Sublease Part of the Premises

Sublease Part of the Premises

bike shop sublease

If you have unused space, subleasing part of your business premises to a third party is a great short-term strategy to reduce some of your fixed costs. This will reduce your rent expense and provide extra cash flow. 

Subleasing typically makes sense when:


  • Business conditions are tough – this reduces your overheads and improves profitability.
  • Downsizing – the business can operate with less space than it previously needed. 
  • Your looking to retire – you can sign up a subtenant for a short-term lease with a view to them eventually assuming your lease.
  • Your planning to move due to business expansion.
  • Introducing a complementary business will generate extra sales and customers for your business – for example, an accountant subleasing part of their office to a financial planning business. 

Implementation process:

  1. Determine the amount of excess space you have available.
  2. Confirm whether your lease agreement allows you to sublease the excess space – unless the lease states otherwise, the landlord has discretion whether to grant your request.  
  3. Get the landlords written approval to sublease.
  4. Work out the rent to charge the tenant.
  5. Find a suitable tenant – the tenant needs to be both compatible with your business and financial.
  6. Have a sublease agreement drafted with the tenant – the subtenant is to provide personal guarantees and/or bank guarantee.

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