Two Lesser-Known Reasons a Company May Have to Sublet


Almost everyone has been in a situation where they needed to either break or amend a property lease. In commercial real estate, there are four main reasons a company may have to sublet their space. The first two reasons are fairly obvious and usually have to do with company size and business trajectory; a company is outgrowing the space, or a company is not using the space.

The second two issues may not be as widely known, but that’s not to say they aren’t common. Should you be faced with either, use the below tactics and solutions to ensure an easy transition and fair break from your lease.

New Ownership

This is not an uncommon case in Chicago and other metropolitan areas. When this does happen, there are certain steps to take, to ensure a smooth transition. Any lease will be honored despite new ownership or change in the buildings purpose. If you’re ever threatened to get kicked out because the building has been taken over, you actually have the upper hand.

In the case of a building being converted into a hotel or residential space, keep in mind that the lease terms you signed are still valid, and many times hotels or residential owners will need to pay you a hefty premium to move. If you get offered a buyout from the new lease group, make sure you do your research about market rates, but more importantly, you should consult a broker. Brokers are essential because they have dealt with these issues before and they know about moving costs, cash buyouts, relocation fees, or subsidizing new work spaces.

Eminent Domain

One of the trickier aspects of buying or renting properties is the possibility of Eminent Domain. This is where the government essentially states they are taking over a certain area for a project, and giving you a set, non-negotiable buyout for your property (the terms are fair market value for your area). While this is a fairly rare occurrence, it can often times be unexpected and force a quick move to a new location.

While Eminent Domain does not have as many options for negotiation, the result will be fair. A great solution in this case, and for a quick (temporary) move are shared spaces. This is a particularly attractive alternative especially when you’re in a transition period. It allows you time to find a more reasonably priced relocation period, without being rushed out or continuing your current lease

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