Office Space for Lease in NYC: How Leasing Works Differently Here

Convention one: rent is an annual figure per rentable square foot

In some markets a quoted rent is a monthly amount. In New York, a number such as 80 means eighty dollars a year for each rentable square foot. For the monthly bill, multiply the rate by the square feet and divide by twelve.

Say a floor of 6,000 square feet asks $80. That comes to $480,000 a year and $40,000 a month. The live block further down is limited to floors asking 75 to 100 dollars, so you can run the same sum on real listings.

Convention two: the feet you pay for are not the feet you use

Offices here are measured in rentable square feet. That number takes in part of the building's lobbies, hallways and mechanical rooms as well as the floor you occupy, so the usable area inside your own walls runs 15 to 25 percent below it. A tenant used to net internal area, or to usable feet, should plan layouts on the smaller number and budgets on the larger one.

The planning figure of 175 square feet per person is a rentable number, so it already matches the way floors here are advertised. Rentable and usable square feet explains where the difference goes.

Convention three: asking rent is not effective rent

The quoted rate is the landlord's opening number. Two things change what the lease costs: free rent, meaning months at the start when no base rent is due, and the tenant improvement allowance, the landlord's contribution toward construction. Spread across the term, they produce the effective rent, and that is the figure to compare between proposals.

Landlords here often give concessions before they cut the face rate, so a floor with a higher asking rent can turn out to be the cheaper deal.

Convention four: three charges sit on top of the rent

• Electricity, which adds roughly $2 to $4 a square foot each year, by meter or by a set charge.
• Escalations of roughly 2.5 to 3 percent a year, fixed in the lease, so the path of the rent is known on the day you sign.
• A security deposit, commonly posted as a letter of credit from your bank.

There are no periodic rent reviews of the kind a UK tenant expects. Opening a New York office from London and from San Francisco translate the rest.

Convention five: terms start shorter than newcomers expect

A lease on a private floor can be as short as 12 months. Two and three year terms are more common, and longer ones are usual where the landlord pays for a buildout. Rent per square foot generally rises as the term gets shorter. A company testing New York can therefore start small and short, then move to a longer lease once the team has settled.