Mainebiz

W W W. M A I N E B I Z . B I Z 21 M A R C H 7 , 2 0 1 6 L et me paint a picture and it may sound familiar. You are a small business owner in a tight commercial real estate market. You have grown the company and are looking to hire new talent. Your offi ce space needs have run the gamut. You started out of your home, and then set up shop at your favorite coff ee house before reluctantly committing to paying for shared co-working space. Now, fi nally, you are ready to sign a direct lease for your own offi ce space. However, there's a problem. Your company's growth is such that it is impossible to predict how much space you will need in six months, let alone over the three to fi ve years most land- lords would require. is scenario is quite common in Maine as the bulk of our commercial transactions are driven by small- to mid-sized compa- nies. So for the sake of these business owners and others, let's breakdown what I believe to be the best solution for this common concern: subleasing. At its most basic level, subleas- ing gives tenants an opportunity and right to fi nd replacement tenants for their own space if things change. Some companies grow, some shrink, some pivot and need new types of space, and some go out of business. So subleasing is the most eff ective way to weather whatever transition your company is going through. In most leases, subleasing is perfectly permissible contingent upon landlord review and approval of the sub-tenant. In some cases, if the new tenant's use and credit is comparable, landlords will even release the original tenant and sign a direct lease with the new tenant. Most impactful for some of my cli- ents is simply knowing they have this option if things change. It allows them to rest easier and more confi dently sign a long-term agreement. I have even put together deals where a cli- ent takes more space than they need, anticipating growth but fi xed with a plan to sublease excess space from Day 1. Again, this is a perfectly acceptable and legal course of action if written into a lease up front. It is important to note that sub- leasing does not relieve the main tenant from any liabilities or require- ments of the initial lease. If anything, there are more liabilities and risks. Proper credit and fi nancial background checks are vital. You should also con- sider consulting your insurance agent about any additional coverage you should carry as the result of subletting your space. You are, in essence, playing landlord and should act as such. A common provision in sublease arrangements is that the main tenant cannot, in most cases, make money on the sublease. In other words, if a tenant signs a long term deal at $10 a square foot but the market improves and the tenant can now sublet their space for $15 a square foot, the land- lord will get some or all of the addi- tional rent. is is an important caveat that should be properly spelled out in the lease, particularly in volatile mar- kets like we've seen the last few years. Subletting commercial space is a common and important tool. It is best to consult with your attorney or local real estate representative to fully understand its impact and how it may benefi t your real estate needs. As your business evolves, rest assured that this lease provision off ers you fl exibility over the long term. JusTin LamonTagne, CCIM, is a commercial real estate broker at NAI e Dunham Group, specializing in the offi ce and industrial sectors. He can be reached at -- or JusTin @ D unham-g ro uP.com Sublet your way around a commercial real estate shortage B Y J U S T I N L A M O N T A G N E H OW TO " " WGTECH provides advanced IT solutions that help you grow your business. From networking, to data management, security, and managed suppor t, WGTECH delivers industry-leading solutions tailored for you. Call us today for technology solutions that work for you. Colors Pantone 2747 Pantone 1807 www.wgtech.com 207.856.5300 "We call in WGTECH for high-level IT support issues—they can take care of any issue. WGTECH has become a very good partner for us. They come up with ideas to help us grow." Stacy Shaw MMG Insurance, Presque Isle Colors Pantone 2747 Pantone 1807 Sometimes You Need a Strong Partner www.WGTECH.com 207.856.5300 Networking Security IT Consulting n n n Managed Services Cloud/Virtualization Data Management n n n At WGTECH, we find the right technologies, integrate them with your business, and keep them running. 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Some companies grow, some shrink, some pivot and need new types of space, and some go out of business.

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