Considering a cheap NYC law office sublet for your office, know these 5 things before signing the sublease.
Yesterday I called an attorney to follow up on a tour of our Midtown office from the week prior. He informed me that he liked our shared law office suite, but that he was looking at a cheap NYC law office sublet (also in Midtown).
When I asked this attorney how much cheaper, he mentioned it was $500 per month less for a similar sized space.
It’s difficult to compare what we offer at Law Firm Suites and an extra office that is being subleased by a law firm. For starters, our shared law office suites are professionally managed by staff whose sole role is to do just that. Plus add in the benefits that come with sharing office space with dozens of self-employed, entrepreneurial attorneys (for example, $2.5 million in cross referrals in every center per year), you’d be trying to compare apples to oranges.
Our existing clients get it. They’ve had a taste of these benefits first hand, which is why we have the lowest turnover rate for any executive suite in NYC and we typically run at 97% plus occupancy rates. But for the skeptical attorney coming in off the street, I understand how attorneys can have the perception that our sales is just trying to get a deal closed.
This all being said, I can tell you that when we price our offices we secret shop all our competition, including sublet office space in NYC law firms. We know that our prices are competitive with what’s out there, especially when you consider things like aesthetics (our office was the former NYC headquarters of an AMLAW 100 Firm, and it looks it) and services.
As with anything in life, you pay for what you get. We don’t have a problem renting offices, but sometimes it takes a bit of time to educate an attorney that there are reasons why a sublet office in a NYC law firm may be cheap.
Here are the top five things you should be afraid of with a cheap NYC law office sublet:
1. NYC firms that sublet extra office space frequently have financial problems.
If a law firm is willing to waste valuable billable time to sublease empty office space to other lawyers, there’s a good chance the firm is in a precarious financial position. Either they took on more space than they need and require the income to offset their rent, or they contracted their practice significantly, which resulted in empty office space.
Law firms price empty office below market because they need the income fast.
Things often get worse for firms in a bad financial predicament, not better. Before you move into a Manhattan law office sublet, you should do your due diligence about the sublessor firm.
Renting from a firm in financial peril is dangerous. One day, you may show up to the office ready to prep for trial, only to find a Sheriffs eviction notice and very little time to find a new office.
2. Law firms don’t spend money to provide great service, which is why they can price offices cheaply.
Executive suites are in the business of renting office space, and for the most part, will have high-end, reliable services. Those services are performed by a dedicated team of professionals, and that costs money. Comparatively, spread over dozens of firms, it’s a very cost effective way to have a smoothly managed office.
By comparison, a law firm sublet is managed by the firm’s office manager (if you are lucky), or worse, the firm’s managing partner who is typically too busy to make sure that your needs are met. They are not spending any additional amounts on staff to manage the needs of subtenants. Therefore, they can price below market, but you may have a terrible experience when something goes wrong with your office.
The two complaints we hear about most often are reception and internet services.
Chances are in sublet office space your guests will be greeted by the sublessor’s receptionist. If that person is rude to your clients, dresses inappropriately or shows up to work drunk (and it is tolerated by the sublessor), your only recourse may be to move.
As for internet, it’s not uncommon for law firms to have insufficient bandwidth causing Internet to be painfully slow. Your only recourse may be to install your own Internet line at a substantial additional cost.
Being a landlord is a full-time gig. The law firm that offers a NYC law firm office space sublease must manage landlord responsibilities in addition to their full-time legal practice.
Which one do you think gets priority?
3. Landlords of sublet office space make up wacky rules (or have no rules at all).
Even if you rent an office from an executive office center, operators set common-sense rules based on industry best practices that are reasonably consistent from center operator to center operator.
These rules help to keep the center a civilized place to work.
In a NYC law firm office space sublease, it’s not uncommon to have to deal with quirky rules set by the sublessor. Things we’ve seen, for example:
- You must have cherry wood furnishings purchased from Room and Board.
- The cost of paper is split between all lawyers whether you use the copy machine or not.
- You can use the conference room any time you want, unless your landlord’s firm needs it; then you’re on your own.
Even worse than quirky rules, some sublet office spaces have no rules at all. In this case, you are at the mercy of whatever decorum is tolerated by the sublessor firm. This may result in a smorgasbord of annoying and disruptive behavior from your suitemates.
Some law firms know that they have odd rules, and are willing to price offices cheaply to entice someone into their wacky world.
4. The sublessor law firm has no intention of keeping you around.
If a sublet office space in NYC does work out well, chances are the sublessor’s firm is doing well. The biggest risk with sublet office space is being asked to vacate as soon as sublessor’s business picks up enough to fill your office with its own people. The firm may know that they don’t have any intention of keeping you around, so they price the office at a bargain to fill it as quickly as possible in order to squeeze as much rent from the empty office space until they need it back for their own use.
5. The master lease is up in the near term and they have no intention to renew.
Similar to item 4, above, often firms have very little time left on their lease and they have no intention to renew. Partners of disbanding firms may be on the hook for personal guarantees, so they are hanging on until the lease term ends. These firms need subtenants to stop the hemorrhaging of cash, so they price office cheaply to fill quickly. Of course, there may be a lot less time left on the master lease than you thought, leaving your in a lurch when it runs out.
Sublet office space can offer a solo law practice or small law firm with a proper office at a good value. That is, as long as you do your homework and understand exactly what you are getting yourself into.