Think an office sublet is the right choice? Think again

Harsh Mehta | November 1 | Success, Growth
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During these difficult times the appeal of an office sublet can be strong. An office sublet 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. Business centers 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

Recently we have seen a significant increase in sublet availability almost markets sublet opportunities come in all sizes and conditions and all have common pitfalls.

First: Your business is vulnerable to your sublandlord

A sub-landlord's goal 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 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 some bankrupt hedge fund.  Welcome to your sublet.

Second: You cannot scale your office space needs with your company’s office space requirement (Need to expand or contract? You can’t)

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: Sublets do not include 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, is not an option. You will also quite likely need to do some tidying up, a little paint here and there, this soon adds up.

Fourth: You do not have direct rights to your space

The lease on sublets takes longer to complete because it requires the over-landlord's approval, which can take up to 30 days.  Legal fees can soon add up.  Maintenance and building problems are also now far more complex since your relationship with the building is not a direct one.  You have no legal right to approach the over-landlord directly.

The optimal choice: Office Business Centers

Luckily, there is an alternative.  Office Business Centers are a cost effective solution for prospective subtenants. In this competitive market, you will have plenty of choice of providers, building locations, and even offices within the center.  You will sign a one-page agreement for a term that you decide directly with the operator. 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 your money on the cost of a receptionist, office manager, administrative support and business machinery such as a copier and fax. Your phones will be working, answered politely and your Internet will be high speed and be fully redundant.  Typically, technical support is available if required.


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. CAT 6e data cabling, secure air-conditioned IT data rooms, 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 expense is staff, a receptionist could cost you a great deal more than an office in an Office Business Center. Being free of human resource issues, vacation planning and costly temps cannot be underestimated. Each Office Business Center has a manager and customer service representatives whose purpose is running the office environment smoothly so you can focus on your business. Should you need additional help you can book their time on an hourly basis, far less costly than booking a temp for the whole day.


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 not just the lease payment. 

 

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Think an office sublet is the right choice? Think again