Subleasing
By Justin Thom, Director at Galetti Corporate Real Estate
South Africa’s office sector continues its steady recovery, with vacancy rates down to 14.2% in Q2 2024 (SAPOA Office Report). This rebound is largely fuelled by innovation, with many landlords working to enhance their spaces and adapt to evolving tenant needs. Amidst this change, subleasing has re-emerged as a strategic solution, offering mutual benefits for tenants and landlords alike.
What is Subleasing?
Subleasing, also known as subletting, allows an existing tenant (now the sublandlord) to lease out part or all of their space to a third party. For tenants facing rising costs or needing less space, subleasing provides a way to offset monthly lease expenses. Landlords are typically supportive, as it keeps spaces occupied, retains anchor tenants, and ensures operational costs are covered.
“Subleasing gives tenants flexibility and a way to reduce costs in today’s dynamic office market,” says Justin Thom, Advisory Director at Galetti Corporate Real Estate. “It’s a win-win, allowing smaller businesses to access prime locations they might not otherwise afford.”
Alternative Income Streams in the Office Market
Leading office REITs, like Redefine Properties, are exploring innovative income models through subleasing. In a recent episode of the Corner Office podcast, Dylan Koning from Redefine explained the value of their non-GLA (Gross Lettable Area) assets. These include subleasing common areas like rooftops, parking spaces, and undeveloped land, which has contributed to a 4.1% increase in net operating income from their office portfolio.
This strategy not only diversifies revenue but also maximises space utilisation, proving that strategic subleasing can boost profitability and strengthen the sector.
Galetti’s Subleasing Success Stories
Galetti Corporate Real Estate has facilitated numerous successful subleases, helping both tenants and landlords achieve their goals. Here are a few recent highlights:
- MTN Headquarters, Roodepoort, Johannesburg
In 2023, Keki Khojane, Head of Office at Galetti Corporate Solutions, helped MTN secure a subtenant for 8,000m² of space at their flagship headquarters, optimising their space and costs. - Goodyear Head Office, Waterfall, Johannesburg
Galetti assisted Goodyear in subleasing a portion of their headquarters, securing an international engineering firm to join the thriving Waterfall business district. - Discovery Building, Sandton, Johannesburg
Galetti is currently seeking a tenant to sublease 6,500m² in Discovery Group’s prestigious Sandton office—an opportunity for brands aiming to establish themselves in South Africa’s prime business hub.
The Future of Subleasing in South Africa
Subleasing remains a practical and flexible option for businesses navigating the current office market. Whether you’re looking to sublease or find a tenant for your property, Galetti’s team is here to assist.
Interested in exploring subleasing options?
