Sublease Offices vs. Shared Office Space

Subleased office space has become an attractive option for many companies over the past year. Markets have seen a 122% (!) surge in subleases according to figures released by Cushman & Wakefield. As businesses cut overhead costs, subleased office space looks more and more attractive … but it is not the only cost cutting option for your office space, and frequently not the best.

Shared office space, also called ‘office business centers’ or ‘executive suites,’ have been around forever and provide a similar option to sublease office space – primarily lower cost vis a vis traditional office space as well as easier lease terms. However, shared office space comes with important advantages over subleases.

Total Cost Of Occupancy

With sublease office space businesses can share the lease burden, and cut their cost for raw office space. This same holds true for shared office space- the executive suite operator leases out portions of space at a lower cost than most traditional leases for equivalent facilities. However, whereas this is the end of the cost saving story for subleases, the savings continue for shared office space.

Executive suites provide this option to share the cost of space but also the cost of office infrastructure. This infrastructure savings can create upwards of a 40% cost savings for the total cost of occupancy over the life of the lease … and that is leaving aside any upfront capital cost for infrastructure and buildout.

Stability

What good is a great office deal if it falls out from under you? With subleases and shared office space, the stability of the agreement is based on the stability of the company they have leased space from. This isn’t a deterrent, but a case of risk mitigation. Unlike a single company which is at the whim of a particular market, the clients of executive suites are spread across many market sectors providing a level of stability for executive suites and therefore less risk. Finding an executive suite company with a multi-city presence and a stable business history can mitigate risk compared to a common sublease.

Control

The very nature of a sublease means that the space is not yours and therefore ultimate control of the space that you are subleasing does not belong to you. This can seem like a trivial matter during the search for office space, but the day-to-day practicalities of this have a less than trivial impact on companies subleasing space. The difference between sublease office space and executive suites comes down to the fact that there is a fundamentally different dynamic between the leassor and subleassor.

In executive suites, renters of office space are seen as clients and business partners. With one notable exception, executive suites tend to be highly customer service oriented as part of their core business model. In the typical sublease relationship, the sublessor is seen simply as a shared tenant, and the lessee as a second landlord to deal with. As such, the executive suite environment is designed to make adjustments to fit your needs.

Additional Services

The final point of difference between subleases and shared office space is the services provided by your new office accommodations. Sublease office space provides just what it says … office space. In contrast, executive suites come with a host of pay-per-use amenities and services such as IT, high-speed internet, networked color copiers and faxes, receptionists with personalized phone answering, furniture, and phones. On top of that janitorial and utilities are included. Some sublease spaces may have extra desks they will let you use, or will let you use their receptionist, but these services will not be tailored to meet your needs.

When looking at the different office space options available to you, from traditional leases, to subleases, to executive suites – carefully consider the benefits of each type of lease for what is right for your business. By avoiding the trap of looking only at the cost per square foot and not the total cost/benefit picture your business will be poised to create an environment and bottom line that fuels your business’ success.

nd-headshot Nicholas DeGraff
Marketing Manager

Currently serves as a Marketing Manager with a focus in online marketing and market strategy. Prior to joining Pacific Business Centers (rebranded as Pacific Workplaces), Nick consulted with small businesses to assist in a business development and public relations role.

2018-02-15T14:02:26+00:00 December 9th, 2009|Office Space|