7 STEPS TO EFFECTIVELY SUBLEASE YOUR OFFICE SPACE IN NYC
Businesses have many reasons to explore subleasing their office space. The most common are that they are growing out of their or they are downsizing. Either way, having too much or too little space will have a significant impact on a business and it is imperative to effect a sublease quickly and at the most favorable lease terms in order to get the space off your books and move on to a space that better reflects your business objectives.
Outlined below are the steps required to effectively sublease your space. Contact us if you’d like more information or need help marketing your sublease.
Evaluate your space needs
How much space do you need? What are the drivers fueling your decision to sublease? Growth or scaling down? Could you achieve your objectives by reconfiguring your space? Would it make more economic sense to sublease your entire space and relocate or would it be better to share your space with another business to offset costs?
Find out how much space you need by using our Office Space Calculator.
Read your lease
Read you lease to understand your rights and responsibilities. Are you allowed to sublease? If so, what rules do you need to follow in order to do so. Do you need to notify the landlord before you market your space? Do you have to use the landlord’s agent to represent you or could you represent yourself or hire an outside broker? These are just some of the considerations you’ll need to look for in your lease.
Establish competitive pricing
In order to ensure that you’re not leaving money on the table nor pricing too high and increasing the time to lease you’ll need to price your space competitively with the market. Start by understanding what your building is asking. Next establish what competitive subleases are asking. Then compare your spaces to those discounting or adding a premium for things such as condition, lease term, views, and ability/ inability to customize the space. The best way to establish pricing would be to look at recent lease comparables to see what other similar spaces have recently leased at.
Need help pricing your space? Contact us for a no obligation analysis
Market the space
The most important aspect when marketing space are visuals. Start by taking pictures, recording video walk throughs of your space, and locating or assembling a floorplan. Alternatively you could book a virtual tour of your space with us. Then put together a compelling description of the space that highlights the positive aspects of the space. Next, determine where you’ll be marketing the space. There are many online listing services including Costar, OfficeSpacesNY, LoopNet, and 42Floors. Social media is a great tool to get the word out to colleagues, friends, and family who might be looking or know someone who is looking for space. Start with LinkedIn, Facebook, and Instagram.
Conduct space tours
Hopefully you’ll be receiving several inquiries a day or week. You’ll need to provide pricing and details to each inquiry and arrange for them to see the space. You’ll often have to show the space to the same tenant multiple times as they gain interest in the space. Always bring a floorplan and try to walk them through the entire space.
Negotiate sublease terms
If you’ve negotiated lease terms before then you’re familiar with the “Big Ticket” lease terms including Rent, Free Rent, and Tenant Improvements. However, you need to ensure that you’re negotiating the other aspects of the lease as well such as annual increases, tax and operating expense pass throughs, moving expenses, and furniture costs. Perhaps the most important but often overlooked points is analyzing the creditworthiness of the subtenant and establishing a security deposit amount. This amount should take into account the subtenant’s financials and be sufficient to cover the sublandlord in the event the subtenant defaults and you have to find another tenant.
Draft the sublease
Once the terms are agreed upon, you’ll need to draft and negotiate the actual sublease. It’s best to hire an attorney that specializes in commercial real estate in the state and city that the space is in- they will know the nuances of what is acceptable and unacceptable to include in a sublease. Otherwise you could try to cobble together a sublease document from the internet.
If all of this seems intimidating or you’d rather spend your time focusing on your business then it might be a good idea to hire a real estate broker to help you. Often they will be able to market the space more efficiently and find a tenant quicker and negotiate more favorable terms than you’d achieve. If the broker is doing their job then the time they save and premium in rent received should easily offset the commissions.
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