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Office Leasing Toolkit (NY)
Practical Law Toolkit w-004-8944 (Approx. 19 pages)
Resources to assist companies in understanding and effectively negotiating office leases in New York. This Toolkit includes practice notes and commonly used forms, such as leases, term sheets, guaranties, estoppels, and consents. These resources also provide analysis of common leasing concerns, including tenant rights, landlord remedies, operating expenses, expansion options, assignments, and security deposits.
All companies need office space to house their employees and run their businesses. Leasing space is often an efficient way to meet this need. Companies invest a lot of time and money in finding the right space and finalizing the lease agreement. Most office leases are long-term commitments, often five years or more, with ongoing obligations and risks. When negotiating leases, companies should:
- Identify short- and long-term business goals. The clearer the business goals, the more likely the finalized lease agreement will be an effective and useful tool for the company and its business vision. For example, if the company believes it will encounter growth in the near future, the company should ensure that additional space options are negotiated during the letter of intent and lease negotiations.
- Effectively negotiate the business terms and lease provisions. The company should understand the specific issues and lease provisions that affect the company's ongoing obligations. For example, negotiating the provisions specifying a tenant's obligation to pay its proportionate share of the building's operating costs may create a more fair and balanced clause that effectively saves money for the tenant each lease year.
- Obtain appropriate protections. The company should consider the time and money it invests in the space and whether it should negotiate certain protections to ensure the lease is not prematurely terminated by intervening interests. For example, in many instances a landlord's lender has priority over a tenant's lease and may be able to terminate the tenant's lease if there is a foreclosure action. A tenant may want to obtain a subordination, non-disturbance, and attornment agreement from the landlord's lender, to ensure that the landlord's default under its loan, and the subsequent foreclosure by the lender, would not permit the lender to prematurely terminate the company's lease.
The continuing costs of an office lease can affect a company's bottom line. A company planning to lease office space should use the general practice tips and negotiating techniques discussed in the resources in this Toolkit to better assess and allocate the costs and other risks associated with an office lease.
In New York, commercial tenants receive few protections. Commercial tenants are presumed to be sophisticated parties represented by knowledgeable and experienced counsel and leases are typically enforced according to their terms. This means that an office tenant in New York should:
- Negotiate aggressively to get as many protections as possible.
- Ensure that the final, signed lease contains all of the agreed points.
This Office Leasing Toolkit provides resources designed to assist companies entering the New York market to:
- Understand the office leasing process (see Office Leasing Overview and Brokerage and Letters of Intent).
- Negotiate favorable lease terms (see Office Lease Forms and Supplemental Lease Clauses).
- Negotiate work letters for the initial build out of the premises (see Work Letters).
- Create flexibility that suits the company's particular business needs (see Tenant Options and Additional Rights and Lease Assignments and Subleasing).
- Protect the tenant from third party interests (see Subordination and Estoppel Issues).
- Understand possible landlord remedies, up to and including eviction (see Defaults and Remedies).
- Manage the ongoing lease relationship and respond to changed business circumstances (see Lease Administration).
Finding office space in New York often involves taking a sublease. For additional, specific information and resources on subleases, see Assignment and Subleasing Toolkit (National and Select States). Many office buildings in New York are ground leased and parties must understand the peculiar impacts of ground leases. For specific ground leasing information and resources, see Ground Leasing Toolkit (NY) and Ground Leasing Toolkit (National and Select States).
In addition to the New York specific resources and guidance, this Toolkit also includes several jurisdictionally neutral office leasing resources. These resources include forms and discuss issues that are useful and relevant to landlords and tenants in every state, including New York.