Subleasing can work well if one can find the right space and a good deal, but this option can be fraught with challenges. Subleasing is a much less transparent market so prospective tenants are advised to use good brokers to find a suitable space and qualified attorneys (with real estate experience) to review the master lease and sublease agreements. Subleasing can be cost-effective and some spaces may already be fully furnished. Some sublandlords may even share office amenities and support staff at a cost. Client referral opportunities may also exist if the sublandlord and subtenant are in the same industry. Because the subleased space tends to be larger, it is more suitable for a business with at least a couple employees.
Perhaps the biggest disadvantage of subleasing is that the subtenant has no control over the master lease. If the sublandlord terminates or defaults on it, the subtenant may lose the space. A careful review of the master lease is required as the sublease is subordinate to it. The subtenant should understand his/her rights, such as exclusive use rights, furniture use, condition of space, sharing of utilities, and non-disturbance; as well as recourse and obligations under the master lease and sublease, for example, maintenance and services. A good real estate attorney can review and negotiate terms of the sublease.
Check out our previous introduction, home office, virtual office, coworking space, and executive suite blogs, and stay tuned for future blogs on traditional office and costs of the various office options.