Subleasing Your Office Space? Here’s What You Need to Know

Subleasing or subletting is nothing but leasing the part or whole of the property by you as a tenant to a sub-tenant!

But why would one want to sublease the office space?

Well, there are many reasons why a business owner thinks of subletting his/her office space to other businesses. Here are a few.

1. Outgrowth:

When the number of employees outgrows the office space, they can’t just cut down the employees just because there’s no enough space to accommodate them. They can’t break the lease term either and move into a larger office space. So what can they do in such a case? Simple, sublease! They can simply sublet their space to any other business and move in to a large office space that can accommodate all their employees.

2. Relocation:

The Company may want to relocate to a different place to avail the tax benefits or to be closer to the customers or business partners, and if the lease term is still in force, the company might think of subletting the space.

3. Downsize:

Third and most common reason for businesses to think of subleasing is the downsized company. The company will have to lay off a few employees because of the poor economic conditions. This leaves a few empty places at the office which makes them think of subleasing.

So, if at all you’ve made your mind to sublease your office space, here’s what you need to know.

Determine if you’re allowed to sublet

First thing you need to make sure as and when you decide to sublease the office space is to determine if you’re allowed to do so. All the lease terms will have a separate clause for sublease if you are allowed to let your leased property to a sub tenant.

However, few specific lease clauses may restrict you for a particular space (up to certain sq. ft.) to be subleased, going beyond which the landlord will have complete rights to recapture the unused space (Right of recapture) and lease it out directly. So, you need to check with landlord about their intention to recapture before subleasing your space.

Decide on the rent to charge

You might have been thinking to charge the same rent as you’re paying to the space, but you need to understand the fact that you can’t expect the same rents as the subtenants bargain a lot. However, in some cases where the office space is at a premium and you’re in a position to charge more than what you are paying, you need to be aware that you may have to share the rent with your landlord.

Check the lease terms to see if there’s any clause that says you’ll have to split the rent if you exceed the amount of what you’re paying as rent to that space. You also have to see the percentage of rent you need to share with the landlord.

Finalize the arrangement of space

While subleasing your office space to some other business, you’ll have to make some changes accordingly to suit the space to accommodate a subtenant. This clearly depends on the amount of space you are planning to sublease.

For instance, if you are planning to rent out a part of your office space, you may have to put a barrier to give subtenants the access to hallway. And, if you want to sublet the whole office space, you need to think of altering the space according to the needs and necessities of the subtenants. But you’ll have to take permission from the landlord to make any changes on the space.

However, it’s always good to work with an experienced commercial real estate agent while subleasing instead of doing it all alone as they know all the sublease terms and clauses well.

Commercial Office Bangalore is one such property management firm that can help you with all your commercial real estate requirements. Just get in touch with us if you’re planning to sublease a part of your office space and let us know the area you want to rent out. We’ll take care of the rest and help you find a potential tenant for your office space.
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