Deciding Whether to Lease or Sublease Your Commercial Space

When searching for the right office space for your business, you may be deciding whether it is best to lease or sublease your commercial space. While there are pros and cons to both, the right choice ultimately depends on your unique business needs. There are many variables that should be factored into this decision, and having all of the facts at your disposal will help you to make an informed choice.

Consider the Long Term Viability of Your Business

The amount of time you expect to stay in your current location has a bearing on whether you should take on a commercial lease or sublease your space. For a commercial business such as a retail store, salon, fitness center or bakery, it may be advantageous to secure your space with long-term commercial lease as the primary lessor. This will allow you to lock in your rate over a longer period of time and enjoy greater profits when your sales increase.

If, however, you are likely to move within five to ten years, are a seasonal business or anticipate needing a larger space in the future, subleasing may be right for your business. In addition, if you are opening a new company, you may consider subleasing to test the market for your product or service without locking yourself into long term contracts. Seasonal businesses may find that subleasing space from a larger, more established business is more cost effective.

Subleasing Office Space vs. Leasing

Some of the main businesses that take advantage of subleased space are businesses that need office space. These businesses often sublease a portion of a larger office, taking advantage of reduced rent and utilities, shared facilities and access to technology. Subleasing office space also means that you will have the flexibility to move without penalty if your current space is not working for your business. With subleased office space, there are no long-term contracts, lower commercial rent rates and increased flexibility.

Older more established businesses may find leasing office space more suitable than subleasing for a number of reasons. If your company has been in business for years, you may want the stability of being recognized at a certain location over time, which adds to your credibility. You may want to appear stable, consistent and stronger than your more temporary counterparts. In addition, you may be able to take advantage of better deals on longer leases and lock in low rates, even if the value of your leased property rises.

Like any other business deal, the decision to lease or sublease must be made with careful consideration. Factor in the pros and cons of either leasing or subleasing and consider your company’s long-term needs when choosing what option is best for your business.