New York City boasts the largest office market in the entire country and has one of the strongest most robust office space markets in the world. The Manhattan and NYC office market is a diverse market however it is driven largely by Tech, Media, Advertising, Creative / TAMI tenants, Wall Street, the Stock Exchange, and financial markets and Co-working, furnished office, and flexible space providers as the largest most substantial tenants making up New York City’s tenant roster.
The country’s leading technology, media, and financial services firms all have a substantial footprint in New York City’s office market. Google, Facebook, Amazon, Apple, and Netflix have recently been absorbing a record number of square feet in their expansion in New York City’s office market, and tech company’s in general are a major force in driving Manhattan and New York City’s office market. Brooklyn also has a thriving office market which largely driven by TAMI / Creative tenants. Williamsburg, Greenpoint, Dumbo, Downtown Brooklyn, Navy Yard, Gowanus, Red Hook, and Sunset Park all have a robust office market. And in Queens the office market is largely driven by the Long Island City office market which also has a substantial TAMI tenant tenancy as well.
Manhattan’s largest office neighborhoods are Midtown, Hudson Yards, Flatiron / Nomad, Union Square, Soho, and the Financial District. From small loft/office buildings such as the type that populate the Soho and Flatiron office market to modern luxury skyscraper office towers typically seen in Midtown and the Financial District, Manhattan’s different types of office buildings vary greatly from neighborhood to neighborhood. This makes for a diverse and exciting architectural landscape for the widely diverse styles and types of buildings that make up the city’s office buildings inventory.
Corbett & Dullea Real Estate is a highly experienced New York City Office brokerage firm that specializes in commercial office leasing and we can guide you in your search for a new office space. There are many important steps to the office leasing process, and there any many individually important terms to every office lease as well. From finding you the right office space to submitting your offer / Letter of Intent, to negotiating your business the best possible terms for your office lease Corbett & Dullea will provide you with the expert experienced office leasing brokerage service you need to help take your business to the next level.
Once we locate you the perfect office for your business we’ll submit a Letter of Intent / LOI otherwise known as an offer to lease to negotiate the terms of your office lease. The primary business terms that are most commonly negotiated in a New York City office lease are as follows:
BASE RENT: This is the rent you pay every month to your landlord. It is often referred to on an annual price per square foot in the office leasing industry.
FREE RENT: A New York City office lease often includes certain concessions granted to the tenant from the landlord and one of the primary concessions commonly granted is a certain number of months of free rent for the tenant. The amount of free rent the tenant gets is normally tied to the term with the general rule of thumb being that the longer the term of the lease the greater the number of months of free rent granted to the tenant.
T.I. Aka “TENANT IMPROVEMENT”: T.I. (otherwise known as Tenant Improvement) is the amount of money that the landlord will either give the tenant for the tenant to build out their space or how much money the landlord will spend to build the office space themselves for the tenant. And just like in Free Rent the general rule of thumb is also that the longer the term of the lease is the more T.I. dollars that the landlord will grant to the tenant. It’s very common for a landlord to require the tenant to sign at least a 5-year lease in order for the landlord to provide and any T.I..
TERM: The number of years that the office lease is is known as the leases “Term”. It’s very common for office lease to be 5, 7, or 10 years long. Many landlords favor the security of having a long term tenant, and landlords often require at least a 5 year lease in order for them to grant free rent and T.I. to a tenant. However office leases can also be shorter terms as well, and 1, 2, and 3 years are not uncommon either. In fact, many companies require these shorter-term leases and often can’t take on the additional risk of a longer-term lease commitment. And with the recent explosion of Co-working and the Flexible Office Industry shorter-term leases have become a far more common feature in New York City’s office leasing landscape.
ANNUAL INCREASE: Typically in an office lease there is an annual increase each year for the term of your lease. The most common industry-standard annual increase for an office lease is 2.5% to 3%.
REAL ESTATE TAXES: In most office leases the tenant does not pay any base tax or any tax at all the first year of the lease. However, an office tenant can expect to pay a pro-rata share of real estate tax increase above and beyond the base year.
SECURITY DEPOSIT: The security deposit and securitizing the deal can often be last and most heavily negotiated terms of an office lease negotiation. The amount of the security deposit and whether a principal of the company has to sign a “Good Guy Guarantee” are often very important terms that can make or break an office deal. A Good Guy Guarantor is a person who signs personally as a guarantor of the office lease. However, the Good Guy Guarantor only has limited personal liability and does not sign a full personal guarantee. Office security deposits generally start at 3 month’s rent.