Office Flex Space for Startups: What It Means and What a Landlord Will Ask of You

What a New York landlord asks of a young company

A lease is signed by a company, and a young company is easy to walk away from. So the landlord looks for security, and sizes it by credit, not by formula.

• A security deposit. Usually several months of rent. A company without years of financials is asked for more.
• A letter of credit. On larger deals the security is often posted through your bank, as a letter the landlord can call on if you default, which leaves your cash in the business.
• A good guy guarantee. A founder guarantees the rent personally, but only until the company moves out cleanly, with the keys handed back and rent paid to that date.

Security deposits and the good guy guarantee each have a full entry. Both are described here in general terms, and your attorney should confirm what a specific lease says.

What a startup can negotiate on a flexible lease

The first number a landlord quotes is its most cautious reading of your credit. Nearly all of it moves.

• The rent, and the free rent at the start of the term.
• The deposit, and a burn-down that returns part of it after each year of on-time payment.
• A renewal option, so a short term does not leave you exposed at the end.
• An expansion right on nearby space.
• The notice period, including the notice that releases a good guy guarantee.

What a young company should have ready before the proposal goes out

A landlord reviews a tenant's credit before it agrees terms, and slow answers to its questions can cost weeks. Have these in hand first:

• A tidy financial package: whatever statements exist, plus evidence of the latest funding round.
• A decision on who would sign a guarantee. One named person is the usual aim, not every founder.
• An answer from your bank on whether it will issue a letter of credit, and against what collateral.
• An attorney who reads commercial leases, lined up before the draft arrives.

Nomad's part, and why the floors below are in NoMad

On your search, we work for you, and the security package is negotiated alongside the rent: the amount, the form, the burn-down and the terms of any guarantee. A well-organized financial package often brings the ask down, so it pays to have one ready before the first proposal goes out.

The block shows NoMad, the blocks north of Madison Square Park where many startups take a second office. The stock is prewar loft buildings along Broadway in the high 20s, with the N/R/W at 28th Street. These are the NoMad floors we list. Flex by Nomad is the furnished, serviced option on a shorter term.