Page 47 - BusinessWest March 20, 2023

This Is Not a Fire Drill
How Landlords, Tenants Can Navigate the Commercial Market
BY BRION J. KIRSCH AND JAMES F. MARTIN
“With a landlord’s consent, a majority of commercial office leases
allow subleasing and partial assignments.
But finding an occupant to sublease part of your space is far from the final step; legalities and practicalities abound.”
Remember in elementary school when they would have a planned fire drill? The alarm would go off, and students lined up in an orderly fashion and
walked single file to the nearest exit and out into the schoolyard. Inside, the school was completely empty.
Obviously, the circumstances are light years apart, but that’s essentially what occurred in office buildings in March 2020. One minute, every room is filled with people working at their desks; next thing you know, the entire place is vacant.
What would always happen after the fire drill — every- one was back at their desks in about 10 minutes — didn’t happen in office buildings. It’s been almost three years. Some are never coming back.
Remote or hybrid work is here to stay, and people’s habits and expectations have changed. As a result, the commercial real-estate market is facing challenging times. In Western Mass., for example, the vacancy rate for office space is of concern to landlords along with the reality of expiring leases for downtown office space. However, the more attractive rental price per square foot of class-A office space in Western Mass. serves as a significant advantage to retaining and attracting tenants when coupled with the lower cost of living in contrast to Eastern and Central Mass.
Thus, there are some reasons for optimism, and potential options for landlords and tenants alike.
The continuing development of multi-family apart- ment complexes in both the cities and the suburbs is a
promising sign. And with the proliferation of shopping from home and consumer subscription services, indus- trial properties like warehouses and fulfillment centers are in high demand.
Options for Tenants
For employers who now have more workspace than on-site workers, subleasing is an interesting option that can both reduce expenses and boost revenue. This requires a conversation with the landlord, but if conduct- ed in good faith, it can be a win-win situation.
With a landlord’s consent, a majority of commercial office leases allow subleasing and partial assignments. But finding an occupant to sublease part of your space is far from the final step; legalities and practicalities abound. The documentation must be specific and thor- ough as there’s an extra added layer of complexity in these situations.
Taking a contractual agreement between two parties and adding a third opens up room for all sorts of unex- pected conflict and misunderstandings. The language in the agreement must be crystal clear.
BRION KIRSCH
JAMES MARTIN
The biggest concern is historic and/or prospective lia- bility. One party’s transgression may have a direct impact on the other party, even if there is fault on only one side. Something else to con-
sider is the construc-
tion of a demising wall
Market
>>
Continued on page 50
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