Commercial Real Estate Brokers NYC & Manhattan

Our commercial leasing efforts, together with our top rated NYC real estate brokers is a step by step process from A to Z that we work together with the client on. Commercial Leasing in the NYC area is like no other…there are so much attention to detail that takes place within our projects and we want our clients to recognize those steps one by one, together with our expertise and proficiency.

Q & A on Commercial Leasing in Manhattan NY.

Steps Of Making A Commercial Lease In Manhattan

Steps
  1. Identify clients exact needs
  2. Do initial search based on clients’ needs and prequalify the spaces that meet clients criteria and landlord accepts the clients use
  3. Send report on available spaces
  4. See selected spaces
  5. After seeing the spaces and deciding if the criteria has to be adjusted do another search to with new criteria
  6. See new spaces (as many times as necessary to find what works. Usually by the 2 or 3rd time we will be able to identify a short list of locations that can work)
  7. Review the final selection of spaces and decide on which space(s) to make an offer
  8. Provide a with a full report on space(s) including any and all additional expenses to be incurred during the lease Prepare DRAFT OFFER LETTER for clients approval
  9. Client approves the DRAFT OFFER LETTER
  10. Client provides financials to be submitted with offer
  11. OFFER LETTER is submitted
  12. Response from Landlord -The landlord will either accept the offer or come back with a counter offer
  13. If the landlord comes back with a counter offer we will counter their offer – Depending on the size of the deal this process is usually done several times.
  14. All terms agreed up on
  15. TERM SHEET is created which specifies everything that has been agreed to
  16. Client and the landlord sign off on the TERM SHEET
  17. Landlord sends the lease
  18. Clients lawyer comes back with comments
  19. Landlord’s lawyer comes back with comments ( Usually there are several rounds of this and can be the longest part of the leasing process)
  20. Lawyers agree on all the issues and the landlord sends an executable lease
  21. Client signs the lease and provides first month’s rent and deposit
  22. Landlord countersigns the lease- once both parties sign the lease only then does the lease go in to effect.
  23. Construction starts – either by landlord or tenant (depending on negotiated terms)
  24. Once construction is complete Tenant move in

Major Issues To Negotiate In A Commercial Lease In Manhattan

Most of the lease in Manhattan will have to be negotiated between the tenants and landlords brokers. Below is a general list of items to be negotiated with all leases. Other negotiating items are discussed depending on the specific industry and space.

  1. Rent – In most cases the rent can be negotiated. Key factors in determining rent are:
    • Term
    • Build out that the landlords has to do
    • How strong are the tenants financials
  2. Term – Unless the space is a sublease most common lease terms in Manhattan are:
    1 – 3, 5, 7 and 10 year leases

    The longer the term the greater the chances are of negotiating the best possible deal.
  3. Annual Escalations – Most direct leases in Manhattan will have annual increase in rent. It is either done as a flat escalation or is part of increase of operating expenses. The standard increases are from 2%-4%.
  4. Electricity – The electric bill is billed to the tenant in one of the flowing ways:
    • Direct Meter– Where client pays directly to utility company for what they use
    • Sub-Meter – Where landlord reads a bill and ads a percentage above the bill
    • Price Per Square Foot – Landlord charges a flat fee based on the amount of square feet
  5. Sprinkler/ water/sewer- if applicable

    Depending on building. Usually Class A building have this charge as part of base rent
  6. Guard charge – If applicable

    Depending on building. Usually Class A building have this charge as part of base rent
  7. Fuel Charge – If applicable. The landlord will pass along any increases in fuel charges to the tenant
  8. Real Estate Taxes – In most leases the way it works with real estate taxes in Manhattan is the tenant pays only proportionate share of any increases on taxes ONLY.

    Here is an example:
    If the building is 1,000 sf and your space is 100sf that means that you have 10% of the building.
    If last year’s taxes were $1,000 and this year they raise the taxes by 10% then the new tax bill is $1,100, you are only responsible for the 10% of the $100 that was the increase.
    Which means that on a $100 increase in taxes with your 10% of the building space you are responsible for $10.
  9. Security deposit – will be determined by:
    • Tenants financials
    • Amount of work landlord has to do
    • Free rent that can be negotiated
  10. Free Rent – Will be determined by:
    • How much work the space needs
    • Term
    • Tenants Financials
  11. Landlords Work – Will be determined by:
    • Term
    • Negotiated price per square foot
    • Tenants Financials
  12. Tenants Work – If tenant want to do their own work or if landlord will not provide work in the space then landlord has to approve the proposed general scope of work in the at the offer stage
  13. Garbage Removal – Depending on building. Usually Class A building have this charge as part of base rent
  14. Office Cleaning – Depending on building. Usually Class A building have this charge as part of base rent
  15. Brokerage Fees – In most commercial leases in Manhattan landlord pays the commission to the brokers
  16. Signage – Depending on type of business signage has to be negotiated to best market the business ( ex. Lobby directory, sign at the entrance, flag with logo etc…)

List Of Expenses When Renting Space In Manhattan- There might additional expenses but general list usually includes:

  1. Rent
  2. Annual escalations ( link to annual escalations)
  3. Electricity ( link to Electricity)
  4. Sprinkler/ water/sewer- if applicable
  5. Guard charge- if applicable
  6. Fuel charge- if applicable
  7. Real Estate Taxes ( link to real estate taxes)
  8. Garbage removal – if applicable
  9. Office cleaning- if applicable
  10. Insurance – most commercial leases require the Tenant to take an insurance policy which helps to limit the landlords liability
  11. HVAC – Some buildings have centralized HVAC and in many cases the HVAC is provided only during building hour (ex Mon- Fri-8-6pm) other times to it will cost per hour to use it. The prices and the hours vary from building to building.
  12. Maintenance of HVAC- if your space has its own HVAC system most landlords requires the tenant to have a maintenance contact with an outside company to maintain the unit.