A signed agreement between tenants that governs the occupancy of a commercial space is known as a commercial sublease. Unlike a traditional lease arrangement, a commercial sublease creates an obligation between the original renter and a new tenant looking to occupy that space. Meanwhile, the original renter’s contact with the property owner remains valid.
This is a popular option for renters who need to vacate a property before the lease term has ended, as well as renters who determine that they don’t need or can’t afford the full space they originally moved into. If you’re looking to sublease office space, it’s important to understand the common misconceptions about this arrangement, as well as subleasing’s pros and cons and the key components of a sublease agreement.
Misconceptions about Commercial Subleasing
One common misconception about signing a commercial sublease is that the terms of the original lease agreement no longer matter. However, it’s important carefully review the sublease and the sublessor’s original lease. Never make a deal with a sublessor who won’t show you the original lease. Those looking to sublease a new space should also ask to see a copy of the sublessor’s audited financial statements.
Another misconception is that the landlord doesn’t need to be involved in a sublease transaction. Although this may be the case in some instances, other commercial leases require the original tenant to get the landlord’s approval before moving forward with a sublease arrangement. Not every lease allows subletting.
Pros of Commercial Subleasing
Commercial subleasing is an attractive option for many tenants because of relocation needs, extra space, and budgetary restraints. These are some of the pros of commercial subleasing to consider.
- Easier to quality for than a traditional lease
- More affordable for businesses on tight budgets
- Allows businesses to start with a small space and expand as the business grows
- Often able to utilize onsite administrative support in shared spaces
- No need to worry about upgrades and build-outs
- Costs often include amenities like Wi-Fi and alarm systems
- Increased opportunities for networking with other onsite businesses
Cons of Commercial Subleasing
However, there are some downsides to this type of arrangement that tenants should be aware of before signing a new agreement. These are some of the cons of commercial subleasing to keep in mind before making a decision.
- Risk of inheriting unfavorable lease terms, such as hidden fees
- Subleases can be affected if a sublessor defaults
- Having to go through the sublessor for maintenance and repairs
- Can be more difficult to project a “small business” vibe for visiting clients
Key Components of a Sublease Agreement
To get a sense of what is involved in a commercial sublease, take a look at the examples on Rocket Lawyer and Law Depot. It’s always a good idea to have a trusted lawyer review sublease documents before signing. These are the sections typically included in this type of document:
- Parties
- Original lease information
- Terms of sublease
- Rent
- Security deposit
- Notices from landlord
- Subletting and assignment
- Insurance
- Condition of premises
- Governing law
- Severability
To learn more about commercial subleasing configurations in New York City, contact NYC Office Suites today at 1-800-346-3968 and get one step closer to finding your ideal space!