NY BY THE FOOT October Edition: Office lease tricks — Don't be fooled
Gregg Cohen - Corporate Real Estate Specialist
At Cresa, I help companies with their real estate
October 2019 — The 21st Foot
"Knowledge is power"- Sir Francis Bacon
OFFICE LEASE TRICKS — DON'T BE FOOLED
When you’re negotiating your next office lease, there are 5 potential tricks to look out for in order to guarantee your next lease is a treat.
Remember, the lease is written by landlords and for landlords. After all, they are in the business of making a profit and tenants are their sources for such. Their priority is themselves. It's essential that you equip yourself with the right tools, knowledge, and tenant representation to avoid these potential tricks.
1. A Security Deposit with no burndown — A burndown ensures you have better cash flow by reducing your deposit after a certain number of on-time payments.
2. Fixed Percent Rent Increases- 3% annual increases can get expensive FAST. By negotiating Direct Operating expenses, you will ensure you never pay more than your fair share.
3. The Wrong Base Year - Each year you’re off for the base year of real estate taxes and operating expenses could result in thousands of dollars in unnecessary payments. it's crucial to establish the correct base year when negotiating the lease terms.
4. Electricity at $3+ per square foot- The larger a tenant the more leverage you'll have. Ask for submetering- know what you are being charged per sq ft for electricity. ERIF ($3+ per SF) is a profit center for the LL.
5. No specific right to sublease — what if you outgrow your space? Do you have a clause to protect you?
BEST DEALS BY THE FOOT
$39 per square foot —need I say more? It's a Monster deal. High up on the 39th Floor. Six years of the term through 2025. There's a Shake Shack, Just Salad & Two gyms within 1 block to work off the Shake Shack burgers across the street. Or Just Salad if you prefer. Open Space for 36, 9 Offices, wired, furnished and ready for your signage.
4,000 - 12,000 — The GM Building
There are Central Park views from the whole space as you face northwest. Double glass door entrance. Everything is high end, as you would expect at such a premium address. 2 offices, Open Space for 14 and 2 conference rooms. Plus, the opportunity to take another 8,000 square feet next door. While only a 10% discount to the building, the scarcity of built out, furnished space with this type of view means it should be included on your next tour if the park is a priority.
Grand Central location, Park Avenue address. Entire 23rd floor, 4 sides of light, with glass-fronted offices and conference rooms. It would be great for a law, accounting, or insurance firm as it has 2 conference rooms, 15 offices and open space for 20. A deal in the $50’s (not a typo). I’m shocked this is still available.
6,800 — 88 Pine St
Great value here. Low $40's per square foot which is 30% less than direct deals in the building. Reception area, conference room by the entrance so clients aren't walking through your space. The bullpen/open area is surrounded by offices with tons of light coming from the east. Views of the water to boot!25,000 — 777 Third Ave
A Sub - sub Lease means deep - deep discount. A deal can be done in the high $40's per square foot versus $70+ from the building direct. Come on in and stay for a while as you have 7 years left. This full-floor seats 116 in the open area plus 18 offices and 3 conference rooms.
RECENT SUCCESS STORIES
The Law Offices of Christopher Q. Davis, Working Solutions NYC
"We have been impressed with all of your efforts since we started the process over 20 months ago. It was our first time going through this process and we had tons of questions. You took the time to answer each and everyone one of them and spoke in a language we could understand. When we changed our focus, you changed with us never blinking an eye. We felt you had our back and that our interests were your interests all throughout our time together." - Christopher Davis
IT'S A BEAUTIFUL DAY IN THE NEIGHBORHOOD
Midtown: For those keeping score at home, One Vanderbilt has topped out at 1,401 Feet and is 59% leased with an August 2020 target opening. Those Chick-Fil-A lines on 42nd are about to get that much longer! A few blocks north at 437 Madison, a large co-working company just signed for 360,000 square feet. This was the largest lease signed in September. And heading west for a moment, 1740 Broadway is about to get a food upgrade with Michelin starred chef coming to the new private tenant club being added. Reason alone to consider the building!
On the sales block, SL Green's 220 East 42nd was bought by Jacob Chetrit for $815mn. 711 Fifth changed hands 1 month after being sold initially. Shvo Group bought it from new owners Nightingale & Wafra. And on Third Avenue, Unizo continues their efforts to sell assets (remember 370 Lexington), this time putting 685 Third up for sale.
Midtown South: LinkedIn continues to grow in the Empire State Building, increasing its footprint 180,000 square feet to 500,000 square feet in total. You know the saying from little acorns, big trees grow? LNKD started in the building as a 4,000 square foot tenant! Facebook is in talks to lease 740,000 square feet at The Farley Building by Penn Station.
FiDi: Uber is circling 3 World Trade Center, considering signing for 300,000 square feet.
Hudson Yards: Cravath Swaine & Moore signed for 500,000 square feet at 2 Manhattan West. They'll be relocating from 825 Eighth Avenue in 2024.
Managing Principal at Cresa, New York / Foundation Board Member RWJ Childrens Specialized Hospital
5 年Great piece, Gregg!
MIDTOWN NYC Office Space. Relocation, Renewals & Restructuring.
5 年Great piece this month!