There may be times when a company ends up with more commercial office space than they need. Financially, this is non-productive, so a business might look for ways for that space to become income-producing once again. Subletting and assigning are different ways in which a company can alleviate themselves of the burden of excess space - but they are two very different things! When looking to remove the burden of unused office space, a business should work with a commercial office lease company to ensure the right option for dealing with excess space is exercised.

What Is Subletting?

Subletting, or subleasing, is when a company that leases office space decides to lease a portion of their space to another company, but still remain in control of that space. This is a very common practice today, and a way for a business to keep all their leased space income producing. Yet not all leased commercial office space permits subletting. Before a company offers a portion of their space for lease to another tenant, their lease must state - or be edited to state - they are permitted to do so.

The Pros and Cons of Subletting

Commercial office lease companies assert there are both benefits and downfalls to subletting. On the plus side, just like with assignment, it relieves a business of some of the cost for space they are not using. Additionally, sublets are temporary, meaning typically, they are only for a specific length of time, after which the lease on that space can be renewed to the second tenant, or the main tenant can take their space back. This is especially good for a company experiencing growth after down periods, or for planning ahead for projected growth.

The downside of subletting is this is a sublease between the main tenant and their secondary tenant, so the main tenant is responsible for the space - regardless. Should the subletting tenant cause damage, or create other problems, the party responsible is the first tenant. Also, subletting puts the main tenant in a landlord situation for the sublet space.

What Is Assignment of Lease?

Assignment of lease is another way a company can deal with excess commercial office space, but in a permanent way. This works in a situation where a portion of leased space, or the entire leased space, will assume to be permanently lost, as a different company becomes the tenant. Once again, the initial lease must also allow this, or the landlord must permit reassignment of the lease.

The Pros and Cons of Assigning

Lease assignment works in more dire circumstances, when a company is in danger of defaulting on their lease because they cannot pay the rent, or when reducing their bottom line by downsizing is essential. Through assignment, the new tenant that takes over the lease becomes responsible for rent payment, and the business assigning the lease is released from responsibility.

Still, assignment is not without its faults, and there may continue to be some lease responsibilities the initial tenant remains responsible for should the assigned tenant fail to live up to the lease agreement. Also, the main difference with assignment is that in most cases, this means the assignor will vacate the space, and not return to it. They are giving up the space, permanently.

The decision as to whether it is better to sublet or use a lease assignment depends on a company’s intent after the fact, and whether they wish to eventually return to their commercial office space or not. If either of these plans is executed incorrectly, there can be negative results. Should subletting or assigning a lease be a consideration, it is important to work with a commercial office lease company that is able to guide the process, and look out for a company’s best interests!

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