"We at NYSPACE learn not only what is currently on the market, but
what will be on the market next week, next month or next year."
his section is a little long but extremely important. Nothing can be fully comprehensive - it would take volumes. And every tenant’s needs are somewhat unique. We at NYSPACE pride ourselves at bringing a technical approach in comparing the several spaces a tenant will be (and should be) considering and negotiating for, and make every effort to keep our tenants fully informed of all such comparisons and their ramifications. So with this caveat, we hope you find this informative.
Starting in the 1930's when Manhattan vacancy rates were very high, owners and landlords found that it was in their best interest to let EVERY broker market their space. They began to use an "override commission" system, where the owners paid both the listing and tenant's brokers. Although this was a little more costly than a "Co-Brokerage" arrangement, where all brokers split one commission, the owner's found that their space rented faster and they made more money in the long run. All brokers had access to all listings. This system is still in use today regardless of market conditions. This means that you, the tenant, get the services of a tenant-only broker/consultant without fee. The landlord pays 100% of our commission. We accomplish this by fully disclosing our relationship so as to avoid even the appearance of a conflict.
NYSPACE has all available listings in Manhattan. We receive mailings from owners and owner's agents. We subscribe to the listings database that we all use, which is constantly updated and is very accurate. But most importantly, we also use our own network of experienced brokers to make daily contact with building owners and agents, and others who, for one reason or another, are not in the computer listings and/or are not represented by agents. By this personal contact we at NYSPACE learn not only know what is currently on the market, but what WILL BE on the market next week, next month or next year. Each of our professional tenant representatives are experts in a specific geographic region of Manhattan and do their own tracking of that area, making our in-house data base the most accurate and up-to-date of any in the city. This information is shared by the entire office. In times of low vacancy rates or in volatile times it is just human nature for some landlords and their leasing agents to hold back some information from the mailings and the listing services, especially small spaces about to come to the market. Because of our long-term relationships with these owners and agents, we know about these spaces too. This comprehensive and cooperative approach has helped make us, we believe, the most competitive brokers in Manhattan, and the best tenant-only firm.
There are several other issues, which are often missed or misunderstood, but are essential. Escalations, the formula or percentage by which the rent increases each year varies from building to building. It could be as simple as a straight percentage increase (3% to 4% for example) or the Consumer Price Index (CPI) which theoretically keeps up with inflation, the direct operating expenses of the building, or based on some unrelated concept such as the percentage of increased wages received by building employees (Porter's Wage) with or without their fringe benefits, etc, etc, etc. A tenant should become fully informed of these various formulas so as to truly compare one space's lease terms to another. The base year escalations kick in ot different times and can also effect the overall cost of the lease, especially in Lease Renewals. In addition, most buildings pass along increases in real estate taxes, fuel, utilities, etc. Some of these are insignificant. Most are not. So in comparing spaces, the rent per square foot is just the beginning.
Which brings us to "Loss Factor". The last thing a landlord's agent wants to point out to you is the loss factor. Some even, if asked, just make the number up. And you can guess which side if things the error leans. But this is the one item, if overlooked, can cost you the most. This, theoretically, is the percentage of the space "lost" to the common areas of the building or the proportional share of common areas attributed to a specific space. Loss factor can and does vary from building to building, and even from floor to floor in the same building. The factors included as "common" are things such as the lobby, elevator shafts, stairways, super's office, boiler room, storerooms, bathrooms, hallways, etc. Unfortunately, some owners have added an extra ingredient - imagination. Just be aware that it exists. Measure the spaces that seem to work best for you and on which you might negotiate so that during and after the negotiation you will be able to determine the price per "useable" (as opposed to "rentable") square foot, more than for any other reason so you can compare the value (per useable square foot) of one space to another, apples to apples.
Another question often asked is WHEN SHOULD I START MY SEARCH ? Well, that depends. If you're looking for 5000' then probably about seven or eight months before you need to move. If your requirement is 20,000' or more, then I would recommend starting at least year in advance. How long it will take to build your new space will be a big calculating factor.
What about RENEWAL? One of the tricks landlords employ is to put-off speaking with a tenant or drag out the conversation about the specifics of renewal until it's too late to go out and find new space. Even if you want to renew you should go out and learn the market - available space, price, etc. - to use as ammunition during your negotiations . This will help keep your new rent down and, if you can't come to terms, you'll be ready to move elsewhere without having to scramble. Most leases contain a holdover penalty clause which is usually punitive. We're happy to assist you by showing space and giving you all the information you'll need even if you intend to renew.
We hope you found this helpful. Some is obvious, but we believe it presents a good overview of how this business works. Unfortunately the learning curve is such that you learn this "stuff" just in time to forget it. By the time you're ready to do it again, say in five years or so, everything has changed - the market, the buildings, the rents, and most of the players - more than half the brokers and salespeople will be gone and replaced. We at NYSPACE have a long, successful track record of helping tenants through this learning curve - this maze if you will. Our job, again, is not to sell you a space or convince you what to do. Our job is to help you sort through ALL the available information so you can make the best informed business decision in choosing space for your company.
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