Squeeze $$ From Unused Space
January 05, 2017
It seems that everyone in business these days is talking about the “collaboration economy” –finding new ways to use resources that allow people to transform unused resources into financial opportunity. AirBNB is the quintessential example. This service allows homeowners with a spare room or a vacant property to connect with travelers who are looking for a place to stay.
Every problem presents an opportunity, and if 2016 saw changes in your business that left you with unused space in your office or commercial building, you might be able to turn those extra square feet into additional cash flow. There are plenty of small businesses, solopreneurs and free-lancers who need commercial space of all kinds.
However, it pays to proceed cautiously to avoid pitfalls and what could end up being costly mistakes. Here are the first steps to take if you decide to find a subtenant for your unused commercial space:
- Before you do anything else, check the terms of your lease. If the lease doesn’t mention subletting at all, that’s good news. Most likely, that means that you are free to sublet. However, you should always discuss your plans with the landlord before moving forward.
- If your lease does have a “no sublet” clause, don’t give up. If you are a good tenant, the landlord might be willing to allow it.
- Analyze the situation thoroughly and make sure you understand both the ups and downs. For example, you will be giving up part of your space to the subtenant, but you will still be legally responsible to pay rent on the entire space if they default on their agreement.
- When you sublet, you are becoming a landlord. Vet anyone you sublet to by requiring a credit report and a background check.
- When you’ve located a potential tenant, be very clear in communicating your expectations and listening to theirs. Get everything in writing so that there are no mistaken assumptions on either side.
Asking the right questions and doing your due diligence can pave the way to a win-win situation. A small business with a need for space finds just the right arrangement to help them grow their business. You, as their sub-landlord, fill unused space and create cashflow to cover the fixed expense it represents.
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