Why are Commercial Leases so Expensive?

The general New York City real estate market trend has been the rising cost of office leases. The question becomes, why is the price to rent NYC office space rising so dramatically? The lease on office space is typically a business’s largest expense. That being said, the rise in price has sufocated a number of businesses. The culprit in the rise of New York City lease expense is the almost constant demolition of office space which has been occurring throughout the city. There have been a number of demolitions which destroyed office space. To make matters worse for tenants, a number of commercial buildings have undergone residential conversions. All in all, the simple rules of economics dictates that with less supply, and demand either increasing or staying the same, prices will undoubtedly rise. In essence, a shortage of commercial real estate has forced prices to rise. In this harsh environment, how are tenants expected to save money? The hiring of a tenant broker may alleviate the stress of an expensive lease due to the services offered by tenant brokers. These services include the negotiation of lease terms, the search for an ideal office space, and other services. Partnering with a tenant broker has the obvious benefits of decreasing the cost of one’s lease agreement without a reduction in the quality of office space. Clients typically save 10% to 15% off their lease expense.
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