How to rent office space in New York City

There are many executive offices in New York.
They will provide furniture, and you can start business right away.
You will share a receptionist and common areas such as a meeting room and a lounge.
The process is easy but more expensive than a long term lease.
Small offices start from $1000/month and up

Long Term Lease

Lease term 3-5 years, rarely 10 years
rent goes up every year. You set the yearly % increase when you sign the lease.

Point 1: It is wise to get a lease for as long as possible:

This is because rent for both residential and commercial property goes up every year.
For example, it is less expensive to rent for 5 years now and set the future rent % increase now, rather than extend a 3 year lease later which will cost more.
And if you decide to terminate your lease early, you might be able to sell the remaining portion of the lease because the rent is cheaper. A new tenant might save money even if he or she has to pay key money.

Broker Fee

Generally, the owner pays the broker fee for commercial properties.
However, if the owner is an individual or a small property company, the owner might not agree to pay for the broker fee.
In that case, the tenant pays the broker fee.
You need to realize that even if you, as the tenant pays the broker fee, these kind of properties can be a better deal.
This is because properties where the broker fee is paid by the owner, means that the broker fee has already been included in the rent. That is why you need to consider the total amount (broker fee / rent for the entire period)

Broker fees for commerial properties is often culculated on the lease period.
1 year lease / 15 % of yearly rent
5 years lease / 1st year 6% + 2nd year & 3rd year 5% + 4th year &5 th year 4% = TOTAL broker fee.
( Yearly rent by __%)

Or if there is Key Money, the broker fee might be 10% of key money.

If you happen to find property through a broker, but you have to pay the broker fee,
you might want to find another property where the broker fee is paid for by the owner.
You always need to think of the total amount as other properties where the broker fee has been already factored into the rent.
So, it is almost the same amount if you think of the total amount you wil pay during the term of your lease.

★ How to calculate rent

Generally, rent per SF is shown on Commercial properties

Indicated SF
1000SF Rentable / including coomon area such as a corridor
700 SF Usable / actual rental space

Differences are called the “loss factor”. Normally 30-40% of the property.
Rent is calculated on the basis of rentable SF, and stated in the lease.
Market rent in Manhattan includes Elevator + security
Less expensive areas (ex : Garment Districit) = $50 up / SF

How to calculate
Rentable 1000SF
Rent $50 / SF

Rentable 1000SF×$50÷12 months=$4167 per a month
Additional fees: electricity, doorman, sprinkler, real estate tax, etc.

★ what to negotiate

● Rent / yearly escalation %
● amount of the security deposit (normally 3 months)
● Lease term
● Free rent
How much renovation can be done by the owner.

NOTE: It is strongly recommended that a lease should be reviewed by a lawyer.

★ Required documents

● copy of Certificate of Incorporation
● Federal Tax ID Number
●Copies of the PHOTO ID and the SSN of who is signing the lease

There will be additional documents required, depending on the property

Posted in Real estate market in New York City


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