IS THE BEST OPTION FOR YOUR BUSINESS, SUBLETTING IN NYC?
The high cost of doing business is leading many business owners to consider sharing office space with other businesses in the hope of reducing overhead costs, thus managing to remain competitive. Previously, the only option that businesses had to cut down on operational costs was moving to smaller spaces to work in which meant cutting back on the number of staff.Subletting is a way of finding appropriate working space because some tenants find available office space to be too big for their operations and at the same time too costly for business survival. Before you get into any subletting arrangement, it is important for tenants to understand that their rights are derivative of the lease rights with which the property was first leased. This means that as the tenant, you only enjoy privileges or rights similar to what the other users of the space have.
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In fact, a subtenant by the very nature of them being secondary participants in the lease agreement has limited rights compared to the prime tenant. Just like you would take the time to compare and contrast available office space as a prime tenant, the same case should apply when you are subletting. The first step in consideration of being a subtenant is to go through the terms of the original lease.
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While the subletting arrangement may not work for all types of business, when it does, the benefits to be enjoyed are numerous;
• Affordability and availability – when you get hold of the original lease of a property, the price indicated as the monthly rent is what must be raised by the total number of tenants due to the landlord. There is no law to govern how much rent the prime tenant should pay in relation to the agreement but it must be reasonable enough to attract potential subtenants. Depending on the nature of your business and amount of space you wish to occupy, the amount of money you will pay at the end of the month will vary but it will be definitely less than what you would have paid as the sole tenant. Subletting is always an option and when it only involves renting a small corner or space in an office, most tenants will find subletting the perfect opportunity to cut down their rent requirement.
• Ready to use spaces – you are seeking to use space that someone else has already claimed, and hence you as the subtenant may not have to bring your own furniture. Most subleased spaces are already partitioned and the only thing you will need to worry about is the equipment you use for your business.
• Access to common rooms and amenities – when most people are subletting office space, they mainly just focus on the functional space to be used for business. This means that common areas such as the reception, washrooms, and conference rooms are free to use. In cases where the cost of using these common utility areas is included in the rent, the amount is quite negligible compared to the level of access. Other amenities that may be free or provided at a low cost are internet and security.
• First priority when the entire space is available – most people consider the option of subletting office space due to lack of adequate resources when a business is starting. With time, and as the operations of the business grow, customers know and are familiar with your current NYC office space. It would, therefore, be good for businesses to continue operating from the same place and better still if the success of the business outgrows the space requirement. In the event that the prime tenant wishes to vacate the premises before the term of the lease is over, they will most likely give priority to the subtenant to occupy the entire space.
Getting into a subletting arrangement requires adequate knowledge of commercial law and an attorney is the best person for this. Commercial real estate brokers can also offer information but you need to be sure of the services of a broker before engaging them. Talk to friends and relatives who have been in subletting arrangements in the past or friends who work in sublet offices. You must be aware of what the lease says about subletting and it’s extremely important to carefully go through the contract before committing to it.
A subletting arrangement in a busy cosmopolitan area such as NYC can be the stepping stone you need to get a strategic business location for your business. While the landlord may not be dealing with you directly, they are definitely aware of the arrangement. If you keep a good relationship such that there is no issue of late rent from you, the landlord may consider you for larger spaces when they do come up if you had expressed interest in a larger working area. The prime tenant may also keep you posted when they plan to move to a different location so that you continue your subletting arrangement.