Overcome the Five Pitfalls of Subleases

SAN FRANCISCO-GlobeSt.com recently chatted with locally based Leon Tuan, a partner in Stein & Lubin LLP, about what he calls the “five pitfalls of subleases” and how to overcome them. In the commercial real estate area, Tuan represents investors, developers, landlords and tenants in buying, selling, developing, leasing and financing a wide variety of properties, including office buildings, shopping centers, apartment complexes, industrial properties and mixed-use projects. In the real estate finance area, Tuan represents institutional and private lenders in originating acquisition, construction and permanent loans, and also advises lenders in loan restructurings and loan workouts.

According to Tuan, large amounts of sublet space have come on the market during the current economic downturn, usually at discounted rates. And while he says subleasing can be an attractive and cost-saving option, “it is not without its drawbacks and does not usually offer the same protections as a direct lease.” Below are five significant pitfalls that are associated with subleases, along with Tuan’s suggestions for managing the risks.