Should subleasing be part of your 2020 post-covid plan?
After the great work-from-home experiment, we may never use workspace the same way again.
Millions of square feet of office space sit empty right now, due to stay-at-home requirements. The big question is: once employees are able to come back to work, will they? Nobody knows for sure, which is why corporate real estate teams are actively evaluating how their office spaces might be used once “re-entry” begins.
You, too, might be contemplating how your organization’s real estate needs will be different going forward. You may need to reconsider your space needs because of employee reductions or in anticipation of having more employees and teams work remotely.
Will your real estate footprint become a liability…or an income stream?
Many companies are finding they have excess space and are considering monetizing that space through subleasing. As staff reductions occur some companies may find themselves with a wing of their office, an entire floor or maybe a full building sitting empty. If enough companies do this, then the supply of available subleased space could be significant in the latter part of 2020. Which makes it a smart move to put together your sublease strategy now, so you can take advantage of early demand signals.
Subleasing vs. licensing
Although the term subleasing gets widely used, you should know that licensing is also an option. Both provide what you want – to monetize your space – but the legalities are different. A sublease gives the subtenant the legal right to exclusively occupy a specific space for a specific period of time. With a license you have more flexibility, including the ability to end the agreement with proper notice.
Licensing your space gives you the agility you may need to convert the space back for your own needs when you need it. These are uncertain times, which means things can change rapidly and often. Licensing your excess space gives you the ability to adapt easily. Licensing can also be accomplished in much more quickly than a sublease, as a license typically does not entitle the tenant exclusive possession of the space.
Depending on your comfort level with looming health and safety concerns, you may consider sharing your space on a flexible office license. You may be able to partition your space to create private work environments without any permanent office restructure. Shared space can be implemented easily using a simple license agreement, which can be adjusted as needs change for either party.
Remember when safety mostly meant keeping unauthorized people out? Now it includes keeping everyone on the inside safe and healthy. Keeping your employees and new subtenants safe is going to be a key factor in how you rethink your real estate. Make sure you have enough space to let employees spread out, as they may not be so eager to work in tight quarters. At the same time, you might keep shared and common spaces to a minimum, as people will be wary of working in shared spaces. Finally, try not to commingle the space you sublease with your own company’s footprint. That way, you can maintain control over your own health and safety policies.
Putting your space on the market
Much like Airbnb works for vacation properties, marketing your unused office space can be as easy as adding it to a flexible office marketplace like LiquidSpace. Putting your space on a marketplace allows you to offer your space on flexible terms, use a standardized license agreement and have someone else manage the transaction. A marketplace gives you access to more space seekers and provides you with the tools to showcase your space value, including photos and video tours. Finally, digital listings are available 24/7, which helps you market your space even though nobody’s on site.
What to consider before taking the plunge
What should you consider before you sublet or license your office space?
- Review your current lease. Make sure your current lease doesn’t prohibit a sublease. If your lease prevents you from subletting, then you should consider licensing, which you can do through the LiquidSpace platform. Regardless, be sure to work with a real estate attorney, so you know you’re on a solid legal footing.
- Know your market. Look to see what other properties like yours are subleasing for. LiquidSpace is a great tool for finding comparable spaces and evaluating current market rates.
- Determine if your space is suitable for private office rentals, team spaces or a temporary build-out for a swing space. One consideration: you may want to partition space in a way that limits the co-mingling of different businesses as much as possible.
- Decide if you will allow subtenants to customize the space to fit their needs.
- Document your health and safety policies to share with possible subtenants. You might even make it a requirement within your sublease or license that subtenants follow your health and safety protocols.
- Make sure you protect your organization from any liabilities by requiring subtenants to carry their own insurance.
Ready to monetize your available space?
Managing your own sublease or license can be a daunting task. Liquidspace has made it easy:
- List your space on the largest flexible office marketplace. LiquidSpace’s tools allow you to market and maintain your listing, which is visible in real-time to thousands of people seeking flexible office spaces.
- LiquidSpace’s DASH LicenseTM makes it quick and easy for you to contract with the lessee while giving you the protection you need as a leasor.
- LiquidSpace will manage sublease transactions by collecting payments from sublessors and depositing the funds directly into your account.