In 2021, the number of applications to start a new business in the US reached 5.4 million. That was 1 million more than the record set in 2020. It’s proof that the pandemic did little to sour Americans’ entrepreneurial spirit.
This year, it’s likely that more people will decide to chase their dreams of owning a business. That means that demand for commercial space will be at a premium. For those with more office space than they need, this is a great time to sublease it.
When you sublease office space, you stand to gain several benefits. Not only do you ensure that your additional space isn’t going to waste, but you also get to earn some money in the process.
But how do you go about subleasing office space? Follow these steps to get everything right.
Why Lease Your Office Space?
Before we take a look at the office space subleasing process, it may be a good idea to look at some of the reasons you may want to sublease your office space. If the following is true about you, then subleasing makes perfect sense.
You Have Office Space That You Won’t Use
The top reason to sublease office space is when you have office space you know you won’t be using. It could be that your office space was just the right size when you first leased it, but you’ve since downsized. As a result, you now have additional space that you’re paying for but not using.
It could be that you downsized because your sales have gone down. Continuing to pay for the space you aren’t using only hurts your business finances. The best solution is to sublease the space, so the rent you get from your subtenant helps offset your overall rental price.
The Time to Use the Space Hasn’t Yet Come
It’s always a good idea to factor in future growth when picking a business space. You may find that the space you’ve rented contains extra offices that you won’t be using until a year or so in the future. Instead of letting this additional space remain unused, it’s a good idea to sublet it until the time comes for you to use it.
Note that you’ll need to inform the tenant that you’re only subleasing the space for a limited time. Doing so helps you avoid misunderstandings when the time comes when you need to use the office space.
You’re Moving to Another Office
In most cases, leases last about three to five years. But what happens if your business grows much faster and you need to find a bigger space before the expiry of your lease? Breaking your lease may prove messy.
A better alternative would be to sublease the space when you move to a new location. You can then use the rent you collect from the new tenant to offset the rent you owe the landlord.
Steps When Leasing Your Office Space
If you’ve never subleased office space before, you may not know where to start. The following steps can help ensure that you get everything right.
Check Your Office Lease First
Before you start to look for tenants, you need to determine whether your leasing contract allows you to sublease office space. You may want to seek the help of an attorney to find out whether an office sublease is acceptable as per your contract and what terms and conditions to follow.
Decide on a Suitable Leasing Price
If your leasing contract permits you to sublease your office space, take the time to decide on what rent charges you’ll set for the space. Most businesses looking to rent the space will be looking for lower costs and a shorter lease, so consider these factors when setting the price.
Also, most leases bar tenants from charging enough rent to make a profit instead of simply helping cover the monthly rent they should pay the landlord.
Inform Nearby Businesses
Now that you’ve set a price for the office space, it’s time to find subtenants. Often, nearby businesses are interested in additional office spaces, so you may want to talk to them first. The main advantage of subleasing office space to such tenants is that you’re already familiar with them.
If you’ll be subletting to someone you don’t know, then screening tenants is an essential step. Acquiring the wrong tenant can be a huge headache for you.
Avoid subleasing the office space to a business that’s your direct competitor. Find out whether the subtenant can comfortably pay the rent so there are no conflicts in the future.
Take the time to determine whether the tenants can coexist well with other occupants in the building. The last thing you want is to sublease your space to a loud, disruptive tenant.
Agree on the Terms
The final step when subleasing office space is to agree on the lease terms with your prospective tenant. Discuss such factors as potential renovations, sharing amenities, and payment for utilities. Include all these agreements in the sublease paperwork, and sign them to finalize the agreement.
Don’t Struggle to Sublease Office Space
If you’re lucky enough to have more space than you need in your workplace, it’s always a good idea to sublease office space. When done right, subleasing ensures that all the space you have is utilized fully. The rental income you get from your tenant can go a long way toward helping you pay off what you owe your landlord each month.
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