A commercial sublease lets a business rent out space it leases but no longer fully needs: excess offices after downsizing, a wing of a warehouse, or an entire location before the lease term ends.
Everything in a commercial sublease hangs on the master lease: the sublease cannot outlast it, cannot permit uses it forbids, and usually requires the master landlord's written consent. This template is structured around those constraints.
When subleasing commercial space makes sense
- Downsizing: rent out unused offices instead of paying for empty space
- Relocation before lease end: cover the remaining rent with a subtenant
- Growth hedging: lease more space than needed now and sublet the rest
- Complementary businesses: share a storefront or industrial bay
Subleasing recovers cost, but the sublandlord stays on the hook to the master landlord for the full rent and for the subtenant's conduct. Screen a business subtenant the way a landlord would: financials, references, and insurance certificates before keys.
Master landlord consent and pass-through terms
Nearly all commercial leases require the landlord's written consent to sublet, and many give the landlord recapture rights (taking the space back rather than consenting) or a share of any sublease profit. Read the master lease's assignment and subletting article before signing anything with a subtenant, and build the consent condition into the sublease, as this template does. For expenses, decide whether the subtenant pays all-in gross rent or reimburses a proportionate share of the NNN and CAM charges you pay under the master lease.
Give the subtenant the master lease
The subtenant is bound to comply with a document it has never seen unless you provide it. Attach the master lease (economic terms may be redacted) so its use restrictions, hours, insurance, and rules are enforceable against the subtenant.
Allocating risk between sublandlord and subtenant
The sublandlord promises the subtenant quiet enjoyment as long as the sublandlord keeps the master lease alive, and the subtenant promises not to trigger master lease defaults. Cross-indemnities, insurance naming both the sublandlord and master landlord, and a security deposit sized to the risk (two months is common in commercial deals) round out the protection.
Frequently asked questions
What happens to the subtenant if the master lease is terminated?
The sublease ends with it, even if the subtenant did nothing wrong. Subtenants with significant build-out or business value at stake sometimes negotiate a recognition (non-disturbance) agreement directly with the master landlord.
Can I charge the subtenant more than my rent?
Often yes, but check the master lease: many commercial leases require sharing excess rent (profit) with the master landlord, commonly 50 percent after costs.
Who does the subtenant call for building repairs?
The subtenant reports to the sublandlord, who enforces the master lease against the landlord. The subtenant has no direct contract with the master landlord unless one is signed.
Do NNN charges flow through to the subtenant?
Only if the sublease says so. This template offers both structures: all-in gross rent or a proportionate pass-through of taxes, insurance, and CAM billed under the master lease.
Is the master landlord's consent really mandatory?
If the master lease requires it, yes: subletting without consent is a default that can terminate the master lease and evict everyone. Obtain written consent before the subtenant takes possession.