Monday, January 8, 2018

Subleasing: Before you become a sublandlord...

Should you offer your unused space for sublease?  Maybe... but maybe not.

First, what is a sublease? A sublease occurs when a tenant leases all or a portion of its leased space to another party.  The tenant becomes a landlord (called sublandlord) to the new party, who becomes a subtenant. 

And why might someone consider subleasing their space?  Some parties intentionally lease a space with the intent to sublease it (ex: executive office suites like Regus, or a hospital that leases a large space and then sublets to individual practices).  That's not you if you're reading this article.  More often than not, a sublease stems from someone having leased space that they no longer need.  Maybe they don't need any of it, or maybe they just have a portion of their space available.   But they'd like to bring in some revenue to offset the economic bleeding.

So should you put your space on the market?

Many factors combine to determine the likelihood that you'll get what you want by subletting. A few of the many questions to consider are:
  1. Is my direct lease sublet-friendly?
  2. Can my space be carved up physically/operationally?
  3. Is there enough term left on my lease to be marketable?
  4. Is my space desirable?
  5. What do I need to save to make the work worthwhile? 
  6. Am I in a good financial position myself? (think tenant modifications, real estate agent fees, and tenant reviews of your finances).
  7. What uses are permitted under my lease?
  8. What competing spaces are available and how might they impact me?
  9. Am I prepared to manage a subtenant?
The first 3 questions are key... if any of them are a "no" then subletting likely won't work.  The rest often require assistance... particularly number 8.

The "assistance" matter brings us to the next big decision... should you use an agent?  I advise at least speaking with one to flesh out the questions above.  In addition to providing "go/no go" clarity, an agent (a qualified one) will find you a tenant faster, gain you a higher rate, protect your valuable time, and insure that you don't overlook any of the terms that make subleases so complex. And since time really is money in this context, you'll find that they pay for themselves.*

At the end of the day, subleasing can be a great solution for cutting ongoing losses related to surplus space.  The trick is to verifying that you're a good candidate before investing in what can be a very time-consuming process.


* Note: Agents won't always be an option, because not all spaces are economically listable. If the total contracted sublease rent over the sublease term is going to be less than $150,000, a commercial agents who know how to penetrate companies effectively may be reluctant to take the listing for fear that they won't be able to cover their own costs.

Monday, January 1, 2018


John Cobb
Healthcare and Technology Representation
Newmark Knight Frank

John is a Managing Director in the Atlanta office of Newmark Knight Frank, joining in 2011 in conjunction with the firm’s acquisition of an Atlanta-based boutique real estate firm.  Specializing in the representation of end users, Mr. Cobb creates and implements strategies around location selection, cost reduction, and property sales.  This multi-disciplinary approach allows John to provide reliable advisement for a myriad of client objectives and to leverage his specialized knowledge across the various areas his clients’ businesses frequently touch. 

Mr. Cobb’s clients include office users, technology providers, and healthcare organizations.  A small sample of his transaction experience includes:

  • Leasing strategy and execution for high-growth companies, ranging from 5,000 SF to over 75,000 SF
  • Early renegotiation of multiple 100,000+ SF office lease portfolios
  • Monetization of office portfolios ranging from 20,000 SF to over 300,000 SF
  • Strategic and Execution lead for multiple 30,000 ground-up office initiative

As a degreed engineer, John applies a thorough, systematic approach to all client matters. Be it a lease restructuring, buy-versus-lease analysis, relocate-versus-renew analysis, or property monetization, John’s clients benefit from reliable projections and a data-based approach.  Clients further benefit from his specialized industry understanding, where economic trends, industry activities, competitor activities, talent availability, and specialized site requirements and availabilities are a few examples..

Prior to his real estate career, John served in various capacities in the technology sector.  His positions included Vice President of Sales and Marketing for a privately-held technology sales and installation company, national account management for a telecommunications provider, and engineering positions in both the power and communications industries.

John is a native of Sandy Springs, Georgia. Married since 1991, he resides in Lilburn with his wife, and two children. The Cobbs are active members of a growing church and are engaged in all manner of family activities, including youth leadership,various sports and fitness activities, and camping.

BA Electrical Engineering (with Honors), Georgia Tech 1991
Technology Association of Georgia
Atlanta Commercial Board of Realtors - Million Dollar Club
Metro Atlanta and Gwinnett Chambers of Commerce
Personally Licensed in Georgia