Subleasing

Subleasing is when a sitting tenant, the sublessor, rents out all or part of their space to a third party, the sublessee, for some stretch of the remaining lease term. The original tenant keeps primary responsibility under the master lease, while the sublessee pays rent to the sublessor.

Tenants sublease to trim occupancy costs or offload space they no longer need. Commercial leases usually require the landlord’s sign-off, and a landlord may bargain for a share of any profit the tenant earns by subleasing above market. Whatever the sublease says, the sublessee’s rights are bounded by the master lease.