Short Term Office Space Solutions: Here’s What to Consider

If Covid has taught us nothing else, it’s taught us that employers and employees alike are interested in flexibility, whether that be flexibility with their work hours, their schedules, or their office space. When it comes to office space, many of the decision makers we deal with on a daily basis are concerned about being locked into a long term lease commitment amid continued uncertainty – what will hybrid work look like for us? What happens if we outgrow our space or decide we don’t need so much with remote work? What happens if there’s another shutdown? Here’s the truth: Short term office space is the most sought after space for companies coming back to the office. If you’re not considering it, you should be.

The good news? Flexibility is easier now than ever before! You can secure a short term office space in NYC, and you have a couple ways to do it: Short term subleases and Coworking. There are pros and cons to both options, but here’s what you should know when deciding what short term office space solution works best for you.

Short Term Sublease

The Pros:
    • Deeply Discounted Rates There’s a direct relationship between length of remaining term and price: less term = lower price. Because subleases have fixed expiration dates, they’re diminishing assets that become less valuable with each passing day to the company subleasing (who often have just spent substantial money creating a space they aren’t even using and are dying to get rid of it). During the height of the pandemic, we saw up to 50% discounts on short term sublease spaces; now, you can still expect higher than average discounts on short term subleases, but the sublease market is a tale of two cities: top tier subleases don’t sit on the market for long and are competitively priced given the “flight to quality” (meaning everyone coming back to the office wants the A+ space) and lower quality spaces are sitting and offering even steeper discount.
    • Your Own Space, Fully Furnished and Wired – Short term subleases come fully furnished and wired and offer companies value as “plug and play” spaces (similar to coworking, but in this case it’s your own private space). In addition to time and hassle saved with a ready-to-go space, many companies subleasing their space have substantially invested in design and furniture, which can literally save you millions of dollars relative to the cost of doing it yourself on a direct basis. Just make sure that disposing of the furniture and restoring any design touches at the end of the term isn’t on you (this should be worked out in your lease agreement).
    • Flexible Term: 2 years, or 10 years (and anything in between): the 20 million square feet of sublease space available covers a range of terms, from 2 years all the way through 10 years (and sometimes more). If you’re conscious of unplanned growth and the need for flexibility, you can find a shorter term sublease (2-3 years); if you’re open to longer terms and want to lock in discounted rates, you can find a longer term sublease (3+ years). And even if you do want a shorter term, many companies subleasing for longer terms are aware of the focus on flexibility and willing to sublease for shorter than the full term (i.e. you can take 2-3 years with the option to extend on a 10 year sublease).
    • Spend Nothing on a Brand New, Beautiful Build – Building a space takes time (think 4-6 months), effort (your team members have to run point, even if you hire project manager) and money (any design or build above “building standard” is on you). Many subleases in this market are from Fortune 1000 companies or growing startups with an eye for aesthetic, and sport brand new custom builds; with 20 million square feet of sublease space available, there’s a strong chance you’ll find the design, layout, and general “vibe” you’re looking for in a space (even more of a chance if you have a broker who knows the sublease market and actually listens to what you want…like I don’t know…us). But you want to act fast given there’s a “flight to quality” on the subleases, meaning that the newly built, beautiful subleases (what we call A+ space) are being snatched up fast. 
The Cons:
    • Direct Extensions Will Cost More – maybe a lot more While you’re probably able to secure a short term sublease at an exceptionally discounted rate, once that short term office space lease has expired, you’re going to be paying the market rate for the direct space should you want to stay. You need to be clear what those new numbers will be, and whether they work for your budget.
    • Any Work You Need Done is on Your Dime – Sublandlords are not in the real estate business and typically will not do work on the space. And neither will the landlord – more often than not, the landlord has already built the space out to the sublandlord’s specifications, and they’re not looking to do any major renovations, especially on a short term basis. You can negotiate free rent to help offset costs and possibly some minor concessions, but if you want real changes you’ll have to manage that yourself. 

 

Coworking

The Pros:
    • Flexible Term – Under a Year – The beauty of coworking solutions is the ability to take as short of a term as you need – in many cases, 12 months or less. You can bring employees back to an office while you figure out a hybrid work model and/or are between offices by signing on to a commitment as short as 1 month up to 12 months (or longer if needed). This short term office space solution also allows you to extend on a monthly basis if needed (though there are some fees attached to that monthly convenience). 
    • Ready-to-Go Space – Coworking space brings the term “plug and play” to a whole new level. These short term office space solutions come with everything you need to walk in and start working. From the office furniture to the board rooms to the fully stocked pantry, ready to go space allows you to focus on growing your business without the hassle of managing the time consuming details of a new office space.
    • Membership Agreement vs. A Signed Lease – Forget the lawyer fees and 50+ page leases… coworking office spaces in NYC send you a 2 page membership agreement that instead of a master lease over 50 pages long. It’ll save you the time and the hassle of reviewing and paying for a legal lease review and get you into your short term office space solution quickly and with ease.
    • Built-In Office Management – Not only are you working in a collaborative environment and have the ability to network with other companies, you also have the benefit of a built-in team running point as your office managers. All coworking spaces have what they call “community managers”, there to help you when potential guests or clients arrive, keep track of incoming and outgoing packages and mail, and generally are there to answer any space-related questions you may have. The time and money you save with an extra set of hands taking those elements off your plate have been a lifesaver for clients of ours.
The Cons:
    • Paying A Premium for Flexibility – The monthly rent that you pay for a coworking space is all-inclusive (with the exception of additional conference room hours if you need more than you’re allotted in your agreement). Because coworking spaces allot on average 80 square feet per person (vs. 150+ in a typical office), you’ll fit more people into a smaller space and pay less for say a 10 person coworking space than you would for a 10 person office on a monthly basis. The catch with these all-inclusive rates is that you’re often paying a ~30% premium all-in vs. the same size space in a non-coworking environment. For these (and other) reasons, we typically recommend coworking only if you’re looking for 12 months or less; for that time frame, it’s about convenience over cost and the premium rate for the benefits of a plug and play, flexible space option is worthwhile; after that, we’d recommend looking first at short term subleases.
    • Shared Amenity Space – Not an issue for some people, but important to consider the shared common spaces that you’ll have in a coworking office space. The reception, the pantry, the use of phone booths and conference rooms, bathrooms and even outdoor space are often on a first come, first serve basis. Occasionally, coworking spaces will have the option to reserve spaces for private events, but on a day to day basis, you’ll be sharing with other tenants in the space and in very close quarters (i.e. through the looking glass) with other companies and teams. Great for networking (and happy hour!), but long-term can be difficult for those who are looking for a bit more privacy and space to spread out.
 
The Takeaway:

If you’re looking for short term office space solutions in NYC, it’s important to keep in mind you’re in good company. As companies return to the office, the demand for short term, flexible space is peaking with the best space options in A+ subleases and coworking providers going quickly.  In other words, as Jerry Maguire once said, time is money.  Whether you’re looking at coworking or a short term sublease, you want to understand which option fits your needs best (knowing they may change down the road) and move quickly. Both are viable options for companies looking to get into an office without the commitment of signing a long term lease, but still important to weigh your options and move quickly.

 

How We Can Help:

Many brokers will push you into making decisions that are more financially advantageous for them. Coworking is a great option they often won’t present (or often won’t negotiate the monthly rent down like we will), but they also likely won’t show you the short term subleases on the market and will make you sign a longer term sublease with a termination right (…and then you’ll have to pay the rest of their broker fee if you act on it). Either way, we’re here to listen to what you need, share data and insights as needed to guide you and avoid the “gotchas”, find short term space options that fit your specifications, and negotiate the best deal on your behalf.

 

CONTACT US: 

Please reach out to our founder, Bert Rosenblatt at brosenblatt@vicuspartners.com, or at (917) 862-8820 to see  if we can answer any questions or get started finding you the right short term space solution.

 

 
 

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