If you have leased office space and are not utilizing all of it, you can consider subleasing the space you are not using. Similar is the case with homeowners who rent out the spare room that they are not using. Just like that businesses can also turn from being a tenant to a landlord and enjoy the benefits that come from subletting the office space.
Commercial real estate Corpus Christi has given you a step-by-step guide on how you can sublet your office space.
How to sublease your office space?
1. Check the existing lease
Before starting the hunt for finding subtenants, go through your lease and check whether you are allowed to do so. Read your lease thoroughly to make sure it allows you to rent out the unused office space to subtenants. You can then get in touch with realtors in Corpus Christi, TX, and have them read your lease and determine whether or not you can sublease. If you can, then ask them about the terms and conditions that will apply.
2. Talk to the nearby businesses
Once you know that you are allowed to sublease the space, your next step involves finding subtenants. But, that does not mean that you can simply lease the space to anyone. Before doing so, ask the local businesses nearby. Companies working nearby may be in a hunt for space to expand their businesses. Some businesses you may already know and maybe have someone moving in more quickly. And if you don’t know anyone looking to sublease, you can get in touch with real estate Corpus Christi. They will do the job of finding the tenants who are looking to share a portion of the office.
3. Screen the applicants carefully
When screening the tenants for your commercial real estate property, certain factors need to be considered. While having a subtenant can be great, you need to ensure that you don’t get the wrong neighbor. First and foremost, you must make sure that you don’t sublease the space to a competing industry. Secondly, make sure that the sub tenants are paying their share of their rent to you on time. Even if they don’t, you are still owed the entire rent to your landlord. Lastly, your subtenants should be the ones you don’t mind seeing daily. E.g. – If they are loud or disruptive, their presence will not be appreciated by you in your office.
4. Decide on the leasing price
Businesses are interested in subletting their office space instead of leasing the entire office space because of reduced costs and shorter leases. However, it is important to keep these factors in mind when deciding the rental charges for the subtenant. Certain leases prohibit the tenants from charging the rental fees for making a profit. They should just charge the amount that helps them cover up the rent they owe to the landlord every month. When subleasing the office space, you can also request a damage deposit for covering any potential damages that might occur. The usual rate of damage deposits is equal to a month’s rental amount.
5. Agree on the terms set
Several factors like sharing amenities, renovation charges, lease terms, office services, branding, and office environment should be discussed beforehand. The arrangements should be made upfront and must be mentioned in the paperwork. This goes without saying, but be sure to ask your realtors in Corpus Christi, TX to check and ensure that the paperwork is correct before you move forward.
6. Finalize the agreement
Once you have the subtenant for your office space and they have agreed to all the terms mentioned in the lease, it is time to sign and finalize the agreement and let them move in.
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What are the advantages of subleasing the office space?
Offset the cost of space that is not in use
If there is a space that you are not using and still paying for it, it is surely going to eat up your financial budget. The best way to lessen this monthly burden is to sublease the space, not in use.
You have the freedom of moving into a bigger office any time
When you sublet your current space, you will not have to break your existing rental agreement for expanding your office.
What are the disadvantages of subleasing the office space?
Hidden costs are pretty bad
Because you are the original tenant, it will be your responsibility to take care of the property and pay the repair costs in case any damage is done at the end of the lease agreement. Furthermore, even if you recoup the security deposit, the future damages done to the property will still be on your dime. You will be the sole liable for any actions of the subtenant.
Based on the nature of your lease agreement, you can be on the hook for any expense in the utility costs that are incurred by your subtenant. A lot of lease agreements dictate specific limits in the utility costs provided by the landlord. Anything outside of that cause will be on you at the end of the lease agreement.
Lease terms can restrict your flexibility
Based on the terms mentioned in your lease agreement, you can lease only certain parts of the building or the space with approval from your landlord. Ideally, the tenant will be able to sublease the entire space they occupy, but it is not always the case. Market conditions, landlord preferences, and commercial rental codes can throw a wrench on your plans for subleasing the unused office space. Some lease agreements can also prohibit you from subletting if your tenant’s credit scores are lower than yours.
What are a few reasons for subleasing the space?
You have more space than you possibly need
Let’s say that you anticipated significant growth when signing the papers to lease that space. But, with time, the business is not growing the way you expected it. This makes you leave with the extra space in your office that you don’t necessarily use. Hence, in order to cover those rental expenses, subletting your office spaces to businesses that need them is what works for you.
You have outgrown the current space
In contrast to what we discussed above, let’s say that your business is growing rather too fast and you find yourself confined to a small space. Hence, you are interested in looking for a bigger space. But, commercial leases last for almost 3 to 5 years and if you need bigger space, it will mean that you have to break the current contract. But, doing so will result in extra costs and we don’t want that! Hence, subleasing the space can save you from such situations.
Your business has downsized
Unfortunately, not all businesses are successful. When the business experiences a downfall, people try to salvage as much as possible from whatever is left. This includes all the current lease agreements. If your lease agreement has a provision that allows you to sublease the office space, you can use that rental income to pay off your debts.
Do you need help subleasing your office space?
When you do your research, you will know that subleasing can be a good way to save some dollars on rent while enjoying the company of like-minded people belonging to different industries. However, don’t take everything in your own hands. Let Commercial real estate Corpus Christi help you out!
That way, you can say plenty of time and money and focus on your business and let the professionals do their job. They will help you connect with the right tenants and ensure a smooth and hassle-free subleasing experience.