What if I outgrow my space?
If business is booming, the first thing you should do is pat yourself on the back. You deserve at least that much if you’ve made a big enough splash in New York to necessitate expansion. More demand for your goods or services requires hiring more employees to keep the business running smoothly. Of course, more employees means additional square footage, and unless you figure out how to use the ceiling, that means relocation to a bigger space. So what happens when your business outgrows your current space but the lease term stretches endlessly before you? Don’t let this conundrum spoil the celebration. There are a few possible solutions:
1. Talk with your landlord. In many cases, landlords will work to accommodate their existing tenants by relocating them to a larger space within the building or another space within their portfolio of properties.
As a general rule, landlords will go out of their way to accommodate existing tenants. From an owner’s perspective, existing tenants—especially commercially successful ones—are a far safer bet than unknown, untried tenants. In other words, a bird in the hand that pays its rent on time and complies with the terms of its lease is worth two in the bush. A little flexibility on your landlord’s part would be a mutually beneficial thing.
If you choose to ask your landlord for expansion space within your building, give it a reasonable amount of lead time. It can take the owner several months to make an ideal space available.
2. Sublease your current space. If your business is bursting at the seams and the landlord has no alternatives to offer within the building or their portfolio, you might consider subleasing your existing space. This basically entails finding another company that could use your current space and pay the rent on it for the rest of your lease term, thereby freeing you up for something bigger and better.
Before doing so, read the sublet clause of your lease very carefully. Verify that you’re actually permitted to sublet, and remember that you always need your landlord‘s consent. You may also be able to simply reassign your lease.
3. In some wonderfully convenient cases, the landlord may just agree to terminate a tenant’s lease early. This is particularly true if your existing rent is substantially below market or if your landlord needs your space back.
We hope that you found this helpful. If you still have questions, contact Alan Rosinsky at (212) 447-5403, Principal Broker of Metro Manhattan Office Space, Inc.
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