In the Manhattan, New York office space market, while the landlord often has the upper hand, the tenant also has leverage. This creates new opportunities for tenants, who can best position themselves for a favorable outcome with their current landlord by taking a few simple steps while also considering potential alternatives.
We can help you negotiate an advantageous new lease. If you are a candidate for renegotiation below are some pointers on how to get the best rate.
(1) Start early:
Landlords know that it can take 12 months for a tenant to relocate. So, when a tenant starts renewal negotiations with only a few months remaining on its lease, it indicates to the landlord that renewal may be its only real option.
(2) Determine the value of your space:
The market value of any office space is a function of two factors— the condition of the space and rental rates both in the building and the neighborhood in general.
The value of the space to the landlord is the critical factor: what rent could the landlord expect to realize if space were vacant and had to be rented to an outside tenant? For example, if the market dictates a landlord contribution of $20 psf toward tenant improvements, and a renewal would not require this expense, the rent for a ten-year renewal should be approximately $2 psf lower than the market rent.
Even if you plan to stay put, act as if you’re ready to move. A competitive environment is crucial to an effective negotiation. The landlord will not negotiate seriously unless it is made clear that the tenant can, and might, relocate. Even when the tenant has absolutely no inclination to relocate. We’ll show you how.
Keep an open mind. The landscape of NYC is changing For new businesses and nonprofits, the cost of NYC office space can be daunting. While landlords are not giving space away, there are interesting options for space in what was, for many, considered unattractive areas, such as the West 30’s, Times Square, Tribeca, and Harlem. The open-minded tenant may be pleasantly surprised by what is available.
Engage an NYC real estate advisor to negotiate with the landlord. The mere introduction of an experienced real estate advisor puts the landlord on notice that market realities will not be ignored and that the tenant will be professionally represented in all aspects of the upcoming negotiation. This will immediately increase a tenant’s negotiating leverage.