Sublease Negotiation Strategies

In my last post, I addressed a few ups and downs of subleasing. One suggestion to ensure your sublease occupancy goes as smoothly as possible is to introduce a "non-disturbance" clause to protect against the sudden default of the sublandlord. This may include a pre-determined rent amount and the continuation of all lease terms as if the sublandlord was still in place as the direct tenant. A non-disturbance clause can be included in the sublease document executed by the building landlord or in a separate side agreement between the tenant and the prime landlord.

Clearly, in these situations, the most important issue to all parties is rent. Will you continue to pay your discounted sublease rate, the sublandlord's rate as the tenant under the prime lease or the current market rate? Like most things between a tenant and landlord, this is subject to negotiation.

There is no assurance the actual building landlord will agree to either scenario. But underlying these strategies is a looming crisis in the commercial real estate industry. In an effort to stabilize tenancy, the coming year should see landlords extending concessions across the board and opening up to tenants in ways few working in this market have seen in decades. Consequently, now is the time for creativity in negotiation and uncommon requests from those seeking space, and working with a tenant representation firm like Carmen Commercial Real Estate is rarely more critical than it is today.