Sublease Manhattan Office Space-A Cost Saving Strategy
Subleasing commercial real estate in Manhattan can be very cost effective. Sublets for office, loft, and showroom or retail space can be substantially below market. Commercial tenants that want to dispose of their leased space (sub lessor or over tenant) are motivated to place their premises on the market at below market rental rates. Often, the lease term for sublet space is a short, making a sublease appealing to businesses that prefer limited lease duration. Often, subleased space has been recently built out and is in excellent condition. Frequently subleases include furniture and phone systems.
While Manhattan sublet space offers many advantages, remember the following before deciding if subleasing space is in your interest.
1. Sub lessors generally offer sublet space in “as is” condition. The sub-tenant is usually responsible, at their 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, check the over tenant’s financial condition. Ask your broker to request the last two years of the over tenant’s 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.
4. A sublease does not provide you with the benefit of establishing a direct relationship with the landlord. A direct relationship is beneficial if you ever seek expansion space within the building or in any of the landlord’s other Manhattan office buildings.