Office Space Blog

Lease vs. Sublease: Pros and Cons

Written by Ben Blumenthal | Jan 10, 2023 6:44:43 PM

When it comes to renting office space in New York City, the two most popular choices for companies are leasing and subleasing. Both have their pros and cons, and the decision of which one to choose will depend on your specific business needs and goals. Below, we'll take a closer look at the differences between leasing and subleasing office space in New York City, and the pros and cons of each.

Leasing Office Space

Leasing office space in New York City is the more traditional option - a great choice for businesses that want to establish a long-term presence in the city. When you lease office space, you're essentially renting the space directly from the landlord or property owner. You'll be responsible for paying rent, taxes, and any other expenses associated with the space, but you'll also have a great deal of control over the design, build, and customization of the space, both during the negotiation process and throughout the term of your lease.

Pros of Leasing Office Space:
  • Long-term stability: Leasing office space allows you to establish a long-term presence in the city, which can be beneficial for building a brand and creating a sense of stability for your business.
  • Customization: When you lease office space directly from the landlord, you'll often have the ability to customize the space to your specific needs (ie. determine how many offices you'd like built, what color paint/carpet to use, which light fixtures you'd prefer). For long-term direct leases, landlords are more likely to cover the cost and perform the work to build out the space for your specific needs
  • Direct Relationship: With leasing, you will have a direct relationship with the landlord, which can be beneficial if you need to negotiate any aspects of your lease agreement. Additionally, you will not be holden to a sublandlord, who would remain on the lease as the primary tenant.
Cons of Leasing Office Space:
  • Long-term commitment: Leasing office space often requires a long-term commitment, which can be problematic if your business is growing or if you're unsure of your future needs.
  • Higher costs: Compared to subleases in the same building, leasing a direct space will often include a higher asking rent. Additionally, furnishing and wiring a space can cost thousands of dollars - a cost that is generally taken on by a tenant when signing a direct office lease.
  • Limited flexibility: Once you've signed a lease agreement, it can be difficult to make changes to the terms or to terminate the lease early if your business needs change.

Subleasing Office Space

Another option to consider when renting office space in New York City is subleasing. When you sublease office space, you're essentially renting the space from another tenant (the "sublandlord") who has already signed a lease with the landlord. The tenant who is subleasing the space is responsible for paying rent and any other expenses associated with the space directly to the landlord, and in turn, you (the "subtenant") are responsible for paying all agreed upon sublease expenses to the sublandlord for use of the space.

Pros of Subleasing Office Space:
  • Short-term flexibility: Subleasing office space is a great option if you need space on a short-term basis. You can often sublease space for a shorter period of time than a traditional lease would require.
  • Lower costs: Subleasing office space can be less expensive than leasing directly from a landlord - both in terms of the asking rent and because subleased space is usually outfitted with furniture already and ready for use.
  • Access to prime locations: Because you're subleasing from another tenant and generally at a discount, you may have access to office space in prime locations that would otherwise be too expensive for you to lease directly.
Cons of Subleasing Office Space:
  • Limited control over the space: As a subtenant, you will be subject to the lease agreement that the original tenant has with the landlord and any restrictions or rules that are outlined in the agreement. This means you might not be able to make any changes or modifications to the space as per your needs.
  • Limited customization: Similarly, you might not be able to customize the space to your specific needs since the space is already outfitted. The original tenant will have already set up the space to suit their needs and any additional costs of customization will fall on you.
  • Uncertainty: Subleasing office space can be uncertain because the original tenant may decide to end the lease early or make changes to the terms of the lease agreement. This can cause disruption to your business and could lead you to lose your office space unexpectedly and need to find new space quickly.
  • Limited liability protection: When you sublease office space, you may not have the same level of liability protection as if you were leasing directly from a landlord. In many cases, the original tenant is still technically responsible for the space, so if there are any issues or problems with the space, you might not have a direct line of communication or recourse with the landlord.
  • Dependence on the original tenant: You may have to rely on the original tenant to enforce the lease agreement, which can make you more dependent on them and create uncertainty. The original tenant might not be as responsive as you want, which can cause issues to the day to day running of your business.

As you can see, subleasing office space does have its own set of drawbacks and it's important to consider them carefully before making a decision. It's important to carefully weigh the pros and cons and make sure that the option you choose aligns with your business needs, goals and budget.

Not sure which option is best for you?
Check out some of the latest available office space to hit the market - both for direct lease and sublease!