Sublet Office Space in New York City

Sublet Office Space in New York City

Are you considering subletting a commercial property in the heart of NYC? Whether you’re a startup searching for your first office, a growing enterprise seeking additional space, or needing a strategic relocation, subletting presents a financially savvy option.

You’ll find abundant opportunities in the New York City commercial real estate market. Whether you’re eyeing an office, loft, showroom, medical, or retail space, you’ll find plenty of options below-market rates. It’s a scene where both large and small tenants are eager to strike deals with attractive terms, especially when they must leave their space early. This situation helps reduce your rental costs significantly and creates a win-win for everyone involved. And if you’re planning to sublease your own space, the market’s surprisingly robust, offering a great platform to connect with the right tenant.  

So, without further ado, let’s explore the ins and outs of subletting commercial space in New York City.  

How Much Does it Cost to Sublet Commercial Space in New York City?

• Class A Buildings: $43 to $130 per square foot
• Class B Buildings: $33 to $80 per square foot
• Class C Buildings: $25 to $55 per square foot

What You Should Look for in a Sublet Space  

Subletting in New York City can be a smart move for your business, but it’s important to know what to look for to ensure a smooth experience. Here are five key factors to consider when scouting for that perfect sublet space:

• Condition of the Space: Remember, sub-lessors typically offer space “as is.” Be prepared to potentially handle improvements yourself, including hiring contractors and filing for permits. It’s also worth mentioning that sublet spaces often come furnished and wired, allowing an easier and faster move in and saving significant costs.
• Over-Tenant’s Financial Health: Your tenancy and security deposit could be at risk if the over-tenant’s (original tenant) financial situation is shaky. Do your due diligence and review their financial statements from the past two years before signing anything.
• Landlord’s Consent: All sublease agreements need the landlord’s approval. Be aware that this process can take 30 to 90 days, so consider other options if you’re in a hurry.
• Relationship with the Landlord: Subleasing doesn’t establish a direct relationship with the landlord, which can be a drawback if you plan to expand within the same building or landlord’s properties in the future.
• Terms of the Master Lease: The master lease’s terms also apply to you as a sub-tenant. Ensure your real estate attorney reviews the master lease and the sublease agreement to avoid surprises.

The Challenges of Finding a Sublet Space for Your Business 

Subletting office space in New York City has potential but unique challenges. Here’s what you need to watch out for:

• Only Cosmetic Improvements: Sublet space usually only comes with cosmetic improvements. At most, the sublessor will paint and carpet, so the space must have the right layout and come in decent condition.
• Complex Approval Processes: Obtaining a Letter of Consent from the landlord can be lengthy and complex and often requires patience and meticulous paperwork.
• No Direct Relationship with The Landlord: Not having a direct relationship with the landlord has a tangible impact. If you have a direct lease with a landlord, the landlord will tear up your lease and relocate you to a larger space if you outgrow your space. You lose the benefit of this if you outgrow your sublease space.
• Unable to Negotiate Terms of the Master Lease: Sublet agreements in NYC often come with rigid terms set by the original lease. It’s not possible to modify the terms of the overlease.
• Over-Tenant’s Financial Stability: Ensuring the financial reliability of the over-tenant is vital. One misstep in New York City can mean significant risk to your business.

Top Considerations Before Subletting Commercial Space in New York City

If you want to sublet commercial space in NYC, you must know what to look for. Here are five key points to consider before you take the plunge:

• Location Dynamics: Every NYC neighborhood has its own flavor and business environment. Make sure the area aligns with your brand and customer base.
• Market Rate Variances: Sublet rental rates can vary dramatically across the city. Do your homework to understand what constitutes a fair deal for the space you’re eyeing.
• Space Condition: Since sublet spaces are usually delivered “as is,” thoroughly assess the condition and layout. Ensure it meets your needs or factor in the cost of necessary renovations.
• Suitability of Layout: Different businesses have different space needs. A law firm’s layout differs vastly from a tech startup’s. Make sure the space’s design aligns with your operational requirements.
• Telecom Infrastructure: In a city that’s always online, reliable internet and telecommunication infrastructure are non-negotiable. Check that the space has the capabilities and equipment to keep your business connected and running smoothly.

Ready for More Insights?

Since 2004, our team has represented hundreds of tenants in subletting or subleasing space. Contact us at (212) 444-2241 for any questions. 

Frequently Asked Questions

1. WIll my sublease space be delivered furnished and wired?

Sublessors often make their existing furniture available when you sublet their space. The existing wiring or router can remain in place, making sublease spaces an easy “Plug & Play” opportunity.

2. Are the rents for subleases considerably less than those for direct-from-the-landlord spaces?

Yes, sublease rents for spaces are usually 20-40% less than those for direct space. Yet while subleases can offer great value, remember you need to take sublease spaces close to “as-is” condition, with the sublessors only making cosmetic improvements such as paint and carpet.

3. Will a sublessor build out my sublease space?

Usually not. Sublessors typically offer limited work, including cosmetic improvements like paint and carpet. So, the layout of a sublease space must be efficient because it will stay the same.

4. What happens if the sublessor goes into default and gets evicted? 

It is very important to check the financial health of the sublessor before signing your sublease. That’s because a major risk of subleasing space is that the sublessor defaults and gets evicted. In this scenario, you would likely lose your security deposit and need to leave your space. However, in this scenario, you could potentially negotiate a direct lease with the landlord.