The appeal of an office sublet can be strong since it is often perceived as a way to minimize rent expenses, the second largest fixed line item for most companies. However, more often that not, sublets are not the best solution on many levels. Shared office space providers offer companies a more cost effective alternative with many advantages over sublets.
Modern Office Business Centers are built to handle both fortune 500 companies and start ups, this means the level of technology and infrastructure is likely to far exceed anything you would install yourself.
Sublet Pitfalls and Disadvantages
Sublet availability has steadily been on the rise. Such sublet opportunities come in all sizes and conditions but they all have these common pitfalls.
First: Loss of Control
A sub-landlord's goal in subletting their space is to reduce or eliminate their financial obligation; any amount of money received is a net gain even if it's less than they are paying to the over-landlord. Assuming your rent would likely be less than the sub-landlord is paying, there would be a gap. This gap amount could be small or large, but either way, it must be paid to prevent default and eviction. Your office space is at risk and out of your control; your sub-landlord is a bankrupt hedge fund. Welcome to your sublet.
Second: Scalability Problems
How much space should you take? How is your business going to grow? If you take too much space, you will be over paying in rent, utilities, and even cleaning. If you take too little, how do you meet your growth needs? Sublet your sublet? More fees, more headaches.
Third: Lack of Proper Infrastructure
Although rare, some sublets may include furniture and even phone equipment. However, this may present a hidden expense and risk to your company. Phone systems and IT equipment cannot be used unchecked and unmaintained. Your entire business relies on this equipment, so taking a risk in this arena should not be an option. You will also likely need to do some tidying up or add a little paint here and there - this all soon adds up.
Fourth: Problems of Working Through a Middle Man
The obtaining of a lease on sublets takes longer to complete in general because it requires the over-landlord's approval, which can take up to 30 days. Legal fees can soon add up during this time. Additionally, maintenance and building problems are also now far more complex since your relationship with the building is not a direct one, and you have no legal right to approach the over-landlord directly.
The Optimal Choice: Shared Office Space Providers
Fortunately, there is an alternative. Shared space providers are a cost effective solution for prospective subtenants. In this competitive market, you will have plenty of choice at every step. You’ll have your choice of providers, location, and even which office you want within the center. You will sign a short, flexible agreement for a term that you decide on directly with the provider. The fully furnished offices you choose will be the size and the layout that meet your needs today, and if you grow, you can simply add more space. The business center is fully staffed and equipped, saving you money on the cost of a receptionist, office manager, administrative support, and business machinery such as a copier and fax machine. Your phones will be working, answered politely (if you choose), and your Internet will be high speed and be fully redundant. Typically, technical support is available as needed.
Modern shared office spaces are built to handle both fortune 500 companies and startups alike, which means the level of technology and infrastructure is likely to far exceed anything you would install yourself. CAT 6e data cabling, secure air-conditioned IT data rooms, and video conferencing are all commonly installed, ensuring you have everything you need to optimize your performance even on a modest budget.
One of your highest, if not the highest, business expenses is staff. A receptionist alone could cost you a great deal more than an office in a shared office space. Being free of human resource issues, vacation planning, and costly temps cannot be undervalued. Each shared office location has a manager and customer service representatives whose purpose is the smooth running of the office environment so that you can focus on your business.
Whichever route you take, the key to making a true comparison is to look at your total cost of occupation. This number must factor in all the fixed and variable costs and not just the lease payment.
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