Is a Sublet Office Space in NYC Right for your Business?
Subleasing commercial real estate in Manhattan can be very cost effective. In NYC, sublets for office, loft, showroom or retail space are often offered substantially below market rates. Commercial tenants (sub-lessor or over-tenant) who want to vacate their currently leased space are motivated to offer terms at below-market rates.
Benefits of Sublet Office Space in NYC:
- Lower rental rates – a good value
- Often in great condition, if build out is recent.
- Often includes furniture, cabinetry and phone systems – cost savings to you
- The lease term is short – attracts start-ups, growing firms & allows you to “try out” a location
- Lower security deposit – smaller up-front cost
Landlords aren’t the only ones offering sublet office space rentals in Manhattan. Additional opportunities exist to sublet excess office space. Metro Manhattan Office Space services business owners on both sides of the transaction: helping connect business owners who are seeking available office space with those who are currently looking to sublet excess office space.
Sublet Manhattan Office Space-A Cost Saving Strategy
So, you’ll be paying below-market rents, potentially using existing furniture and phones, while putting up a smaller security deposit. Check, check and check. But, before you sign on the dotted line, we’ve provided a few tips to consider.
4 Tips to Decide if an NYC Sublet Office Space is Right for You:
1. Sub lessors generally offer office sublet space in “as is” condition. You, as the sub-tenant are usually responsible, at your own cost, for hiring the contractor, filing for permits (if necessary) and paying for improvements. Usually, the sub-lessor offers free rent to help offset the cost of construction.
2. Before signing a sub-lease, review the over-tenant’s financial condition. Ask your broker to request the last two years of their financial statements. If the over-tenant is financially weak, your security deposit could be at risk.
3. All sub-lease agreements are subject to the landlord’s consent. The landlord usually must notify you within thirty to ninety days if they have approved the sub-tenancy. If you need to move into your new space sooner than that, this may not be the best choice for you.
4. A sublease does not provide you the benefit of establishing a direct relationship with the landlord. That would be useful if you ever want to expand your space within the building or in any of the landlord’s other Manhattan office buildings.
Issues to Consider in an Office Sublet Situation
Subletting excess NYC office space can be a bit complex since there are typically 3 parties involved (the sub-tenant, the over-tenant and landlord).
As a sub-tenant, while you may benefit from a below-market rate, you have to consider any additional costs as well as being subject to the original lease (over-lease). It’s important to fully understand the details whether you are the sub-tenant or the over-tenant.
As the over-tenant, you may require assistance finding prospective sub-tenants and negotiating the sub-lease terms. When you need to sublet excess space Metro Manhattan can market it for you to ensure you sublet it to a creditworthy sub-tenant. We often receive inquiries from companies seeking shorter-term leases and firms that prefer furnished space.
Metro Manhattan is happy to assist you with locating the right NYC office sublet space or tenants and negotiating favorable terms. We will also help to clarify any of the following issues:
- Effect of a master lease on a subtenant
- Potential costs incurred by subtenant in acquiring their new space.
- Are there any outstanding payments due to the landlord that need to be paid by you?
- Does the sublease space meet your needs as a business, in “as is” condition?