Why you may (or may not) want to sublease commercial space
With all the uncertainty of our present times, if you are about to open a small business, you may be considering subleasing some commercial retail or office space. While this could wind up being a savvy business move, it could also turn into your worst nightmare.
So, how can you suss out which of the two outcomes it will be? Often, you can’t. But understanding and weighing the pros and cons of subleasing commercial property is a good place to start.
Realize that you are not the tenant
You will technically be subleasing the property from another tenant — the sublessor — and not the property owner. This person may or may not have permission to sublet this space, and that could be a major problem for you if they don’t. So, the first order of business is to determine whether or not subleasing is allowed under the terms of their original lease with the property owner or management company.
Will you have access to common areas?
This can be a real sticking point. Will you and any potential employees and customers have access to the facility’s bathrooms? What about a breakroom and storage space? If you have nowhere to store extra inventory or make a pot of coffee, it could be a real problem.
Some sublessors will agree to let you share some common business amenities like fax machines, copiers, WiFi, printers and even alarm systems. The sublease that you sign must detail everything and every space to which you have access, as well as address what is denied or will be charged extra if used.
What about parking?
Will your customers be able to share the designated parking areas set aside for the sublessor’s use? If not, is there alternative parking for your customers’ convenience?
The value of teamwork
Suppose you are a private investigator who is subleasing space from an attorney’s office. The two are complementary businesses, as some of their clients may be in need of your services, and vice versa. The arrangement could prove lucrative for you both.
Can you share administrative support?
If you have a business that takes you out of the office, e.g., pest control or cleaning service, will there be a receptionist or secretary who can answer phones, accept packages and intercept foot traffic? If this is something that is vital to your business, you should insist that it be included in the sublease contract.
Know the zoning laws
You may have a great idea for a frozen daiquiri shop in this location, only to realize that the zoning laws prohibit it from operating within so many feet of the church or school across the street.
Is the sublessor business compatible with yours?
If you are hanging out your shingle as a counselor, you probably aren’t going to want to share spaces with a music store where customers will be banging around on the drum kits. A store that sells adult novelties would not be a good fit for a Christian bookstore, either. Choose either a compatible or neutral business as a sublessor.
Do you have room for signage?
Understand that the sublessor will likely have prime placement. But you should at least have space sufficient to let your customers know that you are a presence there as well.
As always, have your business law attorney review any contracts before signing.
