TL;DR
- sublease">Sublease is faster but leaves the original tenant on the hook.
- Assignment fully transfers obligations — but is harder to negotiate landlord consent for.
- Most leases include a recapture right — landlord can take back the space instead of consenting.
- Sublease economics are softening in tenant-favorable cycles; budget significant rent loss.
Sublease vs assignment
A **sublease** transfers occupancy to a sub-tenant; the original (prime) tenant remains contractually liable to the landlord. An **assignment** fully transfers all obligations to the new tenant; the original tenant is released (or remains as guarantor). Sublease is faster and more common. Assignment is rarer because landlords are reluctant to release a strong covenant in exchange for an unknown one — and most leases require landlord consent for either.
The recapture right
Most institutional leases give the landlord a **recapture right**: instead of consenting to a proposed sublease or assignment, the landlord can choose to terminate the lease and take back the premises. This effectively forces the tenant to pay through to lease end if the landlord prefers a direct re-lease. Negotiate the recapture right narrowly: limit it to subleases of more than X% of the premises and exclude affiliates / corporate restructurings.
Sublease economics in soft markets
In soft markets, sublease space typically clears at a 25-40% discount to direct space — and at materially shorter terms. Plan for significant rent shortfall (the gap between contractual rent and sublease rent received) plus broker fees and any concessions to the sub-tenant.