When it comes to finding a place to set up your business, sublease space is often an easier, faster, and more cost-effective route than a standard lease. Sublease spaces become available when one company moves out and leaves a vacant space behind, or when a company no longer needs so much room and subdivides. When this happens, other companies looking to scale down, transition, or grow in the near future can often find good deals on temporary space.
The benefits of subleasing are numerous. Sublease space usually is already finished — sometimes even furnished, and offer phone systems along with other technology. They are usually ready to occupy sooner than space that needs to be renovated, provided that the pending new occupant can adapt to the existing design conditions. Sublease spaces also can offer good rents to temporary tenants, since the prime tenant is often seeking to unload or reduce the obligation for space it no longer needs.
Finally, the transaction is often easier to negotiate, as the primary lease is already completed. Sublease deals take far less time to put together, but anyone looking to occupy subleased space should know that it still takes time. From the moment you identify a suitable space until the moment you move in could be three months, contingent on the landlord’s approval.
Sublease spaces are plentiful in a good economy, when companies outgrow their spaces, or a bad economy, when companies need to shed extra space. But subleasing does have its share of pitfalls. As a sublessee, your rental contract relies almost entirely on the fortunes of the prime tenant to whom you are paying rent. If the prime tenant cannot or does not pay the landlord, goes out of business, or defaults on the original contract, you as the subtenant could lose your space. If a pending subtenant has concerns about the financial stability of the prime tenant, they can ask for financials, get a credit report or communicate with the landlord to gain a clearer assessment of the stability of the prime lessor.
It also is important to know that when you sublease space, you rarely have the right to renew your lease. You also do not inherit those renewal rights that may be in the prime lease. However, we often advise our clients at the outset to request a right of first negotiation to renew on a direct basis upon expiration of the sublease term. In addition, if the primary tenant defaults, you are at risk for having the lease terminated as a result.
At Commercial Property network, we have been negotiating transactions and making deals in the Princeton market since 1981. We have helped hundreds of companies find subtenants for space and hundreds of others find sublease space at a time when they most needed it. We are aware of a wide variety of current available options, including several spaces offering sizable discounts to market, offering phones, furniture, and other unique provisions.
If you are looking to consolidate and have space to sublet, we can help. If you need to move quickly and need a short-term option, call us. We can help solve your space problems and keep your company in business in the Princeton market.
Commercial Property Network. 609-921-8844. www.cpnrealestate.com