Flexible Direct Lease vs. Sublease: What You Should Know
Today, finding flexible office space for your business is not limited to just one option. Here is a look at two of these options.
The future of the workspace is flexible. When searching for a new home base (or regional office) for a business, the choices are no longer black and white. The market offers many options beyond subleasing the windowless, unwanted corner of another company’s office space or a restrictive 15 year lease. Over the past year, many companies chose to sublease space, in part due to subleasing being one of the oldest and most traditional means to secure shorter term, more affordable space. The perception that direct leases entail a long, complex negotiation with the landlord and rigidity in rates, concessions, and lease term is not warranted in today’s environment in many cases. Here is a quick primer for the main features of a Flexible Direct Lease vs. a Sublease and then, we’ll dive into pros and cons.
What is a sublease?
A sublease scenario is created when a company doesn’t want or need the entirety of their office space, and looks to find one or more companies (the subtenant) to offset its rent obligations. The subtenant negotiates and signs a sublease agreement with the original tenant, and in most circumstances, both the original tenant and the subtenant must obtain prior written authorization from the landlord before finalizing the arrangement. Sublease space can be obtained at a lower cost than the original lease contract and the term can span from a few months to a few years, but the subtenant must abide by all provisions of the original lease without rights to modify.
How can a direct lease be flexible?
A direct lease or traditional lease is a lease agreement between a tenant and the owner of a building. A tenant has a seat at the table and can negotiate whichever terms are acceptable by both parties. While many building owners have historically required 10-year lease terms, many have evolved to accept more flexible arrangements for certain spaces, particularly if the subject space was originally designed to allow shifts in demising walls and office boundaries with minimum disruption and at a relatively low cost. Though not all spaces in a building can be a candidate for flexible leases, finding ones that can accommodate flexibility will close the gap for our comparison to subleases.
Pros and cons
Whether a business is in its startup or scale up phase, there are unique considerations when evaluating a flexible direct option versus a sublease option. Regardless of the stage of a business, we list below the general pros and cons for both options.
Space+ as a flexible direct lease option
Planning for a growing team while meeting your budget is no small feat, and the options available may be overwhelming. As with any commitment, finding the perfect space to grow your business should require adequate vetting and consideration. Space+ was developed in part to reduce the friction in traditional leasing and lower the barriers to identifying spaces on a direct basis with the building owner that meet the crucial principles of flexibility + stability + control over your growth. No matter if you’re a team of 3 or 30+, you can find professionally managed and smartly designed Space+ locations throughout the greater DC metro area.