Subleasing Emerges as a New Trend for Corporate Tenants in Real Estate. Understanding the Concept

Recently, two iconic developments in the south zone of São Paulo were announced by Colliers on its website as subleases, namely Parque da Cidade and Torre Sigma at 17007 Nações Unidas. The company did not confirm, but according to market sources, the spaces in question belong to Kavak and Nestlé.

The concept of subleasing occurs when the tenant of a property advertises the leased property for rent. In other words, the tenant becomes a sort of "owner" to the subtenant, charging rent for the portion of space being occupied.

Typically, this leasing model arises when companies with more space than needed or reduced teams decide to sublease the vacant area, reducing overall leasing costs and avoiding a potential contract breach.

According to Ygor Chrispin, office manager at Colliers Brazil, subleases should follow rules, but in practice, it functions like a standard lease contract, albeit with fewer clauses.

“A sublease contract follows the same conditions and practices as a regular contract, with the characteristic that it will always be subordinate to the main contract, unable to contain clauses that generate conditions different from the lease agreement. Likewise, subleasing cannot generate income/profit for the sublessor, so the amount to be charged cannot exceed that defined and practiced in the lease agreement,” he explains.

Furthermore, Chrispin explains that even with subleasing, the main tenant remains responsible for the property. He also notes that “the subleasing market in Brazil is still very incipient, and there have been no significant movements to create specific statistics.”