September 28, 2026 · 7 min read

Subleasing office space in NYC: a practical guide

A sublease has two sides. One is a company with more office space than it needs: the team shrank, went hybrid or moved, but the lease still runs for years. The other is a company that needs space for a shorter stretch, often built out and furnished, and would rather not sign a ten-year direct lease.

This guide covers both. The first half is for tenants who want to sublet space (you become the sublandlord). The second half is for companies taking a sublease (the subtenant). It is general information, not legal advice: a New York real estate attorney should read your lease and any sublease before you sign.

Sublease or assignment?

Tenants with extra space have two main ways to hand it to someone else.

Sublease Assignment
What moves Part or all of the space, for part of the remaining term The whole lease, for the rest of the term
Who the landlord deals with You. The subtenant pays you and you keep paying the landlord The new tenant, going forward
Your liability You stay fully liable under your lease You usually stay liable too, unless the landlord releases you
Typical fit Temporary excess space, or space you may want back You are leaving for good

The line matters under New York law. A sublease has to end before your own lease does, even by a day. A deal that hands over the whole remaining term can be treated as an assignment, whatever the document calls it, and leases often treat assignments more strictly.

Walking away is rarely an option. Without a termination right in the lease, a tenant who leaves generally stays liable for the rent through the end of the term. Subleasing is how most tenants cut that cost.

Start with your lease

The subletting clause

Find the assignment and subletting section, then read every rider and amendment, because landlords often replace the standard language with a longer, stricter version. The Real Estate Board of New York (REBNY) standard form, the most common starting point for a New York City office lease, bars subletting without the landlord's prior written consent.

How much room you have depends on the consent standard:

  • "Not to be unreasonably withheld": the landlord needs an objective reason to say no, such as a subtenant with weak finances or a use the building does not allow.
  • "Sole discretion": the landlord can refuse for any reason or none. New York courts generally enforce commercial leases as written, so this wording is hard to get around.
  • Silent lease: if the lease says nothing about subletting, New York law generally favors the tenant's freedom to sublet. Few commercial leases are silent.

Recapture

Many leases let the landlord recapture the space instead of approving a sublease: it takes the space back and your rent drops accordingly. If you simply want out, recapture can be the best result. If you want the space back later, it can end your plans, so read this clause before you market the space.

Profit sharing

If a subtenant pays more than you do, the lease may give the landlord a share of the difference, often half, usually after you recover your costs: brokerage commissions, legal fees, free rent and any work you paid for. In a soft market, subleases more often lose money than make it, but negotiate which costs you can deduct anyway.

Use, subtenant tests and timing

  • Use clause. A subtenant is bound by the same permitted use as you. If the lease says "executive offices", a medical practice or a showroom may be off the table.
  • Subtenant requirements. Some leases set financial tests, or bar subletting to existing tenants of the building or to anyone the landlord is negotiating with.
  • Notice and response time. Landlords commonly get around 30 days to answer a consent request, and some leases allow longer. Many want the signed sublease submitted with the request. You keep paying full rent while you wait.

Pricing a sublease

Subleases usually rent for less than comparable direct space. The subtenant gets a shorter term, takes the space as it is, gets no new build-out from the landlord and takes some risk on your credit. On the other side, a finished, furnished space that is ready now is worth real money to a small team that needs to move quickly.

Work out what the sublease is worth to you, not just the asking rent. An example with round numbers:

  • You pay $60 per SF on 5,000 SF, which is $300,000 a year, with three years left: $900,000 in total.
  • A subtenant takes the whole space for the remaining term less a day at $48 per SF, with three months free: $20,000 a month for 33 months, about $660,000.
  • Your remaining cost falls from about $900,000 to about $240,000, before the commission, legal fees and any work you pay for.

The commercial rent calculator converts quotes between units and shows how free rent changes the effective rate.

Furniture. Furnished subleases are common, and the furniture is often included. Put it in a schedule attached to the sublease, and say who owns it at the end: many sublandlords would rather leave it than pay to move it.

Commissions. On a sublease the sublandlord usually pays the brokers, the way a landlord does on a direct lease. Budget for it when you price the space.

The terms that matter to both sides

  • Term: ends before your lease does. Subtenants cannot renew past it.
  • Rent and escalations: a fixed rent with annual increases, or a pass-through of your operating expense and real estate tax escalations for the subleased share. Spell out which, and the base year.
  • Security: sublandlords often ask for a larger deposit or a letter of credit, since they stay on the hook to the landlord.
  • Services: who pays for electricity, after-hours heating and cooling, cleaning and internet, and how the subtenant reaches building management.
  • Insurance: the subtenant names both the landlord and the sublandlord as additional insureds.
  • Alterations: any change needs the sublandlord's consent and usually the landlord's too.
  • Holding over: if the subtenant stays past the end, the sublandlord may owe the landlord holdover rent, so subleases set a steep holdover rate.
  • Restoration: whether anyone must remove wiring, walls or fixtures at the end, and who pays for it.

Taking a sublease: what to check

Read the prime lease. A sublease is subject to the lease above it, often called the overlease or prime lease. Ask for a copy, attached to your sublease, and read the use clause, the rules for alterations and the end date. You are bound by its terms without having signed it.

Get the consent in writing first. Do not pay rent or move in before the landlord signs its consent, which often comes as a separate three-party consent agreement. A sublease without required consent puts you at risk of losing the space.

Understand what happens if the sublandlord fails. If the prime lease ends early, because the sublandlord defaults or goes out of business, the sublease generally ends with it. Check the sublandlord's finances. For a long or large sublease, ask the landlord for a recognition (or non-disturbance) agreement promising to keep you on if the prime lease ends. Landlords often refuse, but it is worth asking.

Check the space as it is. Test the heating and cooling, the electrical capacity and the internet before you sign, and list any furniture, equipment and access cards that come with the space.

Plan the end. You cannot extend past the prime lease. If you may want to stay, ask early whether the landlord would sign a direct lease when the sublandlord's term runs out.

The Commercial Rent Tax on a sublease

In Manhattan below 96th Street, the NYC Commercial Rent Tax applies to subtenants as well as tenants. A subtenant pays it on the rent it pays, under the same rules as any tenant: no tax while annual base rent is under $250,000; from $250,000 the tax is 3.9% of base rent (6% after a 35% reduction), cut by a sliding credit up to $300,000 and, for smaller businesses, the Small Business Tax Credit. The sublandlord can deduct rent received from subtenants when working out its own base rent, and a tenant that receives more than $200,000 in rent from any subtenant has to file a return. The Commercial Rent Tax calculator takes subtenant rent into account. Confirm your filing with an accountant.

The process, step by step

  1. Read the lease: the subletting clause, recapture, profit sharing, use and notice rules.
  2. Decide what to offer: which floors or rooms, for how long, furnished or not.
  3. Price it against direct space nearby and work out your net cost.
  4. Market it, then qualify subtenants on their finances and their use.
  5. Agree a term sheet, then have your attorney draft the sublease with the prime lease attached.
  6. Send the request and the signed sublease to the landlord and wait for its consent.
  7. Sign the consent agreement, collect the security and hand over the keys.

Next steps

Where to look

The 6 neighborhoods Leasemark covers with the most office floor area, per NYC PLUTO tax lot data (26v2).

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