. If there is enough term left it would make sense for them to sublease rather than pay earlier termination fees. Either way, you will probably get a below market deal.

Pros

• Lower rate – sublessors are motivated to get some cash flow
• Shorter term
• Less commitment
• Most subleases are move-in ready and might contain furniture
• Smaller spaces (which is ideal for start-ups or smaller firms who want to control their costs)
• If the sublessor is still on-site and you are just leasing a portion of their space you may be able to negotiate shared services (copier, break room, conference rooms)
• Monthly costs tend to be a flat fee that covers rent and CAM charges (no unexpected expenses)

Cons

• You will be limited by zoning restrictions for the area
• Limited or no exterior signage
• You probably won’t be able to alter the space
• Bad lease deal can be passed onto you. A thorough review of the original lease and the sublease by an attorney can help avoid this.
• If sublessor defaults and gets evicted, you may get evicted too. Or the landlord could ask you to pay the full rate the sublessor was paying.
• Delays in maintenance. You may not be able to go directly to the landlord-you might have to go through the sublessor. And this could cause delays.

Deciding whether or not to sublease is a big decision and there are many factors to consider.  We can help you navigate through unfamiliar territory.  Contact us today and we can help you get started.