Sublease or Licence: The Right Thing to Do with Unused Office Spaces

Defining Rental Terms

Before answering, “Should I sublease or license my spare office space,” let’s first tackle two key terms in this process. 

Sublease

Subleasing involves leasing out an unused portion of the workspace to a third party. In certain instances, businesses transitioning from an in-person to a fully remote setup may sublease the entire workspace to cover expenses until the contract expires.

Unlike licence agreements, subleasing requires the existing tenant to seek permission from the landlord before finalising a deal with a third party. Upon landlord approval, the existing tenant will negotiate with the third party regarding the distribution of responsibilities outlined in the original contract. The existing tenant retains primary responsibility over the subtenant.

Licence

On the other hand, licensing involves directly renting out workspace to a tenant. Licence agreements typically feature short tenancy periods, providing tenants greater flexibility.

In contrast to subleasing, licencing does not involve a third party or subtenant. The transaction occurs solely between the landlord and the tenant. Additionally, tenants have limited rights in the property compared to leased spaces.

Want to learn more about the differences between a lease and a licence? Here’s a blog that delves into the intricacies of licence and lease agreements. Keep reading to discover expert insights into, “Should you sublet office space and downsize?”

Why Sublease Your Spare Office Space?

The demand for subleasing in Australia has increased in the past few years, especially in smaller cities like Brisbane, Perth, and Adelaide. This rental setup allows businesses to re-purpose their unused space.

Here are some key insights that could be valuable to answering your question, “ Should I sublease or license my spare office space?” 

Extra Revenues

Some businesses often turn to subleasing when they find themselves unable to bear the costs associated with the workspace. Subleasing serves as a means for them to seek out individuals or other businesses capable of covering these expenses on their behalf.

For certain tenants, subleasing represents an opportunity to generate additional income from unused space. Moreover, they can save money on other expenses such as water, electricity, and utilities.

Opportunities for Other Work Arrangements

Subleasing unused office space opens up opportunities to explore alternative work setups, including hybrid or remote arrangements. These setups not only reduce workspace costs but also offer employees more flexibility in their work arrangements.

Transitioning to these setups allows for the rental of short-term space options. For hybrid work, flexible office spaces like hot desking and coworking spaces are ideal and worth exploring. On the other hand, opting for a fully remote setup only necessitates a credible virtual office space.

Improved Work-Life Balance

As you shift towards more flexible work arrangements following the subleasing of your unused space, a healthier work-life balance awaits both you and your team. Operating within comfortable environments can substantially enhance productivity and mitigate the risk of work-related burnout.

These positive effects on the health and wellness of your employees are valuable in cultivating high job satisfaction and retention rates. Furthermore, a more productive workforce can increase your company's revenue and surpass your expectations.

Got more questions? Do not hesitate to reach out! Continue reading to gain more informative points for your inquiry, “Should I sublease or license my spare office space?”

Why Licence Your Unused Office Space?

We may have determined subleasing as a favourable rental agreement. It’s time to explore why you should consider licencing your office space. Here are some compelling reasons to consider;

Simpler & Faster Transactions

Licensing an office space is simpler compared to subleasing. As mentioned earlier, the transaction involves only the landlord and the tenant, with no third party involved.

All you need to do is find the ideal tenant for your workspace, allow the tenant to evaluate the space, and provide the agreement once the assessment is completed. There are no shared responsibilities or the long-term conditions often associated with a sublease agreement.

More Flexible Agreements

Licensing typically entails a short-term tenancy period, offering a more flexible agreement for the landlord and the tenant.

This arrangement helps landlords mitigate the risk of incomplete rental payments often associated with long-term rental plans in lease agreements. Meanwhile, tenants benefit from cost savings with these flexible plans and can readily scale up or down the workspace as needed.

Easier Way to Find Tenants

Since licensing is a less complex rental agreement compared to subleasing, finding tenants here is much easier and faster. Tenants typically prefer processes that are hassle-free and free of bottlenecks.

Another factor to consider is the risk associated with subleasing. Tenants often hesitate about their tenancy in subleased spaces since the terms typically don't offer stability regarding their occupancy. In contrast, licensing presents a more viable solution because of the direct and one-way transaction.

Are Sublet Offices or Shared Office Spaces Better for Your Business?

Sublet and shared offices are both flexible workspace solutions. Their benefits for your business are pretty similar. Here is a quick glimpse into what they can provide for your business;

1. Flexibility: Both solutions offer flexible rental plans, ideal for easily adapting to the unpredictable changes in the business world.
2. Cost-Effective: These solutions help your business reduce overall workspace costs. Apart from their flexible rental plans, these workspace solutions also allow you to access a wide range of high-end facilities and services at affordable, all-inclusive prices.
3. Location Wise: Most sublet and shared offices are built in premium spots. These locations provide great accessibility to transport terminals, malls, and other basic commodities for an employee.
4. Networking Opportunities: The premium locations provided within these workspace solutions are a great opportunity to connect with a community of like-minded individuals easily. Take advantage of these connections to expand your network and business growth.

Need Help?

"Should I sublease or license my spare office space?" Both are viable options, and the decision depends on your capabilities and needs.

If you are looking for an avenue to list your office space, look no further than Office Hub! Here is a simple guide to how we can help you;

1. Go to Office Hub and select List Space>>Add Listing.
2. State the type of office space you want to list with us.
3. Provide your personal details and workspace features.
4. We will look for the perfect tenants for you.
5. Once we’ve found the perfect tenant, it’s time to seal the deal!

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