A commercial sublease creates an occupancy beneath an existing head lease; it does not erase the original tenant's obligations. The available premises, remaining term, landlord consent, permitted use, subtenant strength, shared services, economics and return of the space all need to work under the head lease and the proposed sublease documents.
This is general information, not legal, tax, environmental, engineering, accounting or investment advice. Obtain advice specific to the property and transaction.
1. Review the complete head lease
Collect the executed lease, amendments, renewals, assignments, guarantees, work letters and material notices. Review subleasing restrictions, landlord consent, recapture rights, information requirements, fees, use, sharing, signage, access, alterations, insurance, default and restoration.
Confirm whether the proposal covers all or part of the premises and whether sharing space, licensing desks or transferring control triggers a separate restriction. Legal counsel should interpret the actual language before the space is marketed.
2. Define the subleased premises and shared areas
Prepare a measured plan showing the exclusive subleased area, entrances, corridors, washrooms, kitchens, reception, loading, storage, parking, utilities and any areas retained by the head tenant. State the measurement basis and how shared costs will be allocated.
Test physical separation, security, accessibility, fire separations, egress, metering, data privacy and operational conflicts. A line on a floor plan may require construction or approvals before it can function as a separate occupancy.
3. Build the timeline backwards from head-lease expiry
A sublease cannot grant more rights than the head tenant holds. Align commencement, fixturing, rent, expiry, restoration and surrender with the head lease and leave enough time for the head tenant to meet its own end-of-term obligations.
Address what happens if the head lease ends early, is renewed, defaults or is terminated. These are legal allocation questions that must be documented rather than assumed from the marketed sublease term.
4. Confirm the incoming use and approvals
Describe the subtenant's actual activities, staffing, customers, equipment, hours, deliveries, storage, signs and alterations. Compare them with the lease use clause, exclusivity restrictions, municipal zoning, approved use, permits and business licensing.
Where a change in business activity or tenant improvement is proposed, municipal development, building and trade-permit review may be required. Landlord consent does not replace public approvals, and public approval does not replace landlord consent.
5. Price the complete occupancy package
State base rent, additional rent, utilities, cleaning, security, reception, internet, furniture, parking, storage, signage, maintenance and administration charges. Explain the allocation method for shared or reconciled costs.
The head tenant should model rent received against its continuing head-lease obligations, brokerage and legal costs, inducements, construction, downtime, credit risk and restoration. The subtenant should compare the full package with direct-lease alternatives and the remaining term.
6. Qualify the subtenant and protect information
Prepare a consistent package covering the proposed legal entity, principals, business, financial capacity, references, use, insurance and alteration plan, subject to the head lease and applicable law.
Personal guarantees, credit material and identity records require secure handling. Alberta PIPA applies to many private-sector organizations that collect, use or disclose personal information; collect only what the process requires and control access and retention.
7. Coordinate the three-party document structure
The head tenant and subtenant need a sublease consistent with the head lease, while the landlord may require a separate consent or agreement. Legal counsel should reconcile notices, defaults, cure rights, insurance, indemnities, access, alterations and the relationship among all three documents.
Unless the executed documents say otherwise, the head tenant should plan on continuing to perform its obligations to the landlord. Rent collection from a subtenant does not itself transfer the head-lease risk.
8. Plan possession, operations and the exit
Use a possession record for premises condition, keys, access cards, furniture, equipment, meters, deposits, insurance, permits and incomplete work. Define ongoing contacts for repairs, emergencies, operating-cost statements and landlord notices.
Before signing, decide who removes improvements, repairs damage, clears signage, returns access devices and restores the premises. Schedule the subtenant's exit early enough for the head tenant to inspect and complete its surrender obligations.
Primary sources
Verify the current rules.
Government and regulator pages can change. These links were reviewed on August 26, 2026.
RECA: Real Estate Act Rules↗CRA: Real property and the GST/HST↗CRA: Commercial real property - sales and rentals↗CRA: GST/HST place-of-supply rules↗Alberta: Personal Information Protection Act↗City of Calgary: Changes to existing commercial buildings↗City of Edmonton: Changes to existing buildings and sites↗A real property decision?
Whether you need replacement space or want to compare a sublease with direct inventory, submit the market, size, use, timing and budget.Who, how and why
Who: Commercially Research & Editorial.
How: Primary-source research and AI-assisted drafting were used to organize this guide around a practical commercial real estate decision. Source links, factual claims and material limitations were checked against Commercially's editorial standards on the review date.
Why: To help owners, buyers and tenants identify the records, questions and professional advice that belong in a real transaction work plan.
Editorial owner: Commercially Research & Editorial.
Commercial review: Slav Loban, Commercial Real Estate Division Leader.
Questions or corrections: hello@commercially.ca
Editorial review and correction standard →