Commercial Lease Security Deposit in NYC: Cash or a Letter of Credit
A commercial lease security deposit on a New York office is typically several months of rent, held by the landlord as collateral for the whole term. There is no posted schedule. The ask follows the landlord's read of your credit, so a young company without years of financials is asked for more than an established one. It can be posted as cash or as a letter of credit from your bank. The amount is negotiable, and so is a burn-down, a schedule that hands part of the security back as the company keeps paying on time. Raise both at the proposal stage, before the lease is drafted.
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Send floors at $75 to $100Updated 2026-10-03 · Nomad Group
How much a landlord asks from a company without long financials
The landlord is underwriting one risk: that the rent stops. Years of statements showing the rent comfortably covered bring the request down. A company with a recent raise and little operating history gets a higher one.
The first number sounds like building policy. It is an opening position, and a clear financial package, sent early, often moves it. Security also trades against a personal guarantee: more of one can mean less of the other, and the good guy guarantee explains that side.
Cash against a letter of credit: which a young company should post
- Cash sits with the landlord until the lease ends, out of the business for years.
- A letter of credit is issued by your bank in the landlord's favor. The landlord can draw on it after a default, and until then the funds stay on your side of the ledger. The bank charges a yearly fee and will want collateral behind the instrument.
Where the company's bank will issue one, most finance leads prefer the letter of credit, and the choice of form should be the tenant's. Whichever you post, the lease should allow a draw only after an actual default and notice. Security deposits and letters of credit goes through the clause.
The burn-down: security that steps down as you pay
A burn-down is a schedule written into the lease. Each year of rent paid on time releases part of the cash, or lowers the face amount of the letter of credit, until the landlord holds a fraction of what it started with. It costs the landlord nothing unless you perform, which is why most will discuss it and few will offer it.
Read the conditions. A schedule that is wiped out by any default at any time, including a late payment cured years earlier, is worth far less than one that survives anything fixed on time.
Months of rent: why the floor decides the size of the check
Security is counted in months of rent, so the rent sets the dollar figure. Take an example: suppose a floor of 4,000 square feet is priced at $90 a square foot a year. Rent is $30,000 a month, and every month of security the landlord requests is another $30,000 set aside for the term.
The live block below shows floors in the $75 to $100 band, where a deposit of several months can run into six figures. Multiply any of them out the same way before you tour.
When the deposit comes back, and the date to write into the lease
The lease, and nothing else, sets when the money returns, which is the reason to write a date into it. Ask for three things: a fixed number of days after you hand back the keys, deductions only for amounts the landlord can document, and release of whatever is not in dispute even if a restoration item is still being argued. A lease that says nothing lets the landlord take its time. The wording belongs to your attorney. How to negotiate an office lease shows where security sits among the other terms.
Floors asking $75 to $100 per square foot
Live from our listings · 6 of the 11, cheapest first11 of the 46 floors with a published rent ask $75 to $100 per square foot per year, from 2,940 to 13,266 square feet.
- Floors
- 11
- Sizes
- 2,940-13,266 sq ft
- Asking rent
- $78-$98 / sq ft
- 6 Greene Street, Entire 2nd Floor 4,900 sq ft $78/sq ft SoHo about 28 people
- 17 State Street, Partial 26th Floor 6,606 sq ft $79/sq ft FiDi about 38 people
- 540 Broadway, Entire 2nd Floor 6,350 sq ft $85/sq ft SoHo about 36 people
- Empire State Building, Partial 43rd Floor 5,621 sq ft $90/sq ft NoMad about 32 people
- 110 Greene Street, Partial 5th Floor 3,750 sq ft $95/sq ft SoHo about 21 people
- 5 Bryant Park, Entire 33rd Floor 7,500 sq ft $96/sq ft Bryant Park about 43 people
The full guide
This page is the short answer. The long one, with the numbers worked through, is here:
Related topics
- Tenant Improvements in a Leased NYC Office: Your Rights and Responsibilities
- Leasehold Improvements in an NYC Office: Definition and Examples
- Tenant Improvement Allowance on a Short-Term Office Lease in NYC
- Tenant Improvement Allowance in an NYC Office Lease: How the Money Is Paid
Is a letter of credit better than a cash deposit on an office lease?
Often, if your bank will issue one. Your money keeps working inside the company, at the price of the bank's annual fee and the collateral it wants behind the letter. Ask the bank for its terms first.
When in the negotiation should a young company raise the deposit?
At the proposal, alongside the rent and the term. The amount, the form and the burn-down all belong in the letter of intent, where a change costs a sentence. Left for the lease draft, they are argued later and from a weaker position. Send your financials before the landlord names a number.
What happens to the deposit if the building is sold?
That depends on what the lease says about transferring it. Without transfer language, a tenant can end up asking the wrong party for its money. Have your attorney confirm that the security passes to the new owner and that the new owner is responsible for returning it.
How many months of rent is a normal commercial lease deposit?
Several months is typical, and there is no fixed figure. Established companies with strong financials see lower requests, and early-stage companies can see substantially more. Treat the first number as the start of a negotiation, and ask for a burn-down alongside it.
Talk to a broker
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