Sublease Office Space vs. Direct Office Space Leasing

Commercial real estate options are wide and varied for business owners.  There are many different leasing arrangements which owners of businesses can engage in so that they can carry on business in the best possible manner.  Two of the main types of leasing arrangements are subleasing and direct office space leasing.  The following will highlight each leasing arrangement and discuss the pros, cons and comparisons of each type.

Subleasing Office Space

When individuals enter into a sublease in order to secure office space they are entering into a transaction with the current tenant of the office space.  In order to sublet office space, the lease between the current tenant and landlord must allow such an arrangement to be entered into.  Should the business owner agree to sublet the office space from the current tenant, they will often find that there are certain obligations owed not only to the current tenant from whom they obtained the sublease from but also the landlord of the building.

There are certainly pros to entering into a sublease for office space.  The first deals with monthly rent.  One who sublets office space will often find that their rent is the same or less than what the current leaseholder is paying.  Also, business owners who want to get involved with a sublease agreement may be happy to know that the office space is quite frequently all set up and ready for them to start their business operations right away.  In addition, one who is in a sublease agreement may also find that they are not bound too stringently to the landlord of the building and have more leeway in what they do under the sublease agreement.

There are also cons to subletting office space rather than obtaining it outright from the landlord.  As mentioned above, although some sublease agreements can be less strict for the business owner, the opposite may be true at times as well.  Some business owners who rent office space this way find that their hands are tied to not only the current tenant but the landlord due to regulations regarding the building.  Although some aspects of the primary lease will not apply to them in their position as a subletting entity since the contract was between the landlord and primary tenant, certain points under the lease will apply to them due to general building rules.  Lastly, certain tenants sublet their office space rental to others in order to make some money in the end and this may produce less than favorable results for the business owner who sublets the property from the initial tenant if they have to pay higher rent than the primary tenant is paying.

Direct Office Space Leasing

For those who choose to rent office space directly from the landlord of the building, this means that there is a contract only between two parties, the landlord and tenant (business owner).  This type of lease can be for a year or a period of five years as commercial office space leases will vary.  With this type of lease there is no confusion as to which party is responsible for what aspect of the office space rental arrangement as it will be set out in the single lease between both parties.

The pros of a direct office lease are quite plentiful in number.  First, the tenant in direct office space leasing will know exactly what is required of them during their tenancy.  Also, the landlord will know who is paying them and who to go to when they need to discuss rental matters which makes things easier for both parties.  Direct office space leasing can also help to lessen costs for the business owner as they won’t have to pay increased rates sometimes requested by tenants eager to sublet their office space to make a quick dollar.

As for the cons of direct office space leasing, business owner tenants may find that the terms of the lease are less flexible than they would be had they sublet the office space from a current tenant.  For example, the business owner may be able to sublet a place for a year whereas those tenants who enter into direct office space rental may be locked in to a longer lease term and be unable to change the length of the lease.  Also, those who obtain direct office space leases may not be able to get into the office space right away or find that the office space has a lot of work to be done to it before the business owner can set up shop.

Which Leasing Arrangement Is The Better Option?

After having reviewed both options, subletting and direct office leasing, you may be wondering which is the best bet for you.  The answer to this question is that it all depends.  It will depend on your line of business, the current availability of subleases or direct office leases in your area, what lease terms you are seeking out and how much each type of lease arrangement will cost you.  To make the best decision, consider your current business operation status and review both sublease and direct office lease opportunities in your area.  Just make sure to thoroughly understand your role in either the sublease setup or direct office lease arrangement prior to signing the contract so that you can make a well informed decision in the end.