5 Things to Know About Subleasing an Overland Park Office Space
A lot of tenants want the option to sublease their office space if necessary—either for financial reasons, because they want to move to a different space, or because they have more space than they need. It is important to account for this possibility in the first place when negotiating a lease, but it is also important to go back review these terms and understand the process before actually starting to look for a subtenant. Here are a few things to know about subleasing a space, as outlined in the article “So You Say You’re Subleasing”:
#1 Landlord Approval
Most leases that allow a tenant to sublet the space still stipulate that the landlord must give consent regarding the new tenant. An important thing to address in your original lease is the this actual consent procedure. When does the landlord give their consent? How do you as a tenant make a request for consent? Do they have to have reasonable proof for rejecting a potential sublessee? Some leases also allow the landlord to take back the space you might want to sublease, which would excuse you from paying rent for that recaptured space. Make sure that if you are thinking about subleasing, you fully understand your lease’s terms regarding this process.
#2 Rental Rates
Often leases allow the tenant to determine the rental rate for the subtenant, although some leases include a profit sharing clause that allows landlords to keep 50% or more of the profits from the sublease, particularly if the rental rate is higher than the original rate. If there is a profit sharing clause in your lease, make sure that you are careful to discuss how broker fees or the sale of any furniture factors into this division of the profits.
#3 Lease Term
The term of the lease for the sublease tenant cannot be longer than the term for the original tenant. However, extensions to the lease term can be a grey area. Often the original tenant is the only one who can negotiate with the landlord for an extension, not the subtenant.
#4 Prime Lease Rights and Obligations
Generally, unless specified otherwise in the lease, a subtenant inherits all of the rights, benefits, and obligations of the original tenant. This includes things like parking rights, insurance costs, tenant maintenance, etc. This also means that any alterations a subtenant wants to make should be in accord with the requirements in the original lease, including the possibility of removing those alterations at the end of their term. Any exceptions to the original lease should be clearly spelled out in the subtenant’s lease.
#5 Relationship Between Subtenant and Landlord
Typically a subtenant has a non-direct relationship with the landlord, which means that the tenant cannot pursue legal action against a landlord if a landlord fails to meet their expectations in a lease—for example, maintaining the building. For this reason, tenants who sublease typically want it included in their lease that the original tenant has to make a reasonable effort to get the landlord to meet their obligations.
If you’re thinking about subleasing your space, be sure to review your original lease and talk to your landlord so you know what your costs and obligations will be. Be ready for a subtenant to negotiate, and make sure the obligations and rights of both parties are clearly spelled out in a new lease so that the transition is as smooth as possible.
Looking for an office space for lease in Overland Park? Give a commercial real estate broker in Overland Park a call today at 913-685-4100 to learn more about our available spaces and even set up a tour!