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How Do I Sublease Unused Offices and Floors?

August 5th, 2021 | 8 min. read

How Do I Sublease Unused Offices and Floors?
VergeSense

VergeSense

VergeSense is the industry leader in providing enterprises with a true understanding of their occupancy and how their offices are actually being used.

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As more and more organizations are using dynamic stacking to shut down unused floors of their buildings to reduce emissions, spur collaboration, and unlock pronounced occupancy insights, many are considering how they can make sure these floors do not go to waste.

While some landlords will allow businesses to return floors to them on an ad-hoc basis, many organizations are forced to get more creative. From turning unused floors as experimentation areas and hosting events, to simply using the space as storage. However, subleasing spaces can allow organizations to invest more in the spaces, floors, and buildings that are in use to create an even more sustainable and enjoyable workplace experience.

Why Sublease Unused Spaces?

Subleasing can be a strategic move for companies looking to optimize their office space and reduce costs. With the changing landscape of work and the rise of hybrid schedules, many organizations find themselves with underutilized spaces that can be subleased to other companies. Some common reasons organizations may choose to sublease parts of their corporate real estate portfolio include:

  • Companies have downsized recently and no longer need the entirety of their office space
  • Companies are allowing employees to work on flexible schedules, so the population of on-site workers each day is fewer than in the past
  • Companies who want to avoid paying the associated costs of breaking a lease early
  • There is a rise in startups or smaller companies in certain areas looking to sublease property
  • Growing organizations want office space that they will need eventually, but not yet
  • Companies on a hiring freeze and looking to fill their office with short-term subtenants until hiring efforts resume

By subleasing your unused spaces, you can not only offset the costs of maintaining those spaces but also contribute to the overall flexibility and agility of your organization. Subleasing allows you to adapt your office real estate to the evolving needs of your workforce, whether it's downsizing, accommodating flexible schedules, or creating collaborative spaces.

Subleasing can be a win-win situation for both parties involved. Startups or smaller companies in need of office space can benefit from subleasing arrangements by gaining access to well-established facilities and amenities without the long-term commitments and costs associated with traditional leases. On the other hand, companies with excess office space can generate additional revenue by subleasing.

How to Sublease Office Space: The 7 Steps

Regardless of whether you are subleasing your office space temporarily until your company expands and requires more space, or if you are subleasing on an ongoing basis as part of a broader real estate strategy, the process of subleasing unused office space remains consistent.

Step One: Assess whether spaces will continue to be used

As businesses push for greater in-person collaboration and less remote work, it's crucial for companies to carefully consider their office space usage. After all, the last thing they want is to sublease their spaces only to realize they don't have enough room for their own employees. This could lead to a cramped workplace, hindering productivity and employee engagement.

So, before deciding to sublease, it's important to assess your organization's current and future needs. Some questions to consider as you are evaluating usage

Step Two: Assess which spaces are being underused

Businesses are increasingly embracing the concept of "smart campuses" and optimizing their real estate holdings through the use of innovative workplace analytics platforms like VergeSense. These platforms allow companies to gain valuable insights into which rooms, floors, and buildings are in high demand and should be retained, as well as identifying underutilized spaces that could potentially be subleased to other organizations. By leveraging the power of data and analytics, companies can make more informed decisions about their real estate strategy and maximize the value of their office space.

Tools to Assess Corporate Space Utilization

When analyzing spaces and trying to determine which spaces are used by your employees and which are less popular, use data to drive these decisions. By continuously collecting workplace data like which floors or spaces are occupied over a specific time period,, you can discover trends and optimize your spaces for the ways your employees work.

1. Capacity Management 

People counting sensors like VergeSense capture a complete view of office utilization from campuses, to buildings, to floors, to rooms. With a dashboard showing capacity and utilization, you can get a quick, live snapshot of your real estate (globally.)

2. AI-Powered Occupancy Sensors + Passive Occupancy Detection

Beyond the holistic view of your office buildings, you can use data from AI-powered sensors to capture more granular data to determine which individual desks or meeting rooms are in use and which are available. This supports hybrid working and gives employees the ability to quickly check if the office is crowded, or book a meeting room that is unused at the moment.

3. Workplace Analytics

Data is only as powerful as the practical application of it and having an easy to use dashboard to interpret it. With a workplace analytics platform like VergeSense, you can analyze real estate use trends for your organization to optimize your working spaces and trim the fat of spaces that aren’t being successfully utilized. Find out if people are taking advantage of collaborative vs individual spaces, which days of the week are most popular, and more.

Explore VergeSense’s real estate assessment tools and data capture technology that can be implemented across your portfolio and start thinking strategically about workspace usage--before you decide to take the subleasing plunge.

Step Three: Revisit your lease.

Before you can begin the process of finding a tenant, you first need to revisit your lease to ensure subleasing is permitted in your contract. If you fail to do this step, you risk acquiring a subtenant and drafting a sublease all for nothing when you realize later that subtenants aren’t allowed in your leasing contract.

To be thorough, have an attorney revisit your lease in order to determine if subleasing is allowed and if it is, what the specific terms and conditions of subleasing are. The key here is to be thorough. No matter how much you save by renting out your office space won’t outweigh the cost of breaking your leasing contract. Additionally, you are choosing to sublease your office instead of moving entirely. Since you will maintain your landlord during this process, you want to remain in their good graces for the duration of your time occupying their facilities.

Step Four: Talk to your neighbors

The process of finding the right tenant can quickly turn into an arduous task if you aren’t properly prepared. To make the process a little easier on yourself, start by asking those already working in your building or nearby. You just might find a company to connect with that is looking to grow their office space at the same time you are looking to sublease your unused space.

Best case scenario, you can use this tactic to sublease to a company you already have a relationship with— making the process of finding subtenants that you trust to be responsible occupants all the more easier. Worst case scenario, you spend some time spreading the word about your unused office space and this word of mouth approach leads to connecting with your neighbors in a new way.

Step Five: Screen subtenant applicants

Once you make the decision to sublease your unused office space, the exciting journey of finding the perfect subtenants begins. This process is similar to the vetting process for new clients. Before you present them with a contract and ask them to sign on the dotted line, take the time to carefully select the right tenant for your sublease. Look for individuals, groups, or companies that align with your values and whom you trust to be responsible and reliable tenants.

Once you have a pool of potential candidates, it's important to further screen them to ensure they are capable of paying their share of the rent on time and in full. Remember, even if your subtenants fail to pay, your organization is still responsible for fulfilling your obligations to your landlord.

Lastly, choose subtenants whose presence you genuinely enjoy, rather than simply tolerating them. While the main goal of subleasing is to save on property costs, it's essential to consider the overall impact of your subtenants on your sublease experience. Renting to tenants who prove to be intolerable may result in months of headaches and outweigh any potential cost savings.

Step Six: Determine your leasing price.

Setting the appropriate rent for your subtenants is a complex process that requires careful preparation and industry knowledge. It's not as simple as choosing a random price that seems fair. Instead, you need to offer potential tenants a rate that is both reasonable and supported by a well-reasoned justification. To determine the right leasing price for your office space, consider the following steps:

  • Revisit your leasing contract once more to see if there are any guidelines for subleasing. For example, some leases prohibit tenants from charging enough rent to make a profit from their subleases— as opposed to only charging enough to cover their share of the rent.
  • Businesses are typically interested in subleasing due to the reduced cost compared to simply signing a short-term lease with their own landlord. When determining your leasing price, keep this in mind to avoid inadvertently upcharging your subtenants.
  • Consider requesting a security deposit to cover any potential office space damage that may occur. A typical security deposit rate for commercial subtenants is one month’s rent.

Step Seven: Draft the terms of your sublease.

Crafting your sublease is not simply a matter of jotting down a rental price on a piece of paper and passing it across a conference room table. It requires careful consideration of various factors that may arise throughout the duration of the sublease. When drafting your sublease agreement, be sure to include detailed discussions on topics such as:

  • Lease conditions and the possibility of renewal

  • Office space renovations, remodeling, or upgrades
  • Payment of utilities
  • Access to shared amenities such as a parking garage, on-site gym, cafeteria, or other office services
  • Branding considerations
  • Any other potential modifications to the office environment

Depending on the level of interaction you expect to have with your subtenants, you may consider incorporating details about your company culture into the sublease agreement. As a general guideline, if you anticipate frequent interaction with your subtenants, it is advisable to include specific guidelines and policies regarding office space usage. Once you have finalized the sublease agreement, it is recommended to have a qualified attorney review the paperwork to ensure its adequacy.

Takeaway: Subleasing space is a complex process and not one that should be entered into lightly. Consider all your options and make sure you have a strong understanding of how your employees are using your space first.

Right-sizing your real estate portfolio is one of the biggest challenges faced by global companies. Making the right moves can save (or cost) millions. Request a private consultation to learn how the VergeSense Workplace Analytics Platform can help you make data-driven strategic choices.