For one reason or another, it’s possible that you have found yourself with more office space than your business really needs at the moment. While it can be nice to be able to spread out, every square foot of space that you manage is costing you money. Many business owners may look at subletting extra office space that they aren’t currently using to bring in some extra cash flow. Even for businesses that have spaces that they only use three months of the year, subletting for those other nine months can be lucrative.

That being said, subletting office space isn’t for everyone. Depending on why you have the office space and the state of your company, you might want to keep it on standby.

Let’s talk more about the pros, cons, & costs of subletting your extra office space.

Pros

First, let’s talk about some of the major pros of subletting that extra space.

You can make something off of the space you don’t (and won’t) use.

When you have a significant amount of unused space in your office that you aren’t using, you are paying for that space to be empty. Don’t waste money on this unused space. Hire a real estate agent to find a subtenant can help roll in big savings.

You can network more effectively.

Subleasing your space out to entrepreneurs, small businesses, or freelancers that are in the same or related industry as you can be beneficial. It will make asking for advice easier. Plus, it might also help you both concoct some unique business arrangements that might not have happened otherwise.

You can get a better office space.

If you’re transitioning from a home office or a crowded office space but your company isn’t quite big enough to have a full office to yourself yet, subletting is a great way to get the office of your business dreams without draining all of your money.

You can decide how long they will be there.

If you have just a few months left in your lease before you move to a new office space, the short-term nature of subletting can help you to balance the cost of moving on to a new lease without the stress of ending your lease contract early.

You can move to a better location without losing your investment.

If your business is stuck in a small building commercial lease but you are ready for a much bigger office space, subletting is a great way to earn the owed rent without much of a loss. When companies merge, move to a new city, or downsize quickly, subletting is often the only way that they can stay in the green.

Cons

Now, let’s talk about a few of the major cons that might make you think again before subletting.

You may grow more quickly than expected.

If you have a sudden growth in business or another big change at the company, you may suddenly need that extra office space. And if you’ve already signed the sublease papers, simply asking the subtenant to leave isn’t going to be enough.

You won’t make more than your rent.

Some business owners believe that subletting your office space is a way to completely pay for the rent. They then think that they make a little profit on top of that. That is impossible due to the restrictions that most landlords put on their properties.

While subletting your space can help offset how much you pay in rent, it will never erase your rent completely.

There are important restrictions that you must follow.

Depending on the specific terms of your lease and the commercial rental codes in the area, you may not be allowed to sublet only a part of the building. Alternatively, you might not be permitted to sublet to someone with a lower credit than you.

These rules may seem strange at first. However, they are a built-in protection tactic for commercial landlords who run the risk of losing out if they let you sublet in any way that you please.

Hidden Costs

In addition to the basic cost of paying rent to your landlord for the overall space, there are a few more hidden costs that you should be aware of before you make the decision about whether or not subletting out your extra office space is right for you.

Damages could cost you.

Ultimately, it is your company that is liable for the original lease term with the landlord. Should there be any damages that the subtenant refuses to fix, those damage fees will find their way to your pocketbook.

Finding subtenants that are reliable is the key to avoiding this issue.

You owe rent no matter what.

Even if your subtenant backs out suddenly or begins withholding rent, you will still be responsible for paying your landlord the full amount. Be sure that you have the equity to manage this payment if an incident occurs.

Privacy might be compromised.

Depending on the layout of the office that you work in and the type of confidential documents that come through the building, subleasing might not be the best option. Having another business or an external entrepreneur in the office could be considered a confidentiality breach. If you aren’t prepared to handle this change, subletting should not be done.

The Additional Costs of Subletting

While those are the main things that businesses who begin to sublet their space were surprised by, there are other potential costs:

• Subletting fee (charged by landlord or management company)
• Cost of hiring a company to do property management, screening for you, etc.
• Cost of expanding parking (if necessary)
• Cost of separating entrances and exits (if necessary)

To Sublet or Not to Sublet?

As long as your current lease allows you to sublet your extra space, the decision to sublet is ultimately up to you. Keep your mind open to the potential dangers of subletting. Try giving a short-term subtenant a try first to decide if you can handle the environment.

If it works out, subletting can be a great way to make your business more profitable by simply making better use of the space that you are already paying for!