commercial real estate broker Overland Park

5 Things to Know About Subleasing an Overland Park Office Space

A lot of tenants want the option to sublease their office space if necessary—either for financial reasons, because they want to move to a different space, or because they have more space than they need. It is important to account for this possibility in the first place when negotiating a lease, but it is also important to go back review these terms and understand the process before actually starting to look for a subtenant. Here are a few things to know about subleasing a space, as outlined in the article “So You Say You’re Subleasing”:

#1 Landlord Approval

Most leases that allow a tenant to sublet the space still stipulate that the landlord must give consent regarding the new tenant. An important thing to address in your original lease is the this actual consent procedure. When does the landlord give their consent? How do you as a tenant make a request for consent? Do they have to have reasonable proof for rejecting a potential sublessee? Some leases also allow the landlord to take back the space you might want to sublease, which would excuse you from paying rent for that recaptured space. Make sure that if you are thinking about subleasing, you fully understand your lease’s terms regarding this process.

#2 Rental Rates

Often leases allow the tenant to determine the rental rate for the subtenant, although some leases include a profit sharing clause that allows landlords to keep 50% or more of the profits from the sublease, particularly if the rental rate is higher than the original rate. If there is a profit sharing clause in your lease, make sure that you are careful to discuss how broker fees or the sale of any furniture factors into this division of the profits.

#3 Lease Term

The term of the lease for the sublease tenant cannot be longer than the term for the original tenant. However, extensions to the lease term can be a grey area. Often the original tenant is the only one who can negotiate with the landlord for an extension, not the subtenant.

#4 Prime Lease Rights and Obligations

Generally, unless specified otherwise in the lease, a subtenant inherits all of the rights, benefits, and obligations of the original tenant. This includes things like parking rights, insurance costs, tenant maintenance, etc. This also means that any alterations a subtenant wants to make should be in accord with the requirements in the original lease, including the possibility of removing those alterations at the end of their term. Any exceptions to the original lease should be clearly spelled out in the subtenant’s lease.

#5 Relationship Between Subtenant and Landlord

Typically a subtenant has a non-direct relationship with the landlord, which means that the tenant cannot pursue legal action against a landlord if a landlord fails to meet their expectations in a lease—for example, maintaining the building. For this reason, tenants who sublease typically want it included in their lease that the original tenant has to make a reasonable effort to get the landlord to meet their obligations.

If you’re thinking about subleasing your space, be sure to review your original lease and talk to your landlord so you know what your costs and obligations will be. Be ready for a subtenant to negotiate, and make sure the obligations and rights of both parties are clearly spelled out in a new lease so that the transition is as smooth as possible.

Looking for an office space for lease in Overland Park? Give a commercial real estate broker in Overland Park a call today at 913-685-4100 to learn more about our available spaces and even set up a tour!

4 Tips for Your First Office Space Lease in Overland Park Negotiations

Finding an office space to rent for your growing business means opening a new chapter in your future. While the real estate market has been improving recently, there are still some advantages that tenants can leverage in negotiations, and the best way to obtain these advantages is to be prepared. Here are a few negotiation tips to consider, as outlined in the article “How to negotiate your first office lease”:

#1 The Lease Term

One of the most important elements of a lease is deciding the lease term. A stable business should consider a longer lease if possible, because landlords prefer these long-term leases and it will give you a little more leverage in negotiations. However, if you are just starting out, you may not want to commit to a long lease because new businesses typically need some flexibility while their trajectory is still uncertain. Unfortunately, most landlords prefer multiple year leases, so this does lower your negotiating leverage and might prevent a landlord from agreeing to certain requests, for example, improvements to the space. But fear not, there are landlords out there willing to offer short term leases, so be sure to look for those and try to find as many options as you can in order to compare.

#2 Evaluate Your Requirements

Before you start seriously looking at spaces, it is important to have an outline of what kind of office space you want for your business. How many private offices do you want? Do you need break rooms or a kitchen area? Conference rooms? What kind of office design are you envisioning – will desks be in a traditional office layout or a more innovative arrangement? There are pros and cons to both of those office layout options: traditional cubicle setups are more cost-effective, but more open spaces are becoming popular as a way to promote creativity and give an office a modern feel. Other things to consider when coming up with your office space layout is what kind of customer or client interactions you have, and how much privacy is needed.

#3 Study the Market

Do some real research on what is out there before you settle on a single space. A good way to really get a grasp on the market is to work with a professional. Even if you feel like you can find a space yourself, it is helpful to have a real estate broker to assist you in navigating all of the lease terms, clauses, fees, etc. Bear in mind that tenant’s brokers are paid by landlords, so bringing your own representation to the table might help you get the best deal possible.

#4 Work for Favorable Terms

Take nothing at face value, particularly the rental rate of a space. One thing to ask for if you are looking for a longer lease term is a few months of free rent, which lowers the overall costs for you but allows the landlord to still charge the listed rental rate. Also talk to the landlord about allowances for improving or customizing the space. Finally, ask about what options your business has if you grow rapidly during the term of your lease and need more space – for example, can you expand into another space on the property.

As a small business owner, it is important to enter the search for a rental space with an idea of the overall process and what you can do to get the best deal possible.

If your business is interested in business space for rent in Overland Park, give a commercial real estate broker in Overland Park a call at 913-685-4100 to find out about our office space options!