Sublease, Assign, Surrender – and Win

Guides Danny Fitzgerald

Over the past 15 years, disposing of tenant space has become one of the cornerstones of my career. Over the last decade alone, I have advised on the successful disposal of nearly 500,000 sq ft of space – roughly eight football pitches. Based on that experience, here are a few trends we consistently see in successful disposals.

Know what your lease permits

Your ability to sublet or assign will be set out in the alienation provisions of your lease. Most leases allow assignment. Not all permit subletting and some allow multiple sublettings. Your lease will tell you exactly what you can (and cannot) do.

Have a clear strategy

It sounds obvious, but it is often missing. Are you looking to sublet, assign or surrender? When we go to market with a clear message, we avoid confusion and keep the transaction uncomplicated.

Communicate early with your landlord

Whether it is a sublease or an assignment, superior landlord consent will be required. In our experience, transparency helps align expectations early and allows for more open, honest discussions with interested parties later.

Have your technical information ready

At a basic level, know what your costs are, including utilities. Beyond that, a simple data room containing space plans and technical information can make a big difference. When we can give immediate access to this detail, it helps an acquiring party properly assess what they are taking on.

Be open-minded and flexible

We often see situations where the building works for an occupier, but the inherited lease does not. This is more common than you might think. Rather than admitting defeat, we explore options with the landlord. For example, if you have 18 months left but a party needs five years, would the landlord consider a surrender and re-grant?

Quality wins

Tenant space now competes directly with landlord-fitted space, managed offices and, to a degree, serviced offices. If you want to substantially cover your occupational liabilities, your space needs to compete. There is a reason the most successful listings on Vinted are “Excellent” or “Very Good”. Most prospective tenants want quality.

Sometimes poor quality wins too

Lower-quality space can still present an opportunity. If a landlord can take it back, refurbish and re-let, a surrender may be on the cards. In those situations, we focus on structuring a clean exit that works for both sides.

There is almost always a way to exit a lease. The winners are the ones who match their strategy to the building, the market and the moment.