Nadel & Ciarlo, P.C.

What are key negotiating points in a New York commercial lease?

Renting commercial space in New York City can be a complex proposition. Whether you are looking for retail space, office space or industrial property, it is important to understand key lease provisions and negotiate terms that are as favorable as possible.

The amount of rent is obviously a primary consideration. The duration of the lease is also critical. If your business is a new venture, you don't want to be saddled with a long-term lease if things don't pan out. Many new and small businesses try to get a one or two-year lease, with an option to renew.

Landlords of commercial real estate often require tenants to pay additional costs such as common area maintenance or CAM. Utilities are often the responsibility of the tenant, and it is important to find out how the utility charges are measured and apportioned among the tenants. In some cases each tenant will have their own meter; in other cases utility charges will be apportioned by square footage. Be sure to find out whether you or the landlord are responsible for maintenance and repair of specific systems like plumbing and air conditioning.

A few key terms that are worth trying to negotiate for include the ability to sublease, as well as exclusivity and co-tenancy clauses. An exclusivity clause prohibits the landlord from renting space in the building to a business that would compete with yours. In a building with a large anchor tenant, a co-tenancy clause gives you some options if the anchor tenant pulls out. Often such clauses allow you to terminate the lease if the landlord fails to secure a comparable replacement anchor tenant within a certain time period.

Having an experienced real estate attorney can make a big difference in negotiating favorable terms in a commercial property lease. An experienced commercial leasing attorney will understand not only the fine print in the lease but will know which terms are usually considered negotiable.

Source: U.S. Small Business Administration, "Leasing Commercial Space," accessed Jan. 12, 2015

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