More space than you can afford or use
You have space that you are 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 have downsized since then. That means you are paying for space you do not use. Perhaps that worked for a while, but if company sales are down, and cash flow is tight, it is no longer workable. Instead of letting the extra space go to waste, you may choose to find a subtenant to offset the overall rental price.
While it is important to consider potential growth when entering a new lease, it is also possible that your company could wind up paying for space that it does not ultimately need at the time. In this case, you might find some short-term subtenants to help you pay rent until you can afford to employ additional staff. Even on paper, it makes more sense to recoup your investment on unused office space rather than letting it sit empty.
Need for a Larger Office
This is the most ideal situation in which to sublet office space. If your company grows beyond its bounds and the office feels cramped, even after professional space planning advice, it is time to expand and move into a larger office. Most leases last at least three to five years. Many companies consider breaking their lease. However, breaking lease agreements can be expensive and complicated, making it more attractive for tenants to seek a subtenant to offset termination costs and provide financial flexibility when seeking a larger space.
Work out how much space you need with our practical guide.
Hidden Costs can Bite You
Since you signed the original lease with the landlord, you are responsible for returning the space in its original condition at the end of the lease. While commercial subtenants are typically responsible for maintaining the property, you as the sublessor become responsible should they refuse to repair or pay for the damages.
You must pay the rent no matter what. One of the most popular reasons to sublease is so the subtenants will help you pay the rent, but what if they don’t? Well, you still owe the full amount to the landlord.
Even if you have a few extra offices, subleasing may not be realistic. First, ensure the office space includes entrances and exits that can accommodate everyone. Second, make sure there is enough parking. Your future subtenants might need extra space for visiting contractors and clients to park. Third, ensure shared areas like kitchens, hallways, and common areas will not become overcrowded with the addition of some subtenants and that social distancing is straightforward to maintain.
Inviting employees with a different company to work in close by means they will often be within earshot. Remind your employees to talk about sensitive information—such as finances or customers’ personal information—only behind closed doors. Demountable partitioning and acoustic division can solve this can separate the subtenant and, even better, they do not require remedial works on completion of the lease.
However, with some straightforward partitioning alterations, separation is straightforward. See how Accolade converted an empty shell into a fully fitted office for NFU Mutual.
Subtenants will change the culture and character of the space to some degree, so be sure to take this into consideration.
- Will they disrupt visitors’ perception of your company?
- Will they have any kind of negative impact on your brand?
- Will they cause too much excess noise for your employees to work effectively?