A New York Commercial Lease Agreement allows the rental of an office, retail or industrial space for commercial purposes. Non-profit or charitable organizations cannot use this type of lease to occupy a property.
Commercial leases in New York usually run for longer than a Standard Residential Lease, typically three to five years and are typically designed to allow a business out of the property. Unlike a residential lease, a commercial lease does not have a warranty of habitability clause which means the Landlord does not have an obligation to maintain or repair your premises, or to maintain the common areas. Depending on the type of business and property, there are often multiple clauses dictating use of the property and occasionally surrounding properties. In New York the two most common types of Commercial Lease are Triple Net and Gross. In Triple Net, the tenant is responsible for utilities, maintenance and insurance, with a reduced rent to compensate. In Gross, the tenant is only responsible for rent, but it is typically much higher.
Negotiating the Lease
Location – The location of your property is very important especially if you have a traffic based business. By calculating your budget and sales forecast, you can determine the amount you can pay for a decent location. Always do your research and take into account the zoning rules so that your business may fully operate.
Advisor Team – When renting commercial property in New York, especially New York City, you will need an attorney, real estate broker, government agencies, etc. in order to succefully lease a commercial space.
Property Ownership – It’s always a good idea to see the real owner of the property you are looking to lease from, that way you can see if it has clear title while also reviewing deeds, mortgages, mortgage satisfactions and financing statements. To find out this information, go to http://www.nyc.gov/acris.
Operating Costs & Taxes – Before leasing a property you should put together a business plan. That plan should include the upfront costs, building-out of the space, insurance, utilites, and so on. Will your landlord share the operating costs? Who and how much are the property taxes? (Tenants can find out by going to http://www.nyc.gov/html/dof/html/home/home.shtml.) These are the types of answers you will need to ask.