5 Things Small Tenants Need to Know
1. You matter to landlords: 78% of office leases in NYC are under 10,000 square feet, and 56% are under 5,000 square feet. While all tenants matter, small tenants are the lifeblood of the NYC real estate market.
2. You’ll get a better deal with representation: landlords work with brokers all the time. When they are approached by a broker on your behalf, they know that you are out in the market, have options and they see this a signal that they need to make a market deal with you. Working with a tenant side broker who knows what they are doing will save you time and money.
3. Know the market (here’s how): identify 3 spaces that work for you and get detailed pricing info on each of them. By comparing similar spaces, you’ll quickly understand value and have a first-hand benchmark to pricing and concessions.
4. You’ll have 4 basic costs: 1) base rent: $X/s.f. per year; 2) electric: typically $3.00-3.50/s.f. per year; 3) escalations: typically 2-3% of base rent per year, increasing annually & cumulatively; 4) proportionate share of real estate tax increases above a base year: everything except the increases should be on the landlord.
5. There are concessions you should ask for: at minimum, you should get several months of free rent at the start of term, and money to build out the space. Beyond this, you may be able to negotiate expansion options, termination rights, a burn-down on the security deposit, and other give-backs.
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