How does successful subletting or re-letting work?

In this blog post, we will take a closer look at how these factors influence the subletting and re-letting of office space. Below, you will also find tips and advice to help you sublet or re-let your office space.

Subletting or re-letting office space refers to the letting of parts of an existing office space to third parties. This is an agreement between the main tenant, who has signed the original lease with the owner or landlord, and the subtenant, who uses the office space for a specific period of time and at an agreed price.

In subletting, the main tenant passes on part of their rented space to a subtenant. However, the main tenant remains responsible for paying the rent to the landlord. The subtenant, on the other hand, pays the rent to the main tenant. In this form, furniture or furnishings are often also rented out for an additional fee.

In subletting, the main tenant becomes the landlord and rents out the already rented office space to a third party. The new tenant pays the rent directly to the main tenant and the main tenant continues to pay the rent to the landlord. In this form, the landlord and the main tenant often agree on a compensation payment to terminate the existing lease agreement, and the landlord negotiates a new lease agreement directly with the new tenant.

There can be many reasons for subletting or re-letting office space. For example, a company may have rented more office space than it needs and wants to sublet part of it to save costs. Or a company may need additional financial resources and therefore sublets part of its office space to another tenant.

Home office and remote work have become increasingly important in recent years. In the wake of the COVID-19 pandemic, many companies sent their employees to work from home to slow the spread of the virus. Even though the pandemic is now under control, many employers have recognized that working from home is an attractive option for keeping employees happy and increasing productivity. This flexibility allows employees to organize themselves better, which saves not only time but also money. However, when employees work from home, companies need less office space. It can therefore make sense to sublet or re-let office space to save costs.

Another factor influencing the subletting or re-letting of office space is the trend toward coworking. More and more companies and self-employed people are opting for this form of work because it offers greater flexibility. Coworking spaces offer the opportunity to exchange ideas with other people and make new contacts. By sharing office space in this way, companies can save costs and at the same time create an attractive working environment for their employees. It's like having offices on demand.

Before you decide to sublet or re-let, there are a few important factors to consider. First, you need to check whether subletting is permitted under your lease agreement. If this is not the case, you will need to talk to your landlord and ask for their permission. Second, you need to consider the costs of subletting, including rent, utilities, and possibly maintenance fees, contract drafting costs, and brokerage fees. You must ensure that the costs of subletting exceed your income so that you do not make a loss. Finally, you must thoroughly check potential subtenants to ensure that they are reliable and do not pose any security risks.

Subletting can have several advantages for companies with vacant office space. Successful subletting or interim letting can generate additional income and help reduce rental costs. It can also help reduce office vacancy rates and make more effective use of space. Subletting or re-letting office space offers companies a number of advantages, including:

• Cost savings: Subletting or subleasing office space can help companies save money. For example, if a company has rented a larger office space than it needs, it can sublet part of the office space to a subtenant and thus reduce its rental costs.
• Flexibility: Subletting or re-letting office space can also offer companies greater flexibility. If, for example, a company needs more office space at short notice, it can sublet it temporarily to cover its requirements. As soon as the additional space is no longer needed, the sublease agreement can be terminated.
• Additional income: Subletting or re-letting office space can also generateadditional income for companies. For example, if a company sublets part of its office space to a subtenant, it can generate additional rental income.
• Networking: Subletting or re-letting office space can also provide an opportunity to make new contacts and network. If a company uses coworking spaces, for example, it can benefit from the contacts and exchange with other companies and freelancers.
• Risk minimization: By subletting or re-letting office space, a company can also minimize the risk of being stuck with too much office space if business conditions change or the company grows or shrinks.

However, there are also some risks involved in subletting or re-letting offices. For example, there may be difficulties in working with the landlord if they do not agree to the subletting or re-letting. It can also be difficult to find the right subtenant, especially if the office is located in a less busy area. Although subletting or re-letting office space can offer many advantages, there are also some risks that companies should consider when deciding on this option:

• Landlord's consent: Most leases only allow subletting or re-letting office space with the landlord's express consent. If the landlord does not give their consent, this can lead to legal problems and financial losses.
• Responsibility: If a company sublets office space, it usually remains responsible for paying the rent to the landlord, even if the subtenant does not pay the rent. This can lead to financial difficulties for the company.
• Claims for damages: If a subtenant damages the office space or fails to comply with the terms of the lease, the landlord can claim damages from the main tenant. The main tenant must then pay for the damage, even if they are not directly responsible for the incident.
• Impact on reputation: If a subtenant uses the office space for illegal or unethical activities, this can damage the reputation of the main tenant and lead to negative publicity.
• Rent fluctuations: Re-letting office space can be uncertain when the commercial real estate market is volatile. If rental prices fall, this may mean that the main tenant receives less rent than originally agreed for office space that they have sublet to a subtenant.

Overall, subletting or re-letting office space offers companies a number of advantages, including cost savings, flexibility, additional income, networking, and risk minimization.

Carefully weigh the risks and benefits of subletting or subleasing office space before deciding on this option. A clear agreement between the main tenant and the subtenant can help minimize potential risks.

One of the easiest ways to start subletting is to use your own network by searching for subtenants or new tenants yourself. However, subletting is a risky step for many companies, as things can go wrong with the wrong tenant. Don't be afraid to seek support from experts. Contact us with details of your vacant space and receive professional advice on the next steps in your subletting process.