Subleasing is when a company signs a commercial lease for office space that is already leased to another company. Commercial office sublease are common when tenants have more space than they need, but do not want to permanently downsize or give up this space. Although a sublease that is arranged through an experienced commercial lease company can offer many benefits if your company is seeking a smaller space, there are some downsides to be aware of as well.
The Pros of A Commercial Sublease
Subleases are a great option if your company is in need of a commercial office lease in a hurry or you do not want to make a long-term commitment. They can work quite well in the right circumstances based on the following advantages:
- Shorter Commitments - A sublease is usually arranged for a much shorter period than a standard commercial lease would be. A company can find an availability for anywhere from a few months up to a year, as opposed to committing to multiple years at a time.
- Flexible Options - With a shorter commitment, your company has more flexibility with what they can do at the end of the contracted period. Options may include renewing the sublease, signing a primary lease in the same building if possible, or working with a commercial lease company to relocate to another suitable location.
- Lower Rates - Because sublets are typically done on surplus space, companies frequently offer it at below market rates to fill it quickly so they can reduce operating expenses. Some money coming in, even below the market rate, is better than none.
- Finished and Furnished Space - Space for sublet is usually finished with improvements that were done at the time the primary contract was signed. Many spaces are already furnished as well, especially if they were in use at one point and the primary tenant downsized.
The Cons of A Commercial Sublease
While all these benefits make subleasing a commercial office lease an attractive idea if you are a company in need of space for a short period of time, it is important to also note the disadvantages that come with this kind of arrangement:
- Renewal Concerns - With a sublease, the main tenant reserves the right to not renew a commercial lease with the sublease tenant if they want the space back. When the main contract ends, you cannot renew the sublet with the landlord; your company would have to obtain a primary lease. Even if the primary agreement provides concessions and rights to the main tenant, these rights and concessions do not extend to the secondary tenant. If you sublet, you typically cannot make improvements or expand. You also cannot negotiate favorable terms with the landlord if a permanent contract be desired. Due to the many potential complications, it is important to work with a commercial lease company even when seeking a sublet.
- Longer Approval Process - Subleasing means a company must gain approval first from the main tenant, then from the landlord. This means a longer and more demanding approval process. There is no guarantee that the landlord will approve just because a tenant does.
As with most details in the commercial lease process, subleasing has its pros and cons. A sublet on a commercial office lease can be a perfect option if you are a company looking for a short-term arrangement if your intent is to vacate at the end of the term or seek a primary contract with the landlord. If you want to get the most from a sublease, it is recommended that you work with a commercial lease company that can advise you about your rights and options and help you avoid costly leasing mistakes!