As the old saying goes:
"nothing in life is free... except for the guidance and support of your local NYC office space broker!"
If you're considering an office space move or expansion for your team in New York City, sooner or later you will likely find yourself speaking with a broker and being asked about exclusive representation. And depending on your familiarity with the city's commercial real estate landscape, you may find yourself walking away from an initial conversation with more questions than you started with:
Who pays the broker's fee?
What's the difference between a tenant representative and a landlord's agent?
Can't I just negotiate the lease on my own?
So to help demystify the world of exclusive tenant representation in NYC, we've aggregated a list of the most commonly asked questions we receive from company's in similar situations - hopefully the below offers more answers than new questions!
1. Will hiring a tenant representative cost me money?
No. For office leasing transactions in NYC, Tenant representatives are compensated by the landlord (ie. our fees are paid by the landlord, not by you). In most cases, a fee is already factored into the lease transaction and being paid by the Landlord anyway. With no direct cost to you as the tenant for our services, it behooves you to be properly represented - and will likely save you money!
2. Who pays the broker's fee?
Because Manhattan office space has always been a Tenant’s market (i.e. more space than tenants), both the listing and tenant brokers are paid by the Landlord (lessor) according to an industry standard schedule of rates.
3. What’s the difference between a building agent and a tenant representative?
A building agent (often referred to as the Landlord's agent) works on behalf of a property owner or landlord to help market available space at a specific property and negotiate leases at the most favorable terms for the Landlord. On the other hand, a tenant representative has no interest or obligation to a specific building; he/she works directly for the tenant to understand their needs, source the best buildings and spaces for them, negotiate on their behalf, and secure the best possible lease terms for the tenant.
While it's possible for an agent to represent both the Landlord and a Tenant in a single transaction, a building agent has a contractual obligation to the Landlord and generally operates with the Landlord’s best interests as their primary motivation. As tenant representatives exclusively, we work for you - to secure the best rates in terms regardless of the location.
4. What are the benefits of working with a broker exclusively?
Some benefits to working with a tenant representative exclusively:
5. Why can’t I negotiate an office lease on my own?
Landlords are professionals and incredibly shrewd when it comes to getting the most money out of your pocket and into theirs; as a result, first-time or occasional lease negotiators often find themselves unprepared and unversed in the correct approach to take to achieve the most favorable results. Commercial lease transactions are complex and variable, as a result of both the myriad of economic items being negotiated (base rent, free rent, improvement allowances, build-outs, escalations, RE taxes, cleaning, security deposits, etc.) and the non-economic lease terms that are significant for long-term, expensive commitments. Even the best of negotiators would be at a loss without the most relevant and up to date information that compounds from a daily immersion in the market.
6. We’re renewing our existing lease - why wouldn’t we negotiate directly with the landlord?
Presenting yourself directly to the Landlord without a broker limits your leverage, as it severely compromises your intent of relocating. Maximizing your leverage on a lease renewal is done by creating a credible threat of relocating, which carries a significant cost and impact to the Landlord. On a lease renewal, our job as a tenant’s representative is to identify credible alternatives while arranging a renewal proposal from the Landlord that leverages the market conditions, building status, and cost/impact of your team vacating the building.
7. How do renewals work? How can you help us with a renewal?
The process of renewing your office lease in NYC is similar to the process of signing a new lease, and all of the lease terms are on the table for negotiation (ie. free rent, real estate tax base years, operating expenses, improvement allowances, Landlord work, etc.).
Ultimately, your best chance at achieving the most favorable lease terms on a renewal is to understand the current market conditions and leverage alternative options to achieve a market-appropriate deal. Similar to a relocation, our team can oversee all ends of the lease renewal process - from evaluating your renewal lease to negotiating rates using market-specific comps.
8. We have relationships with other brokers. What can you offer that they can’t?
Our exclusive focus on tenant representation in Midtown NYC is a unique advantage that compounds with our continued exposure to this specific market throughout our daily activities. In Midtown, we track every building, vacancy, and lease signed, and connect with the majority of businesses in the area on a regular basis to maintain our informational advantage. We can’t be everything to everybody, but to Midtown tenants, we try to be the best.
Before engaging with any broker, it’s always recommended to inquire about their specialty. In what area of brokerage do they focus? Who are their typical clients? Do they specialize in what you need?
9. We have a great relationship with our landlord and were told we will get the best deal working directly with them (without a broker). Why would we jeopardize that?
A strong landlord relationship is certainly valuable - but how competitive do you expect them to be for your tenancy? Ask yourself: If I don’t have a representative showing my Landlord that I’m informed about my alternatives and prepared to move, how competitive will my Landlord be to keep me?
An experienced broker with local market knowledge will help you understand your market alternatives, compare apples to apples, and create competition for your Landlord to extend their best offer.
10. Can my real estate attorney handle lease negotiations instead of a tenant representative?
Real estate attorneys play a crucial role memorializing the economic terms negotiated in a lease document, however, the economic and market terms within your lease can only be properly negotiated by a professional with exposure to many deals in the specific market.
11. What are the benefits of working with Noah & Co.?
We are a growing NYC business who like our clients, places a strong emphasis on relationships, reliability and results. We face the same reality as many of our clients and understand first-hand the need for a reliable team that can share expertise and insights.
Our business and client values center around our market specialization, back-end technology, and role-based collaboration, all of which are designed to create a streamlined and efficient process for you!
12. How will we be sure that we’re seeing all of the relevant space options?
In the commercial real estate market, available space is centrally listed for all brokers to access. As specialists working exclusively in the Midtown NYC office market, we track every space that hits the Midtown market on a day-to-day basis and through years of experience and thousands of deals, we have the unique ability to distill the 450 million square feet in Manhattan down to the most relevant options for your requirement.
To get a sense of the types of spaces that we continuously aggregate for clients, click here.
13. What exactly are we committing to by signing an exclusive agreement?
By signing our exclusive agreement, you are assigning our team as the sole representative to manage your office space search, prepare you with relevant information to make the most informed decision, and negotiate the most favorable lease terms on your behalf. This agreement creates a contractual relationship for us to represent your interests exclusively as a single point of contact throughout all negotiations.
See what some of our previous clients have shared about their experiences working with us.
14. What should we keep in mind in advance of our lease expiration date?
Whether you're looking to relocate or preparing to renew your existing lease, it's best to begin the initial planning approximately 18-24 months in advance of your existing lease expiration.
To responsibly plan for a new space, it's essential to have a general understanding of the timeline involved:
A. Finding a Space (1 month)
B. Negotiating Terms and Exchanging Proposals (1-3 months)
C. Negotiating a Lease Agreement (1-3 months)
D. Subleases and Landlord's Consent (1-3 months)
E. Landlord's Work: Modifications (2-3 months) and New Build (6+ months)
*For lease renewals specifically*
Beginning the evaluation process well before your lease expiration allows you to consider your options and leverage your bargaining power. Ultimately, the threat of relocating is only credible if you have sufficient time to explore alternative options and starting early gives you the advantage of negotiating from a position of strength.
15. I am in the real estate business and have negotiated leases before, I know what I’m doing! What can you offer me?
While your experience in negotiating leases is undoubtedly valuable, an experienced office leasing broker with local market knowledge wil provide you with information to leverage the most competitive deal available. What were the rates of recent deals in the building? What concessions has this landlord offered in the past? How do these terms compare to similar spaces in the neighborhood?
Our focus exclusively within the Midtown NYC office space market will help you understand your market alternatives, compare apples to apples, and create competition for your Landlord to extend their best offer.