Is Subleasing Office Space a Good Idea?

There are pros and cons to subleasing office space. On the positive side, taking over another company's lease can be a great way to secure short-term space and a below-market rate rent. Often, subleases can be had for 10 percent to 50 percent less than the regular lease rate. The discount depends on how marketable the space is and how much time is left on the lease. The shorter the sublease, the lower the price.

Another plus to subleasing - the outgoing tenant may be going out of business or relocating to another state and willing to sell your company its furniture and office equipment at a big discount.

The downside to subleasing: Whether your company outgrows the subleased space or not, it will probably have to move at the end of the lease, or at the least, pay the current market rate to stay put. If the market rate jumps 30 percent during your one-year sublease, your company may wish it had signed a five-year lease.

Another negative is that subleased space comes as is. Landlords of subleased space won't provide tenant improvements such as new carpet or private offices. Your company will have to pay for any improvements - which won't be cost efficient if you're planning to stay in the space only for short time.

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