If you find yourself no longer in need of your entire office or with ample unused space, subleasing can save you money; however, before you begin the subleasing process, there are some things that you need to know. Read on to discover some important aspects of subleasing that can help you ensure the best possible outcome.
1. Subleasing Is Different From Assigning
Some leases provide the option to sublease or assign. People sometimes use these terms interchangeably but they mean dramatically different things. With a sublease, you remain the tenant and collect rents and CAM from the subtenant. Assignments give you the right to turn over your lease to someone else and walk away from the office or building entirely.
2. Your Landlord Has Likely Imposed Some Restrictions
Most right to sublease clauses include some restrictions, so it's important that you carefully review your lease with an attorney. You may be required to turn over any subleasing profits to the landlord or have limitations on what types of companies you can offer a sublease to.
3. You Should Talk to the Landlord First
Leases typically require you to notify your landlord before you begin subleasing, but having a conversation about your space needs at the start of the process could actually save you time. If market conditions are favorable, your landlord may be willing to let you out of your lease entirely.
4. You May Be Better Off Moving Out Completely
If you only plan to sublease a portion of your office, take the time to carefully consider whether or not it would be more advantageous to move out and allow a subtenant to occupy the space. Ask yourself whether another company would realistically want to move into your available space and think carefully about whether or not your daily business would be interrupted by a co-tenant.
5. Depending on the Market, You May Still Have to Cover Rent
In the event that average rent rates have declined since you signed your lease, you may have a difficult time finding a subtenant that is willing to pay your current rent and CAM. Keep in mind that you may still end up on the hook for part of your occupancy costs.
6. Let the Neighbors Know
Taking a few minutes to notify your neighbors that you're planning on subleasing your office space is a nice courtesy, and it may even be beneficial for your company. You may find that another tenant in your building has been looking to expand. This could allow you to quickly find a subtenant or potentially even work with your landlord to simply assign the space to the other tenant.
7. Choose Your Subtenant Wisely
Whether you'll be sharing an office or turning over the whole thing, you want to ensure that you have a co-tenant who is trustworthy. Ask for references and consider conducting credit checks to ensure that the company won't default on their rent. Also, keep in mind that you'll be responsible for any damage done to the office by the subtenant.
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