David Groff: Article on Subleasing Published in Houston Business Journal


David Groff, a shareholder with Wilson Cribbs + Goren, recently wrote an article entitled “Things to consider before subleasing your office space” that was published in the March 4 issue of the Houston Business Journal. Due to falling oil prices, many energy and related service companies in Houston have begun exploring ways to trim costs, including unloading excess or expensive office space.

In his article, David lists the following five things a tenant should consider when negotiating an assignment or sublease of office space:

  1. Transferee’s Creditworthiness.  Since the tenant, absent a release from the landlord, remains liable under its existing lease it is imperative that the assignee/subtenant be financially capable of honoring its obligations under the transfer instrument.
  2. Release at End of Current Term.  In an assignment, the tenant should try to secure for itself (and any guarantor) a release from the landlord no later than the expiration of the current term of the lease. 
  3. Timing of Delivery.  Consideration should be given to the timing of delivering the premises to the assignee/subtenant and should be streamlined to accommodate the assignee’s/subtenant’s relocation from its current premises. 
  4. Unused Tenant Allowance.  Any remaining improvement allowance granted by the landlord in the existing lease may, if transferable, prove valuable in negotiations with a potential assignee/ subtenant.
  5. Fixtures and Equipment.  A tenant’s office furniture, if not leased, may be sold in place to an assignee/subtenant benefiting both parties.

For more information, contact David Groff at dgroff@wcglaw.com.

 

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