The local economy has been moving along just fine. Large amounts of venture capital flowing into startups and continuing growth by local companies such as Apple, Google, Cisco, and VMWare have been contributing factors to the rapidly increasing rental rates for office space in Silicon Valley. As company’s grow they might find that their growth plans are coming ahead of their lease expiration dates.

Traditionally this would force comapnies to either negotiate buyouts or attempt to sublease their space for the remainder of the term. In today’s market whereby many tenants signed their leases 2-4 years ago when rental rates were significantly less, this provides a catalyst to the landlord to let tenants out of their leases under much more favorable conditions with little to no buyout expense.

Of course, we encourage tenant’s to consider the language in the lease to analyze how excess rents (the portion of rent under a sublease which exceeds the rent the tenant which is subleasing is paying) are handled along with what recapture rights the landlord might have in a sublease situation. These items need to be taken into consideration when tenant’s analyze the possible profit they might realize from a subleasing situation. In the end though, most tenants prefer to simply forego the hassle of subleasing and capturing a portion or all of the excess rent when faced with the opportunity to simply and cleanly walk away from a lease.