What Is Office Subleasing?
A sublease is an arrangement in which an existing tenant makes all or part of its leased office space available to another company.
The original tenant remains a party to the main lease agreement — the head lease — and continues to be responsible for its obligations towards the landlord.
The new occupier — the subtenant — enters into a separate sublease agreement with the existing tenant.
In simple terms:
Landlord → Tenant → Subtenant
For companies with surplus office space, subleasing can be an effective way to reduce the financial burden of space they no longer need.
When Does Subleasing Make Sense?
Your Office Has Become Too Large
Hybrid working, restructuring or a reduction in headcount may mean that your company is using significantly less space than when the lease was originally signed.
You Still Have Several Years Left on Your Lease
If your lease does not include a break option, simply terminating the agreement may not be possible.
Subleasing can provide an alternative way to reduce the cost of unused space.
Your Business Model Has Changed
A merger, acquisition, restructuring or change in workplace strategy may substantially alter your office requirements.
You Are Planning to Relocate Before Your Existing Lease Expires
A sublease can help reduce the cost of overlapping leases during the transition to a new office.
Step 1 — Check Your Lease
Before marketing the space, the first step is to establish whether subleasing is permitted under your existing lease.
Many office leases allow subletting, but usually subject to specific conditions.
These may include:
- prior written consent from the landlord,
- restrictions concerning the type of subtenant,
- limitations on the amount of space that can be sublet,
- minimum financial or reputational requirements for the subtenant,
- restrictions on the commercial terms of the sublease.
The exact provisions of the head lease should therefore be reviewed before starting the process.
Step 2 — Obtain the Landlord’s Consent
In most cases, the landlord’s consent will be required.
This does not necessarily mean that obtaining consent will be difficult.
A professional approach should clearly explain:
- who the proposed subtenant is,
- what part of the premises will be occupied,
- the proposed duration of the sublease,
- how the space will be separated,
- whether any alterations will be required.
The consent process should run in parallel with commercial negotiations wherever possible so that it does not unnecessarily delay the transaction.
Step 3 — Define the Space You Want to Sublease
Not every office can be easily divided.
You need to consider whether the proposed subleased area can operate independently.
Important issues include:
- access and reception,
- meeting rooms,
- kitchens and common areas,
- toilets,
- IT infrastructure,
- access control,
- electricity and other utilities,
- signage,
- fire safety and evacuation routes.
Sometimes a relatively small modification to the layout can make a significantly larger part of the office commercially attractive to potential subtenants.
Step 4 — Determine the Right Commercial Terms
The rent payable under a sublease does not necessarily have to be the same as the rent under the head lease.
The appropriate level will depend on:
- current market conditions,
- location,
- building quality,
- office standard,
- furniture and equipment,
- remaining lease term,
- size of the space,
- flexibility offered to the subtenant.
A fully fitted and furnished office available immediately may have a significant advantage over traditional space requiring several months of fit-out works.
At the same time, a short remaining lease term can reduce the number of potential occupiers.
The objective is therefore not necessarily to achieve the highest theoretical rent, but to find the optimal balance between rent, transaction probability and time to occupancy.
Step 5 — Market the Space
Successful subleasing requires more than simply publishing an online listing.
A commercialisation process may include:
- preparation of professional marketing materials,
- direct communication with office brokers,
- approaching companies with known office requirements,
- listing the space on relevant property platforms,
- targeted direct marketing,
- organising property viewings.
The positioning of the offer is particularly important.
Potential subtenants should immediately understand why the space is attractive compared with other available offices.
Step 6 — Negotiate the Sublease
Once a potential subtenant has been identified, the parties need to agree on the commercial and legal terms.
These typically include:
- rent,
- service charges and utilities,
- parking,
- security deposit or bank guarantee,
- duration of the sublease,
- commencement date,
- furniture and equipment,
- use of common areas,
- reinstatement obligations,
- liability for damage,
- conditions resulting from the head lease.
The sublease term cannot normally extend beyond the term of the existing head lease.
How Much Can You Recover?
This depends primarily on the quality of the space, remaining lease term and current market conditions.
In favourable circumstances, a tenant may recover a substantial proportion of the cost of surplus space.
In other situations, accepting a discount to the current contractual rent may still make strong financial sense.
For example, recovering 70% of the cost of space that would otherwise remain completely unused is considerably better than recovering 0%.
The right question is therefore not:
“Can we sublease the space at exactly the same rate we currently pay?”
but rather:
“How much of our remaining lease liability can we realistically recover?”
What Are the Main Risks?
The Tenant Remains Responsible to the Landlord
A sublease does not normally release the original tenant from its obligations under the head lease.
If the subtenant fails to pay, the tenant still has to meet its obligations towards the landlord.
The Sublease Must Be Consistent with the Head Lease
The tenant cannot generally grant the subtenant rights that it does not have itself.
Finding a Subtenant Takes Time
The more specialised the space and the shorter the remaining lease term, the more challenging the commercialisation process may become.
This is another reason to start early.
Price Expectations May Be Unrealistic
The amount your company currently pays for the office does not determine its current market value.
The sublease needs to compete with both other subleases and direct offers from landlords.
Sublease or Lease Renegotiation?
Subleasing is not always the best solution.
Depending on the circumstances, it may be worth discussing other options with the landlord, such as:
- surrendering part of the premises,
- reducing the leased area,
- relocating within the same building,
- restructuring the existing lease,
- extending the lease in exchange for reducing the occupied space.
In some situations, a negotiated solution with the landlord can be financially more attractive and operationally simpler than introducing a subtenant.
That is why the first step should be to compare the available scenarios.
How Does the RE+ Process Work?
Stage 1 — Lease Review
We analyse the head lease and determine whether, and under what conditions, the premises can be sublet.
Stage 2 — Strategy
We assess the space, determine realistic commercial terms and prepare a commercialisation strategy.
Stage 3 — Marketing
We assess the space, determine realistic commercial terms and prepare a commercialisation strategy.
Stage 4 — Negotiations
We negotiate the commercial terms with prospective subtenants and coordinate the landlord consent process.
Stage 5 — Agreement
We support the legal documentation and execution of the sublease agreement.
Summary
Unused office space is not just an operational problem.
It is a financial liability that can continue for several years.
Subleasing can turn part of that liability into revenue and significantly reduce your total occupancy cost.
The earlier the process begins, the greater the range of options available — and the greater the probability of finding the right subtenant.