With over 30 years of experience as a commercial real estate broker, QuantumListing Founder David Perlmutter provides some tips for new buyers and tenants that are as applicable to other US cities as they are to New York City.
When it comes to commercial real estate, New York City has some of the most valuable property in the United States. However, like any major metropolitan area, it has its own distinctive neighborhoods. And, these neighborhoods are constantly changing and evolving.
What’s the best way to find space or an investment property in the city? Our advice would be to first familiarize yourself with the listings on QuantumListing by conducting a search and filtering down to the asset and trade types that are right for you. Then contact one or more of the agents who have listings in the categories that interest you. Consider working with an exclusive agent once you’ve gotten a little information about the market.
One important thing to know about using a professional is that they are typically paid by the landlord or seller. Many agents specialize in specific neighborhoods or asset types, too. When you work with a commercial leasing or sales agent, you are more likely to get the best deal possible too, since they are well versed in market conditions and often have access to information about comparable sales or lease transactions to help you make an informed decision.
Whether you are looking for a space located in the heart of midtown, or with views of the park, medical space on the east side, warehouse space in one of the outer districts, or retail space in downtown, there are experts that will help you get the best deal possible.
Perhaps the first thing you should consider is whether you will be looking for property for sale, lease or sublease. Purchasing typically requires a large upfront capital commitment. It is a great way to build equity, but it is not without risks.
Leasing can be very cost effective, and landlords will often build out your space for you. The longer the period of time your company can commit, the greater the tenant improvement allowance you’ll likely be able to negotiate in your lease agreement. Leasing also gives you more flexibility to adapt your space as your needs change over time. Many landlords will happily modify your lease to go to a larger space in one of their buildings.
Subleasing space can result in the best economics, because the tenant from whom you are subleasing the space will usually subsidize the rent you are paying. In some cases, the sublessor will include all of the furnishings and fixtures in the deal. The downside is that it can be more difficult to customize the space to your needs.
Before you begin your search for commercial space, you should meet with your team to discuss your company’s priorities. Some of the things you should consider include:
Do you want Class A office space for lease or perhaps something less fancy and more economical? Has your team analyzed how much space your organization needs? If you are looking for office space, there is no simple one size fits all solution for how many square feet per employee you need. For example, if you are looking for space for a law firm, you will need more private offices than if you are looking for space for a tech start-up.
Partners in the firm will generally get larger offices than associates. How many conference rooms will be required? How many people do you want to accommodate in each conference room?
If you are searching for medical office space, you’ll need to make sure that the office building is completely accessible to those with disabilities and has enough parking.
If your commercial office space is mostly open plan, will you need small rooms for phone calls? Will you need spaces where teams can collaborate or where a couple of colleagues can huddle? Will your employees need a kitchenette or a place to eat? Are you satisfied with bathrooms shared with all the companies on your floor, or do you want something more private?
You should take into consideration how your employees are commuting to work. Take a survey to find out how many will drive or take mass transportation? For the former, you’ll need to make sure there is adequate and affordable parking. If the latter, how convenient is the location to mass transportation?
If you are looking for retail space for lease or sale, you need to consider a lot more than size. Parking might not be as important a consideration in a city as it is in the suburbs. However, most retail benefits from being located in a critical mass of other retail, so that retailers can benefit from each other’s traffic. A densely populated city might have districts dedicated to certain types of retail, such as home decor and design, electronics, jewelry or high end fashion.
Warehouse or industrial property tenants will want to consider proximity to road networks, ceiling height, number and type of loading docks, and power. You’ll need to make sure that the building is right for your specific use. A tenant manufacturing goods will have very different needs than one that is more focused on logistics.
No matter what type of real estate you are looking for, whether it is an office for lease or sale, or retail for lease, an experienced professional can help you answer these questions. Many landlords will provide a “test fit” at no charge based on your program requirements if you are seriously considering their building.
Once you’ve agreed on all of the business terms for your purchase or lease, make sure you have an experienced real estate attorney to review and help you negotiate all the agreements prior to your signing them. Whether you are going to become an owner or a tenant, you are making a substantial long-term commitment. You are much better off avoiding a mistake, then having to spend your time and additional resources recovering from one.
To help you get started on finding the perfect commercial real estate for you, we have put together a selection of searches that have been filtered by asset class and trade type.