Who should represent you?
You want an experienced Tenant Broker who represents only the tenant. A tenant broker's fiduciary duty is to your interest and not the landlord's. A friendly broker or managing Agent represents the landlord's interest, not yours. Their goal is for you to pay the highest price and on the most onerous terms.
Who do you need on your real estate team?
CFO/accountant, Tenant Broker, real estate attorney, architect, and furniture vendor.
What do you need now in terms of space needs?
How many offices? How many executive offices? How many workstations? Huddle rooms? Zoom rooms? What size and nature of pantry? Do you want people to eat or sit in the pantry? What other spaces do you need? How many conference rooms do you need, and what sizes do they need to be?
Space needs in the future?
Will you bring in other divisions? Spin-off divisions? What size will you need in the 3rd or 5th year of the lease?
Budget
Your budget dictates the size, location, and quality of the space you can consider or achieve. Options to renew, expand, or relocate.
What building amenities do you need or want?
- Quality of building: Class A, Class B, or Class C.
- View: Do you want a view, a terrace, operable windows?
- Location: What areas will you consider? How far north, south, east, or west?
When do you need to move in?
Many buildings offer a New Building Installation. Upgrades and changes are usually at the tenant's expense.
Tenants must evaluate overall economics, build-outs, security, flexibility, and leverage before signing.
- Most of a tenant’s leverage is created before the first offer, by running a real search with credible alternatives.
- Negotiate the economics of the whole deal, not the asking rent. Free rent, landlord work, escalations, and operating costs often matter as much as Base Rent.
- The clauses that protect you later (sublease rights, renewal and expansion options, the guaranty) are easiest to win while the landlord still wants the deal.
What you are really negotiating
- Asking rent: The landlord’s opening number, per rentable square foot per year.
- Concessions: Free rent and landlord-funded work.
- Operating costs: Escalations, electricity, operating expenses, and tax pass-throughs.
- Build-out costs: What is the cost to make the space usable? For you at the quality you want.
- Effective cost: What are the full lease costs over the full term of the lease?
Timing
Lease negotiations are shaped before proposals begin—by knowing your needs and securing alternatives.
Search time is usually 2 weeks to 3 months, depending on the complexity of your requirements.
It generally takes 3 weeks to negotiate a term sheet.
6 weeks to negotiate a lease.
Find real alternatives
Competition builds leverage: Landlords refine offers only when facing real alternatives. These options must be credible, including lease renewals.
General structure of a lease
Negotiation starts before the first offer.
Landlord’s price proposals based on your lease expiration, touring activity, decision-making structure, and credit risk.
Three factors strengthen your initial position:
- A clear brief: Defined headcount, space needs, locations, budget, and timing.
- Enough time: Sufficient runway to walk away from poor terms.
- Real options: Multiple finalist options with different owners.
Asking rent vs. overall economics
Asking rent is just an opening figure. Total lease costs depend on base rent, rent escalations, free rent, landlord work or allowances, operating expenses, taxes, and electricity fees.
Similar asking rents can yield vastly different total expenses. A lower asking base rent isn't always cheaper. Learn how to compare two NYC office deals.
Negotiable Items with the biggest economic effect value
- Base Rent: Depends on demand and competing offers.
- Free rent: Depends on the lease term.
- Landlord Work: NBI or a Contribution to a $ cap
- Escalations: Base Rent, Real Estate Taxes, Operating Escalations
- Security Deposit: Move-in date.
- Electricity
- Lease Term
- Options to renew, extend, expand, or relocate.
Landlord work and the improvement allowance
A landlord can do the work themselves and deliver a finished space to your requirements, or give you an allowance to build it yourself. Price the build-out before you agree to the number.
Security deposit
Deposits reflect financial standing, with early-stage firms facing higher requirements. You can negotiate the deposit structure—cash versus a letter of credit—along with the total amount and a burn-down schedule that reduces the balance over time with consistent, on-time payments.
Taxes, electricity, and operating costs
The base year, your percentage share, and any cap. Electricity may be submetered, charged by survey, or included in rent at a fixed rate per square foot.
Commencement and delivery
The lease commencement date, rent commencement date, and delivery date often differ. If the landlord is doing work, the lease should define when the space is considered delivered and what happens if it is late. Landlord delays should not shorten your free rent or leave you paying for two offices.
Flexibility for growth or change
Renewal options, rights to additional space and less commonly contraction or early termination rights let a lease adapt as the company changes. They are much easier to obtain at signing than midway through a term.
Assignment and subleasing
If the company is acquired, merges, or needs less space, these clauses decide what you can do. Look for the right to transfer to an affiliate or successor without consent, a reasonable consent standard for subleases, and clear terms on any profit sharing or landlord recapture.
Guaranties
Landlords often ask younger companies for a guarantor. In New York office leases, this is frequently a “good guy” guaranty, which generally limits the guarantor’s exposure if the tenant gives notice, pays through the date it leaves, and returns the space. Terms vary widely; negotiate the scope, any cap, and when it falls away.
| Term | What to ask about | Why it matters |
|---|---|---|
| Free rent | Length, timing, and which charges it covers | Free rent lowers the net effective cost of the lease. |
| Landlord work / TI | Scope, amount, who controls the work | Cost of construction less Landlord’s work equals your cost |
| Escalations | Fixed increases, base years, caps | Compounds over the term |
| Security deposit | Amount, cash vs. letter of credit, burn-down | Ties up cash you could use elsewhere |
| Delivery | Delivery condition, outside dates, remedies | Protects your move date |
| Sublease/assignment | Consent standard, affiliate transfers, recapture | Your exit if plans change |
| Renewal/expansion | Option terms, notice windows, rights to adjacent space | Room to grow without moving |
| Guaranty | Type, cap, burn-off | Personal or parent exposure |
General guidance
Listings show asking rents. Comparable transactions show what similar tenants paid in base rent, free rent, landlord work, and term in similar buildings of similar size. That is the information that tells you whether a proposal is competitive.
Landlords and their agents have this data. Tenants usually get this information from their broker. Comparables are most useful for setting realistic expectations and identifying which terms to push on, not as a script to read to the landlord.
What leverage looks like
Leverage is rarely about who argues harder. It comes from facts the landlord cares about:
- Credit and stability: A tenant the landlord is confident will pay is worth more to the building.
- Term and size: Longer terms and larger spaces generally justify larger concessions.
- How long a space has been available. A space that has sat vacant costs the owner money every month.
- How much work the space needs. A tenant that can use an existing build-out is cheaper to land.
- Certainty: A tenant that can decide quickly and close cleanly is attractive, especially to an owner under pressure to fill space.
Leverage drops when a tenant starts late, tours only one building, reveals a hard deadline, or asks for extensive custom work in an already competitive space.
The strongest negotiating position usually comes from having a credible alternative, not from arguing harder about one building. We would rather spend time building two or three real options than drafting a sharper counter on the only one.
The sequence: proposal, LOI, lease
- Proposals: Landlords respond to your requirement with business terms. Compare them on the same basis.
- Counter and narrow: Negotiate the finalists against each other on economics and key terms.
- Letter of intent: Summarize the agreed business terms. Most office LOIs state that they are not binding, apart from specific provisions.
- Lease: Attorneys negotiate the full document. Business terms should already be settled.
- Sign and deliver: Execute the lease or sublease, submit the security deposit, and pay the first month's rent.
Involve your attorney before the LOI is final and definitely once the lease draft arrives. Terms that look minor in a letter of intent, such as the guaranty, delivery condition, or restoration obligations, can be hard to renegotiate later.
What is your total occupancy cost over the term?
Construction cost shortfalls what the landlord is willing to provide. Base Rent, Escalated Base Rent, Base Rent Step up. Escalations. Furniture and IT infrastructure cost, Utilities for heat, AC, internet. Proportionate share of Real Estate Tax Escalation equals the Total office costs to occupy over the full term: Before Rent concessions. That is the number a CFO will ask for.
Negotiating well is less about winning individual points and more about ending up with the deal that fits the company’s needs at a comparable cost of occupancy.
This information is not legal or tax advice. Your attorney, accountant, and other advisors should review the terms specific to your transaction.