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The Sublease Market in Russia in 2022


This year, due to significant changes in the business environment, the issues of non-residential premises subleasing have become particularly topical. Therefore on November 24th the AEB Real Estate Committee held a webinar "The Sublease Market in Russia in 2022". 

The event was moderated by Anton Alekseev, Deputy Chairman of the Committee.

Maria Zimina, Partner and Director of the Office Real Estate Department of NF Group (ex-Knight Frank Russia), revealed the commercial aspects of office property sublease. The expert presented the analysis of the office supply, including the offices commissioned during this year, rental rates, their indexation, etc., accompanied by the demonstration of the dynamics of commissioning volume and rental rates by property classes for the period from 2014 to 2022. Special attention was paid to the share of foreign residents in the occupied office space. Maria provided her forecast regarding the delivery, vacancy rate and rental rates for the whole year 2023. She also outlined the key trends that will shape the rental market in 2023, including the continued presence of sublease.

Sublease discussion then moved on to the legal plane. Stanislav Veselov, Senior Associate at ALRUD, in his presentation considered peculiarities of the legal regime of subleases in general: how such agreements are united with lease agreements and what are their specific features (including the extent to which the lessor's consent and the terms of the underlying lease agreement limit the sublease possibilities - in terms of time limits, intended use, etc.). The expert explained what should be checked from the legal point of view before concluding a sublease agreement - both in terms of existing rights and encumbrances of the owner and in terms of opportunities and restrictions of the lessee-sublessor. In addition, Stanislav named special "risk areas" to consider when choosing premises for subleasing.

The Associate of Dentons Irina Satsuk spoke about the most common legal problems that arise in the absence of the state registration of lease and sublease agreements. Irina considered the possibility of opposing an unregistered sublease agreement to third parties: the owner (who "knew" and who "did not know" about the sublease - with all the vagueness of the criteria of such knowledge), the new tenant, the new subtenant, as well as the authorities. The last aspect was considered specifically on the example of the established procedure and practice of compensation in the case of seizure of a land plot: whether it is possible to oppose to state bodies an unregistered sublease agreement in principle and whether the agreement can be registered already after notification of seizure.




Inna Firsova, the Real Estate and Construction Counsel at ALUMNI Partners (ex-Bryan Cave Leighton Paisner), further described the relationship between the tenant and the subtenant. Since these subjects of legal relations interact with each other in terms of compliance with the law (in operating the premises and carrying out works), the main lessor and sharing responsibility in case of damage (to the premises or the inseparable improvements), it is necessary to know the specifics of how these relations are organized, which conditions the participants need to observe, and the options (including the most common scenarios) for allocating rights and obligations between them. Separately, the expert drew attention to the legal status of inseparable improvements in the leased premises, and, accordingly, to the problem of liability for damage caused by them.

Finally, some issues of conclusion and termination of sublease agreements were covered by Ekaterina Sidenko, Lawyer of ADVANT Beiten. In particular, Ekaterina focused on the questions frequently arising for market participants concerning the terms of validity of such agreements and their relation to the terms of "upper" lease agreements (and the possibility not to indicate terms in the sublease agreement at all). She illustrated the position of courts on this issue with references to certain judgments. Possible and frequently used in practice options for early termination of the contract were also discussed, as well as their advantages and disadvantages for the lessor, the lessee and the sublessee. As a conclusion to her presentation, Ekaterina provided recommendations on sublease contracts based on the established practice to protect the interests of each of the contracting parties.