Subleasing is great, when it works. After all, your company gets the opportunity to move into what is essentially “plug & play” space. Show up day one and you are off to the races. No need to concern yourself with the upfront costs from furniture to the wiring, items that can equal hundreds of thousands of dollars depending on the size of your space.
But just because you found a great office and even if you have successfully negotiated the financial terms, there’s still a mountain to climb.
It’s called Consent and it’s the landlord’s blessing of the transaction. Not only can it take awhile to get but there’s lots of reasons why they may not give it.
When does the clock start ticking for the consent period to begin?
If you have strong tenant and legal representation the consent period will start once there is a fully executed term sheet. However, you’ll find the clock for consent in many leases doesn’t start until there’s a fully executed sublease. Why does this matter? Because the difference in time between those two points is often at least 30 days, making the approval process that much longer and keeping a tenant looking for space in limbo for an unnecessarily long amount of time.
Why does a period of consent exist?
To protect the landlord and also the other tenants. Without this preventative measure, there’s nothing to stop an inappropriate user from coming in to the building. Think a tenant with heavy noisy manufacturing equipment in an office building (putting stress on the building and noise disruption to surrounding tenants) or a business that has exceptionally high foot traffic wearing on the building’s resources(imagine 100 people hanging in the hallway waiting for a casting call or trying to get in 3 elevators)
The landlord also wants to accommodate an existing tenant who has a need for space. Afterall landlords want to keep growing tenants. If they can’t grow in the building they leave.
And the landlord is in the business of making money so if the rent on the subleased space is $50 per square foot and the current market commands $70 per square foot the landlord wants the opportunity to take back space and rent it out at higher rents.
Until you have consent a sublease is NOT DONE. So always have a backup space. Because crazy things can happen and as I hope to have demonstrated it’s not in your control.