Smart Subtenant Protections: Part 1: Focus on Due Diligence

Nancy Ann Connery

This article discusses sublease due diligence from the subtenant’s perspective. The author primarily focuses on issues raised by office subleases. Retail and industrial leases often raise the same issues, but other issues may assume greater importance in these transactions or the same issues may be viewed from a different perspective. For example, environmental due diligence and the overlease’s environmental provisions commonly assume much greater importance in an industrial sublease than in an office space (a cleaner use). Although assignment and sublease rights are often important for all subtenants, for the proposed subtenant of restaurant space, the primary issue is often the subtenant’s ability to sell the restaurant. The retail subtenant will also focus on the use clause, percentage rent, signage rights, parking rights, exclusives, and subdivision and demising rights.

Smart Subtenant Protections

Smart Subtenant Protections

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