How it works
In a sublease the original tenant becomes the sublandlord. It signs a new agreement with the subtenant for all or part of its space, for a term shorter than its own lease. The original lease stays in force, so the tenant still owes rent and must meet its obligations to the landlord even if the subtenant does not pay.
Most commercial leases require the landlord's consent to sublet and set conditions on who can take the space and on what terms; some forbid subleasing outright. The rent a subtenant will pay depends on the market, the remaining term and the space itself, and it is often below the tenant's own rent.
Space sublets most easily when it is self-contained: a whole floor or a clearly separated area with its own access. That is why a sublease usually follows a restack that brings the tenant's teams together and frees a continuous block of space.
Examples
- A company restacks onto three floors of a four-floor lease and sublets the fourth for the rest of the term.
- A tenant with a long lease and no break option sublets one wing to a smaller firm to offset part of its rent.
Common mistakes
- Counting expected sublease income as a certain saving in the business case; show it separately from cash savings.
- Offering space that cannot be separated from your own, which few subtenants will take.
- Overlooking landlord consent, the cost of making the space lettable, and agent fees.
- Forgetting that the tenant remains liable to the landlord if the subtenant defaults.
How Kadence helps
Kadence helps free space that can be sublet. Workplace Insights shows which floors and areas sit empty, and SpaceOps stack planning and guided workflows consolidate teams onto fewer floors using real occupancy data, so a whole floor or block becomes available.
SpaceOps · Workplace analytics
Frequently asked questions
What is the difference between a sublease and an assignment?
In a sublease the original tenant keeps its lease and lets space to a subtenant under a new agreement. In an assignment the tenant transfers the lease itself to a new tenant, who then deals with the landlord directly. Depending on the lease, the original tenant may remain liable after an assignment.
Do you need landlord permission to sublease office space?
Usually yes. Most commercial leases require the landlord's consent, often on terms that it cannot be unreasonably withheld, and some leases prohibit subletting. Check the lease and local law before marketing the space.
Who is responsible if a subtenant stops paying?
The original tenant. A sublease does not release the tenant from its own lease, so it must keep paying the landlord and meeting its obligations, then pursue the subtenant under the sublease agreement.
Is subleasing a good way to cut office costs?
It can recover part of the cost of space you no longer need, especially when a lease has no break option. Income is uncertain and often below the rent you pay, so treat it as a possible benefit in a business case rather than a guaranteed saving.
Related terms
- Lease event A lease date that forces or allows a decision, such as an expiry, a break option, a renewal option or a rent review.
- Restack Reassigning teams across the floors of a building to free space, absorb growth or improve adjacency, done as a sequence of moves.
- Office consolidation Moving teams from several floors, buildings or sites into less space, then giving up or repurposing the space that is freed.
- Business case for consolidation The financial case for moving into less space, with cash savings, one-off costs and softer benefits kept separate.
- Real estate portfolio optimization Matching the buildings, floors and leases an organization holds to the space its people actually need.
Sources
- sublease, Legal Information Institute, Cornell Law School
Kadence editorial team · Last reviewed