The Ultimate Guide to Subleasing Your Office Space in Atlanta
FROM EXCESS TO ASSET
In today’s ever-changing business climate, the requirements for office space can shift rapidly. Many Atlanta businesses find themselves reconsidering their current office space needs, often resulting in excess space that remains unused. Subleasing these spaces provides a strategic opportunity to optimize office size and manage costs effectively before your lease term ends.
Why Consider Subleasing?
Excess Space
For high-growth companies, securing a larger office space with the intent to grow into it makes sense. However, if your company isn’t quite ready to utilize all the space, subleasing the surplus can be a financially savvy move. It allows you to save on costs while keeping future growth options open.
Hybrid Work Policies
The shift towards hybrid working models means less need for permanent on-site office space. Subleasing the unneeded space can help alleviate financial burdens associated with unused office areas.
Business Expansion
Rapid growth can lead to a shortage of space. Subleasing your current office can free up resources to move into a larger area without the complications of managing multiple locations, which could lead to inefficiencies and communication issues.
Relocation or Closure
If unforeseen circumstances require your business to relocate or shut down, subleasing can prevent financial loss by covering rent costs without incurring penalties for lease termination, which landlords typically enforce strictly.
Step 1: Analyze Your Lease & Understand Your Options
Lease Analysis:
Review your lease terms with your broker to understand your subleasing rights and obligations. Important aspects include landlord notifications, consent requirements, and any restrictions on potential subtenants.
Landlord Consent:
Ensure you’re current on rent and understand the conditions under which your landlord might withhold consent. Ideally, your lease will prevent the landlord from unreasonably delaying or denying permission to sublease.
Recapture Rights:
Be aware if your landlord has the right to take back the leased space if you opt to sublease. Your broker can help you navigate these terms and their implications.
Sublease Strategy:
Determine your motivations and constraints related to subleasing. Consider the logistics, such as the cost of modifications and what concessions might be attractive to potential subtenants.
Estimate Subleasing Costs:
Even though the goal of subleasing is to make money to offset the rent, it is important to calculate the cost of subleasing and figuring out if it is ideal for your company. Essentially, you are a sub-landlord.
Here are the common costs associated with subleasing office space:
Brokerage commission: You will be responsible for paying the broker commission if your subtenant uses a broker, and they will use a broker.
Attorney fees: You will be responsible for paying the attorney who will help you draft and finalize the sublease agreement.
Moving and relocation costs: Having a subtenant means that you have to move your properties either to a new location or to another part of the building. You will be responsible for the costs associated with the relocation.
Sublease recovery: The sublease recovery shows the percentage of the rent you will recover when you sublease your office, after factoring in broker commissions, attorney fees, and market concessions.
Step 2: Bring Your Sublease to Market
Setting the Asking Price
Your broker will consider market conditions, the specifics of your space, the quoted rate for direct-lease space in your building as well as comparable buildings in the area, and your financial obligations to set a competitive asking price.
Marketing Your Sublease Space:
Utilize tools like sublease flyers, video, online listings (Peachtree Commercial Real Estate and AtlantaSublease.com), broker emails, and listings on commercial real estate sites (Costar & Loopnet) to effectively market your space. Your broker can provide you with all of these marketing tools.
Engage Prospective Subtenants:
Your broker will actively promote your property to the Atlanta brokerage community and directly to suitable tenants, arrange property tours, and suggest tips to keep the space appealing to potential subtenants.
Guided Property Tours:
As part of the prospecting process, prospective tenants will visit the office space with your broker for guided tours. Here’s how to make the most of these tours:
Empty Spaces – If the space is vacant, coordinating tours is straightforward. Provide your broker with a copy of the key, allowing them to access the property without disrupting you during each tour.
Occupied Spaces – When your company still occupies the space, maintain a clean and welcoming environment. Imagine it as selling a house—tidy up, hide clutter, and create an appealing atmosphere that allows prospects to envision themselves in the space.
Comprehensive Reporting:
Stay informed during the marketing process with regular reports from your broker. These reports should include:
Tour and Inquiry Records: Keep track of property tours and inquiries.
Proposal Updates: Receive timely updates on any proposals received and ongoing negotiations.
Marketing Recap: Get insights into marketing efforts, including email campaigns, new photography or video content, and advertising performance.
Step 3: Negotiate the Terms for Your Sublease
Upon receiving interest from a potential subtenant, your broker will handle the negotiation process, ensuring you achieve the best possible terms. This includes preparing and reviewing proposals, managing negotiations, and finalizing the sublease agreement.
Vet Potential Subtenants Carefully: This step is especially important since it could save you from a lot of troubles later on. Since your subtenants will be paying rent to you, not your landlord, you will still be 100% responsible for any damage caused or any rent unpaid. Even if you manage to find a financially strong company to sublet to, there are still other issues you need to consider.
Are you subletting to a competitor? No one wants to work together with a company in a competing industry in the same office space. Another potential issue is noise. Some companies may be noisier than others. It depends on their corporate culture. If noises and loud talks affect your employees’ productivity, it’s important to find a subtenant that has the same problem. If a potential subtenant requires a major overhaul of the existing space that may contradict what’s laid out in the original lease agreement you have with your landlord, you may need to reconsider their eligibility.
Step 4: The Subtenant Takes Occupancy of Your Space
Once the sublease is fully executed and your Landlord has provided their consent to the sublese, you will coordinate with your broker to transition the space to the subtenant. This includes any agreed-upon modifications and setting up rent collection processes. Remember, you remain responsible for the lease with your landlord and must ensure seamless operations during this transition.
Subleasing office space in Atlanta can be a beneficial strategy for companies facing changes in their business size, structure, or location. With the right guidance and understanding of the leasing process, you can turn an underutilized office space into a financial asset. For detailed assistance tailored to your specific needs, partnering with an experienced commercial real estate broker is crucial. Peachtree Commercial Real Estate along with AtlantaSublease.com have a great track record for helping companies in Atlanta to sublease their space. We can guide you every step of the way. Reach out to us today ro schedule a consultation!
Subleases Are One of Our Specialties
With over 27 years of experience in Atlanta’s commercial real estate market, we know the subleasing process, building details, and most effective strategies for subleasing commercial space.
Our AtlantaSublease.com website was created specifically to highlight exceptional sublease opportunities in the Atlanta market and to serve as a resource to advertise and showcase our client’s sublease spaces effectively. Our expertise and dedication to clients have consistently delivered favorable outcomes, ensuring that we save them money on unneeded lease obligations quickly and cost-effectively.
Engage Peachtree Commercial Real Estate to sublease your commercial space to:
- Leverage extensive market knowledge
- Maximize negotiation outcomes
- Secure the best possible terms
- Ensure a seamless sublease process
Contact us today to schedule a consultation and start planning your lease renewal strategy. Let’s work together to ensure your office space continues to support your business’s success.
