Raising the stakes: JTC unveils new rules on industrial subletting

Industrialists’ sublet quantum slashed by 20%.

The JTC has unveiled new subletting policies for industrialists who wish to establish their businesses on JTC land. Starting October 2014, major tenants will only be allowed to sublet 30% of a building’s gross floor area, down from 50% in the current rules.

According to the JTC, 30% of the total gross floor area (GFA) is an adequate steady state space for a company to use as buffer to cater to fluctuating business volumes.

“As a result, JTC will be adjusting the maximum allowable sublet quantum from 50% to 30% of GFA, with effect from 1 October 2014 onwards This sublet quantum cap does not apply to lessees subletting to their wholly-owned subsidiary or company in which they have a majority shareholding of at least 51%,” stated the JTC.

Here’s more:

Currently, JTC’s lessees or tenants are allowed to sublet their space to facilitate the co-location of related companies and activities for better synergy.

They are also allowed to sublet temporary vacant space to other companies, putting scarce land resource to productive and optimal use.

As lessees or tenants have been allocated the land for their own productive use, they have to continue to occupy the majority of the space. As such, JTC has set a limit on the maximum amount of space lessees are allowed to sublet.

This sublet quantum cap does not apply to lessees subletting to their wholly-owned subsidiary or company in which they have a majority shareholding of at least 51%.

In addition, given that tenancies are short term, JTC tenants will no longer be permitted to sublet their space. In the event tenants have excess space , they can renew their tenancy for a lower quantum at the end of their current term.