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HENRY B. LaTORRACA

Civil Trial Attorney

California company enters commercial subleasing sector

| May 11, 2017 | Uncategorized |

A California real estate listing service hopes to change the way that commercial properties are subleased. Spacegrab’s platform provides prospective tenants with access to properties that require little or no work by allowing tenants to post their existing space online before their leases expire. The Los Angeles-based company’s founder says that providing consumers with direct access benefits tenants by allowing them to turn their unused space into a reliable source of income.

Negotiating long-term commercial leases can be a delicate process for growing companies, and deals that seemed beneficial when they were signed can quickly become burdensome if markets slow or new competitors emerge. Allowing tenants to advertise unwanted space also protects landlords by making defaults less likely, according to Spacegrab. The subleasing of commercial properties currently relies on a nebulous combination of word-of-mouth recommendations, back-channel negotiation and personal networks.

Spacegrab has also entered into exclusive agreements with several leading commercial real estate service providers. Brokerage services are being offered to clients of the online platform by Digsy, executive suite space services are being provided by Regis, and SharpLaunch is coordinating the company’s marketing efforts. The free-of-charge service is currently only available in Los Angeles, but Spacegrab says that it plans to quickly expand to other areas of the United States.

Attorneys with commercial real estate experience may encourage business owners to consider their options carefully before signing long-term lease commitments, and they could also urge them to not rely on subleasing revenue to help them if their companies fail to grow as expected. Attorneys may instead work to negotiate more flexible lease terms that provide tenants with options to avoid default.

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