How do I negotiate a strong commercial lease in NYC?
Sixteen years after New York City and the rest of the nation experienced the horrors of 9/11, the New York City commercial real estate market has rebounded and then some. The latest market statistics show over 2.75 million square feet of commercial space leased, with the average asking rental price of nearly $74 per square foot. New York City developers anticipate that the commercial real estate market in the city will only continue to grow. With such demand, securing a coveted commercial space can be difficult. Our Staten Island real estate lawyers at Merlino & Gonzalez offer some tips for negotiating your best commercial lease below.
Negotiating a Commercial Lease
Commercial leases will often commit you to pay a hefty sum for several years. Many standard commercial leases are full of legal terms that protect the landlord. When you take the first steps towards negotiating and signing a commercial lease, you will want to make sure your legal interests are represented to the greatest extent possible. Keep these factors in mind when negotiating your lease:
- Know what rental price is fair: You will want to walk into any commercial lease negotiation with a firm grasp on what rent price is fair based on the location and space itself. Research not just current rent rates, but reasonable rent increases, as your lease will likely include terms for rent rises in the coming years.
- Use the length of the lease to your advantage: Your ideal lease term will depend largely on your business. If your business is heavily location dependent, you may want to negotiate a better rent rate for signing a longer term lease. Keep in mind that shorter rental terms result in less of a financial commitment should the business fail.
- Avoid the personal guarantee: Many landlords will request that you personally guarantee the commercial lease. This can prove detrimental if your business goes under as you personally will then be on the hook for any rent owed. Some tenants can successfully negotiate for the elimination of the personal guarantee by satisfying other terms important to the landlord or selling the landlord on your business and its future success.
- Aim for a high tenant improvement allowance: When you take over a space, you may need to invest a considerable amount of money to make it work for your business. Knowing this, landlords will sometimes offer tenants improvement monies to entice tenants that will make the space better. Negotiate for as much as you can in tenant improvement dollars so that your business starts off strong.
For questions or assistance with your potential commercial lease, contact the experienced real estate attorneys at Merlino & Gonzalez today.