Tenants must plan for the unimaginable, so it’s wise to keep as many options open as possible. Pay close attention to lease language concerning “use,” “parking” and “assignment and subletting.” Negotiate to keep the “use” as broad as possible, even if the company only needs space for “general office use.” Also, secure as much free parking as possible, whether it’s needed or not. Afuture expansion or decision to assign more employees to work in less square footage would make extra parking a plus. For example, we represent a 17,000-square-foot technology company in Dallas that needs another 5,500 square feet. The company next door was marketing 9,000 square feet for sublease, but my tenant could not take any of the space because that company’s lease prohibited subleasing to another tenant in the building. My tenant was prevented from expanding in place, even though no other square footage was available in the building.
The lease’s assignment and subletting language is key to a tenant’s flexibility. Subleasing may be a firm’s only option if its real estate needs change, but many companies overlook this portion of the lease and discover costly roadblocks to subleasing space. The following sublease information could save the day if that bridge needs to be crossed:
- The most likely sublease candidate is the tenant next door or one that’s nearby in the building.
- A good sublease candidate might have recently toured the building without finding suitable space.
- Secure as many rights as possible to pass along on the sublease, such as those connected to building signage and advertising sublease space.
- Subleases tend to happen quickly so it’s good to strive for a landlord consent time of seven to 10 days.
- Sublease space typically garners lower than current market rates, but a company will not be able to charge those rates unless it’s specified in the original lease.
- In the rare case that a company can secure above-market rent, it’s advisable for the firm to request that expenses, commissions, and tenant improvements be covered first as part of a profit-sharing agreement with the building owner.
- It’s advisable to design space in such a way that it can easily be divided in the future to create functional space for two parties.