No one has to tell small business owners in Southern California how expensive real estate is — particularly if you’re looking for space in a popular area where customers are plentiful. Some small business owners here in SoCal and throughout the country are able to afford space in plum sites by subletting some of that space to other businesses. Space sharing helps new businesses be able to afford to get off the ground.
There are even “matchmaking” sites to help business owners find partners. For a fee, sites like Shared Business Space and Shared Offices lets businesses seeking a shared space list their availability and find others looking to share space. The best match, according to one of the site’s owners, is a business that is not competitive with yours, but that attracts a similar clientele. Some entrepreneurs turn to real estate brokers to find a business with similar clientele. In some cases, landlords even put businesses together.
Business owners who are seeking a partner to share their space need to be sure that their lease allows them to sublet part of their space. Even if you have no immediate plans to do so, it’s a good option to have available. Your landlord may agree, with the provision that you do a background check on any businesses before you sublet. Of course, you should do that anyway.
Further, if you end up sharing a space with another business, you will likely need to do some remodeling to separate the two, including, for example, creating separate entrances. Therefore, you need to be sure that your lease allows that.
Space sharing isn’t new — particularly among retailers. Large retailers like Target and Walmart have Apple mini-stores in some of their locations. Some Sears locations sublet space to Forever 21.
When you lease a space, it’s crucial to negotiate terms that give you plenty of leeway to take your business in whatever direction you choose. An experienced commercial real estate attorney can help you do that.
Source: Entrepreneur, “How Small Shops Economize by Sharing Space,” Jane Hodges, accessed June 03, 2016