Is there a difference between a Landlord’s Agent and a Tenant’s Agent?

Optimal Spaces, Inc. is a Tenants Representative. We represent the company or tenant who is looking for space and not the Landlord of the commercial space. Most major brokers are “Landlord’s Agents” or Managing Agents. Their legal duty is to represent the owner of the building. Their goal is to market and lease their clients' properties. They do not represent the tenant and may not show you all the available space options. The landlord’s agent will not get you the best terms for your lease because it is not in their interest to do so.

Why is a Tenant Agent better at negotiating a lease?

We act as your 800-pound real estate gorilla having negotiated over a 1,000,000 square feet of leases in the past few years. We have complete access to all the available space listings. We know which landlords will reach for a deal and which landlords will not. We are experts at what we do and that is our specialty. We will show you the issues to consider most.

• 1. Some negotiable items include: + Free Rent.
  Landlord's Work Contribution:
  Base Landlord Work
  Lease Term
  
• 2. Options to renew and extend.
• 3. Escalations.
• 4. + Security Deposit.

What are the advantages of a long term lease?

What are the 10 issues to consider when acquiring or renting office space, retail space, or industrial real estate?

Why is Usable Square Feet (SF) less than Rentable Square Feet (RSF)?

How can a Tenant Agent help you renew or renegotiate your lease?

By engaging Optimal Spaces as your exclusive broker, we can save you money by presenting to the Landlord a credible threat that they may lose you as a valuable tenant. As an independent third party, Optimal Spaces, Inc. will:

• Review your current lease agreement.
• Advise you on money saving lease issues.
• Provide current comparable market data.
• Negotiate on your behalf.
• Assist in documenting the transaction.

Subleasing
If you have extra space and have time remaining on your lease, we can also help you find desirable sub-tenants or negotiate a surrender of the lease.

How can Manhattan office space listings be obtained?

What is the industry custom around brokerage fees for commercial tenants?

When buying and leasing Manhattan commercial real estate what are the 10 Commandments?

1) Have an agent         

With the New York City Real Estate Market constantly changing, one is in need of competent advisors to get the most of the single largest business decision most companies have to make. Your real estate actions can dramatically affect your company’s bottom line. Our job is to understand the real estate market and help our clients determine their needs. This way we can get you the best deal for what you need versus a bargain for something that does not work for you long term.

You need a real estate expert to make sure you get the best deal. A lease is a complicated legal document that needs to be reviewed and negotiated by an expert. Our brokers know the demand for the type of space you are looking for including the competing properties. Our brokers also have the ability to speak the language of the landlord. We can help get you the space you want at the best possible price.

There are two types of agents: Most commercial brokerages are "Landlord’s Agents" or "Managing Agents", representing the Owner of the property, not the company looking for space. Their goal is to market and lease their clients' properties. Under the law, they act solely on behalf of the owner. They do not represent you. A landlord's agent may not show you all the space that is available until they have concluded that you are not interested in the properties they represent. When it comes time to negotiate the terms of your lease, a landlord's agent cannot best represent your organization's interests.

Tenant Representatives like Optimal Spaces, Inc. only represent commercial tenants, not owners or landlords. This type of agent will show you a broader range of properties than a managing agent and will get a better price; their fee comes from the landlord, as is industry custom, so you get great advice at no cost to you.

Which agent would you prefer to have on your side?

Optimal Spaces, Inc. is looking to create relationships with businesses that will continue to use us as their needs grow and change. The better that we know you, the better we can serve you.

A company’s space needs vary over time. Since it can takes 3-6 months to find an appropriate space, poor planning and lack of foresight can lead to costly business mistakes. Such as renting the wrong space or not having the right to renew. One needs to keep in mind future expansions of business due to growth or acquisition, downsizing or consolidation.

Items you need to understand about your lease:

Functionality of the space over the term of the lease.

Changes in the corporate image necessitate change in the space image.

Extracting the value from and old lease which has now appreciated in value over time.

Where will you company be in terms of employees in 1, 3, 5 and 10 years. By anticipating future growth, acquisitions, or dispositions, one can negotiate appropriate lease terms to cover these possibilities.

The process of moving is costly. The true cost of relocation is not the sum of moving costs alone, but also the time spent searching and negotiating, and the loss of productivity that coincides with the downtime of moving. Typical downtime is two weeks before the move - employees prepare for the move and initiation of new projects come to a standstill until relocation is complete - and at least two weeks after the move - waiting for phones, data lines, business cards, letter head, mail, files, servers, etc. If this downtime occurs at a busy time, the cost to the business may be huge. It may pay to rent expansion space now and subleasing it out until needed. This way you can grow where you are without disrupting the flow of your business .The following guidelines may be helpful:

Each NYC landlord represents Rentable Square Feet differently. Landlords add a loss factor to the actual square footage to be occupied by the tenant. Landlords set the price $/SF based on rentable square feet which includes space lost to common areas such as lobbies, stairwells, hallways, bathrooms, and mechanical areas. Most tenants are interested in useable square feet, the actual measurement of the space that the tenant will occupy. Based on the landlord's RSF measurement, one can expect a minimum loss factor of 18-25% for full floor rentals and 30-40% for a multi-tenanted floor. Be aware that you will get 10-15% more space if you rent out a full floor than if you rent out space on a multi-tenanted floor. For instance, a 5,000 RSF space on a multi-tenanted floor will only give you ~3,500 useable square feet, whereas the same space on a full floor will give you ~4,000 useable square feet.

* Turnover rates rise as RSF per employee diminishes.




4) Define the vision of your space to match your corporate image :         

Your corporate image is critical to your company and your space reflects on your corporate identity.

An office location on Park or Madison Avenue may give the impression to your clients of class, financial success, and establishment. A large loft space in Tribeca may give the impression of vitality, growth, and creativity. How would you like your company to be perceived by prospective clients, vendors or associates? By making an office comfortable and well situated with regard to transportation, restaurants, banks and other daily necessities it can help lower employee turnover, which upsets business flow and ultimately affects your bottom line.





5) Know your terms. :       


What are your "negotiation points" and relative areas of inflexibility? For most tenants, security deposit is a key area as the cost of capital for a tenant may be as high as 40% and the value to the landlord may be 8% or less. A key in these negotiations is raise the Landlord's confidence in the strength of your company. If the landlord has confidence in your company then the security deposit, free rent arrangements, landlord's work contribution and other lease items can be negotiated more favorably (see Commandment #7 above).

The following are the most common negotiation points:

The following are the most common negotiation points:

• Base Rent
• Escalations
• Base Work and building services
• Security Deposit
• Renewal rights
• Expansion Rights

6) Determine your budget with your accountant        

There are lots of choices at different price ranges for New York real estate. For budgets in excess of $100/RSF, one can rent space in some of the most prestigious buildings in Midtown. For $60-90/RSF, one can be in many of the top "Class A" office buildings in Midtown. For $40-60/RSF, one can be in a great office building in Wall Street. From $30-50/RSF, one can be in a variety of prime areas outside of midtown such as SoHo, Tribeca or the Garment center.

More economical space options exist in older buildings situated in Brooklyn, Queens, New Jersey, and Westchester, and some relocation credits/incentives exist. There are tradeoffs when going for a lower budget, location, quality, age of building, desirability of space, light, view, speed and capacity of elevators, electrical capacity, internet access, quality and age of existing tenant installation. Price alone does not mean that the space is a bargain. Rent for a company is typically about 5%+ of a company's budget. It may well make sense to budget more for the rent if other factors that bring value are added.





7) Treat landlords well :       

The relationship between landlord and a prospective tenant is extremely important. Treat the landlord as you would your banker or venture capitalist. If the landlord sees you as a desirable tenant, the landlord may reach to get you as a tenant and offer you extra construction dollars or more flexible lease terms.

We give our clients a list of items to show the landlord and is available upon request. The list includes a 2 page executive summary.

• 1 page summary of the principals
• Current Profit and Loss statement
• Current Balance sheet
• Bank statement
• Projected Profit and Loss statement

Two paragraph description of what you are going to do in the space.

• List of clients
• Any articles or press releases on the company.

8) Identify the type of space that you need :        

Raw space is often cheaper to rent, and it can be finished to your exact specifications. However, extensive construction often requires a considerable investment of time and money in excess of the Landlord 's contribution towards the build-out. It typically takes 6-9 months to finish a complete build-out and can distract key employees while they oversee the process. Finished or "built" space can be more costly to rent initially but it may suit your needs as is or modified easily. The key here is to understand your needs so that your search and relocation process can be as efficient as possible.






9) Choose wisely, direct lease or sublease  :      

Subleases can be ideal in certain situations, but they are not the remedy they are made out to be. The biggest problem of all is the shortness of the lease term. Given the high cost of moving (one month of productivity) the savings of the sublease may be a false economy when you factor in the cost of another disruption. There is another risk: if your prime tenant goes bankrupt the landlord may terminate the lease.

Unless your space requirements are changing rapidly, it is wise to avoid subleases. Usually, the deals that sound great just do not happen. Landlords generally will resist approving a sublease if the rent is lower than market. If a sublease is recaptured by the landlord, they can rent it at current market value. Also, it takes longer to get a sublease approved. There are two levels of negotiation, one through the prime tenant and then again for the landlords approval. There are certainly some situations in which a sublease may be the right solution. It is critical that you work with a competent broker that you trust in order to determine the best type of lease for your business.




10) Know the value of your Lease:        

The market for office space has doubled and then tripled over the last few years. You may be able to cash in the value by subleasing your existing space and then moving into a cheaper or smaller location. The right agent can help you to access that value. The landlord may want to take a piece of any profits, and his/her cooperation is critical for the deal to go through. As such, maintaining competent representation in these negotiations is vital to assure that your interests are addressed.

Optimal Spaces, Inc. is a Tenant Agent helping companies get the best deals for commercial real estate while charging the company renting space "No Fee", which is the industry custom. Please contact us for an evaluation of your current and future real-estate needs. We have complete listings for all your office, retail and industrial space needs. We make our Rolodex available to our clients so that all your office needs are met: architects, contractors, dial-tone, Internet access, movers, and printers.

Please call us at (212) 258-2700 for more detailed information or for a consultation to discuss your real-estate needs.