Grey space is leased space the tenant no longer needs and quietly offers to the market, usually by sublease or assignment. It is occupied on paper and idle in fact, which is why it appears in no vacancy statistic. For the tenant it is a cost problem with a property solution. For everyone else in the market it is supply that competes with the landlord’s own empty units without ever being counted.
What counts as grey space
JLL, in a December 2023 note on the phenomenon, defines grey space as available space unofficially marketed for either sublease or assignment, and put the visible volume at around 600,000 square metres in the UK and over 1 million square metres in Germany at the time. The word unofficially is doing real work in that definition. The space is not on the landlord’s availability schedule and often not on any public listing at all. It circulates through agents, through a 3PL’s client network or through a phone call between neighbours on the same industrial park. The shapes vary: a few hundred pallet positions inside a live operation, a sealed-off chamber with its own dock doors, or a whole building the tenant has exited operationally but still pays for. What unites them is the legal position. The occupier remains a tenant under the head lease, keeps paying rent and service charge, and is trying to move some or all of that liability onto someone else’s business.
Why the statistics do not show it
Because a vacancy rate counts space the landlord is marketing, not space a tenant regrets. Cushman and Wakefield’s Slovakia Industrial MarketBeat for the first quarter of 2026 reports vacancy at 7.72 per cent and prime rent at EUR 5.30 per square metre per month. We counted the words as well: sublease, sublet, grey, second-hand and assignment appear exactly zero times in the report. That is not sloppiness, it is methodology, and it is the same methodology in every headline market report. The consequence is a blind spot precisely where the market is soft. The same report shows gross take-up of 128,800 square metres against net take-up of 56,700, with renegotiations at 54 per cent of demand, which means most contracted demand moved no goods anywhere. In that environment, surplus capacity accumulates inside existing leases, invisibly. An occupier comparing a landlord’s quote against the official availability figure is therefore comparing against only part of the true supply.
What Slovak law lets a tenant do with surplus space
Less than the tenant usually hopes, and nothing without paperwork. DLA Piper’s Slovak guidance is blunt on the two routes. A tenant can sublet non-residential premises only with the landlord’s written consent, and only for a limited period of time. Subletting without that permission is listed among the grounds on which the landlord may terminate the lease, which converts a cost-saving idea into an existential risk for the whole operation. Assignment is the cleaner cut, because the lease itself moves to the new occupier, but it needs the landlord at the table for the same reason. The practical difference matters commercially. Under a sublease the original tenant stays fully liable to the landlord and simply gains a paying undertenant; under an assignment the departing tenant can achieve a genuine exit. Which route is available, on what conditions and at whose cost is decided by the head lease wording agreed years earlier, which is why the alienation clause deserves attention at heads of terms, long before anyone imagines needing it.
What grey space is worth
To the taker, usually a discount and always a compromise. Second-hand space comes as it stands: the racking layout, the office fit-out and the remaining term are inherited rather than chosen, and the sublease usually ends at or before the head lease’s own expiry or break. That is why JLL observes that this space tends to attract only a subset of all occupiers, typically those who value speed, shorter commitments or a lower entry cost over specification. To the provider, the goal is rarely profit. Every euro of rent recovered mitigates a cost that would otherwise run to the end of the term, so pricing below the tenant’s own passing rent can still be rational. The wider market effect is smaller than the headlines suggest. JLL’s conclusion is verbatim that grey warehouse space, new or old, at market rents or below, on a standard or flexible lease, will not have a significant impact on prime rental levels, because prime demand wants new, specific and long, which is exactly what surplus space is not. The pressure lands instead on the secondary stock the space actually resembles.
How to offer or take second-hand space in Slovakia
Start with the head lease, because it decides everything downstream. The provider needs the landlord’s written consent, a defined period that respects the head lease term and any break option, and clarity on what happens to alterations and reinstatement at the end, since the head tenant answers to the landlord for the state of the premises regardless of who caused the wear. A schedule of condition between head tenant and undertenant is cheap insurance in both directions. The taker should read the head lease as carefully as the sublease, because its permitted use, its service charge terms and its termination rights all flow through, and a default higher up the chain can end an undertenancy that was itself perfectly performed. Both sides should be honest about timing. With vacancy at 7.72 per cent, 203,200 square metres under construction at 35 per cent pre-lease and renegotiations dominating demand, a Slovak occupier with surplus bays is competing with landlords who are themselves under pressure, and the realistic ambition is cost mitigation delivered quickly, not a profit on the spread. The service charge deserves a line of its own in the sublease, because the head tenant keeps paying it in full and needs the pass-through to match what the undertenant actually occupies.
Frequently Asked Questions
Is grey space included in the vacancy rate?
No. The vacancy rate counts space marketed by landlords. Space a tenant is trying to sublease or assign stays statistically occupied until the lease itself ends or moves, which is why reported availability understates true supply in a soft market.
Sublease or assignment – which is better for the tenant?
They solve different problems. A sublease recovers cost but leaves the original tenant fully liable under the head lease. An assignment transfers the lease and can deliver a real exit, but it needs a counterparty willing to take the whole contract and a landlord willing to accept them.
Can the landlord simply refuse consent?
The Slovak statute requires written consent for subletting non-residential premises and does not oblige the landlord to grant it, so the tenant’s real protection is a well-drafted alienation clause agreed at signature, for example consent not to be unreasonably withheld.
Does grey space push prime rents down?
The evidence says not much. JLL’s assessment is that surplus space does not significantly move prime rents, because prime demand wants new buildings on long terms. It competes hardest with older secondary stock and with landlords holding similar second-hand units.