What is your fee?
Businesses often shy away from working with a tenant broker because they don’t want to pay for their services. Rest assured, all New York City commercial brokers collect their commissions form Landlords or Sub-Landlords. Broker commissions are paid upon execution, commissions are split with the Landlord’s agent and are often priced into every transaction. dispelling the notion that a tenant would save money without a tenant rep.
What is a Letter of Intent (LOI)?
A Letter of Intent (LOI) is commonly used in Commercial Real Estate and outlines business terms such as rent, lease term, space specifications, build out details, real estate taxes and operating expenses. The LOI is a non-binding document that shows a Landlord a certain level of seriousness that you are willing to transact on a space within their building. This letter will go back-and-forth between Landlord and Tenant and eventually become the back-bone for the final Lease Agreement.
What is meant by “loss factor” when leasing commercial space?
Commercial Real Estate (in contrast to Residential) tenants are charged rent/square foot on a Rentable Square Foot (RSF) vs. Useable Square Foot (USF) basis . Rentable square feet is defined as all the space occupied whether or not it is actually “useable” working space for your employees. The difference between rentable and useable is referred to as a “loss factor” which accounts for things like elevator cabs, lobby size, common corridors, restrooms, etc.
The Real Estate Board of New York (REBNY), states that the average loss factor for any building is typically ~27%.
Loss Factor Calculation:
(RSF – USF) / RSF = Loss Factor %
Remember to ask your broker to calculate usable square feet in order to account for loss factor when narrowing down your options. When searching for office space It’s important to consider loss factor when conducting your office search as you may need to up your square footage requirements to offset avg. loss factor.
What are the different types of electrical charges?
Direct metered electric: This is a direct charge for electricity usage from ConEd. There are no additional fees levied by the Landlord.
Sub-metered electric: When the Landlord installs a sub-meter into your space, this measures how much energy your office uses (does not factor in other tenants’ energy usage) to determine your monthly bill. Some Landlords add an admin fee on top of your direct bill of roughly 4% – 10% (varies by property).
Price per square foot: This option we try to avoid as much as possible. Landlords in some instances will charge tenants electric on a Price per Square Foot basis and typically ranges from $2.00 to $3.50 per square foot.
Are these spaces listing prices final?
No, all of the prices listed on our site are ‘asking prices’. These spaces are completely negotiable and all come with a certain amount of free rent which naturally depends on the term/length of your lease.
What is the typical timeline for an office move?
Securing a commercial office space can take anywhere from several weeks to — in some cases — up to a year. By allowing an appropriate amount of time to begin your office space search, tenants are able to explore multiple options to lock down the best deal terms possible.
If possible we recommend businesses start their office search at least 6 months before your desired move in date. Reason being, when an owner knows you are pressed for time they tend to be tougher to negotiate with. The best thing you can do is assign someone within your office to pre-negotiate on spaces that would meet your requirements and use time to secure deal terms that best suit your budget. Remember, tenant brokers are trained to secure the best deal possible for their clients, use them!
Here are some standard industry timelines:
- Space Search (2 – 3 weeks)
- Letter of Intent Negotiations (1 – 2 weeks)
- Lease Negotiations (2 – 3 weeks)
- Space Build Out (3 – 4 weeks)
Keep in mind, if the space was previously built out prior to your occupancy, the timeline can be compressed between ~5 – 8 weeks. If you are looking for a new build out installation the process could take anywhere from 8 – 12 weeks.
Do you pay real estate taxes when leasing office space in NYC?
In New York State real estate taxes are in every commercial lease and kick in after your “base year” which is determined after 12-months of occupancy. On the positive side, you won’t pay any real estate taxes during your first year (base year) of occupancy.
Real estate taxes vary from building to building, however, most first year tax obligations range from $.22 – $.50 per Rentable Square Foot. Throughout the life of your lease subsequent years of tax obligations will remain flat from your base year unless there are major capital improvements to the building — in that scenario you are responsible for your prorated share of the building increases. So if you have 1,000 square feet in a 100,000 square foot building your share of tax increases would be 1% of the total.
Ask your broker for a break down of real estate taxes in all spaces you are interested in.
What is a “Good Guy Guarantee”?
In New York City it is very common for business owners to sign a “good guy guarantee”.
Essentially this clause is a personal guarantee signed by an individual within the firm, typically a member of the executive team or the majority owner. The individual that signs the guarantee is held liable for all missed rent if (and only if) the occupying business refuses to pay rent and continues to occupy the space. If a tenant refuses to pay rent and gives the space back to the Landlord (a good guy) she/he is only held liable for any back-rent and is released from any other liabilities.
This guarantee is used to keep tenants from “squatting” or occupying the space without paying rent. The clause has been credited with making New York City Commercial Real Estate one of the most reliable investments in the world.