Moving your business or starting one in New York City is a complicated, risky and very stressful undertaking. NY is one of the biggest and busiest cities in the world which can be both a blessing and a curse. It provides a large customer base and access to a very large and diverse market. It can also be very expensive, complicated and competitive so it can be very risky to a new company. With many questions surrounding starting or moving a business to NY one of the first and most important is always if you should buy or lease commercial property in NYC? So what is it you should consider and know about this problem?
Get legal help and representation to decide whether to buy or lease commercial property in NYC
Whether you are leasing or buying, it is of paramount importance to get some legal representation. Buying or leasing commercial real estate is different from residential leasing. There are a lot of specificities tied to commercial property acquisition that are not always common knowledge. The whole process is also very time consuming and must take a lot of considerations to complete. In order to keep doing the primary function, the business must engage some professional help in the form of real estate agents and attorneys to complete this process. If you want to relocate your business at a reasonable price getting professional help is crucial. Usually, the process can take from 6 months to a year or more depending on whether you are leasing or buying a property. The process usually consists of:
- finding new space,
- negotiating reasonable terms,
- obtaining necessary permits, making improvements or renovations,
- purchasing any furniture or office equipment,
- obtaining insurance and moving in.
In both cases, specialized professionals with proper market knowledge and experience can help find, negotiate and acquire business space in the most efficient way possible. Also, be sure to hire professionals like usantini.com to handle your commercial move in the most efficient way possible.
Leasing – What you must know
Commercial leasing in New York City is specific and much different than residential leasing. Many people are not aware that both parties in commercial leasing contracts are considered to be equal bargaining interests. This means that neither side is protected by some judicial or statutory decree. The terms of a Legally binding contract between the tenant and landlord is the only document defining mutual rights and duties. This means that any issue rooted in that contract will be resolved through its elements and without any lawful protection of ether side. Failure to understand the contract cant to be considered mitigating which means that you must have an attorney when negotiating and signing the lease contract.
Leasing costs – research and negotiate
Unlike residential leases, a commercial lease is not always straight forward. When leasing commercial space it is a custom that besides the lease the owner also expects tenants to pay real estate taxes and maintenance costs. Prior to the signing of a lease its important to know and understand all of the elements of the leasing contract. Costs such as tax, garbage disposal, water and electricity bills, etc, must be clearly defined and negotiated within the contract. As these costs can be considered it is good to negotiate them beforehand as well as to stipulate the modification of the lease year by year. Also, consider the cost of commercial moving and expenses and try to keep the cost down.
When leasing you should always think long term. Even new businesses can benefit from long term leasing since landlords are usually interested in providing incentives for such leases. Concessions might mean a lower monthly rent, additional renovation by the landlord, or even several months’ rent-free lease in exchange for long term lease. Such concessions can make a long lease acceptable even for new businesses.
Defining the responsibility for improvements, repairs and alterations are also important. Tenants must understand that the landlord of the commercial space is not responsible for repairing, maintaining or altering the premises. This means that the property is rented as-is unless specifically defined in the lease. This also means that any urgent problem must be planned and budgeted when leasing.
Leasing, especially for new businesses, can be a risky endeavor. In such cases, it is important to have a backup plan that you can put into action. Backup options usually mean negotiating and contracting clauses to:
- terminate a lease
- sublet or reallocate
- right of the first offer even to
- renew (if the business is booming)
Terminating a lease is usually beneficial to the landlord obligating the tenant to give notice well in advance and pay a cancellation fee. Subletting is an option that usually requires consent from the landlord. Struggling companies may want to sublet the space they don’t need to other companies. This option can alleviate the stress and cost of the lease helping the company in the time of crises. If the business is booming the company can also activate the right of first bit to transfer the offices to a new location owned by the landlord.
Buying – What do you need to know?
As already stated, hiring real estate attorneys and professionals is crucial. Surrounding yourself with a professional team of businessmen will help you to make a sound investment decision. First, you have to hire a real estate advisor/attorney with the inside knowledge about the NYC property market. This will save you time and provide much-needed expertise for making a decision. Even professional movers can provide quality advice for the start of your reallocation.
Precisely identify the sector you will use your real estate for. Your business can be: industrial production, retail, multisectoral business or your property will be used for mixed-use. Different sectors and uses will determine the legal issues that have to be addressed and performed. If the purchase is for industrial uses the question of environmental protection and requirements may be crucial. Environmental liability issues then come in to play and must be addressed.
When buying property, you might need to engage professional structural engineers. Their purpose is to assess the property from a structural standpoint. They perform surveys and prepare inspection reports, evaluate the value of the property. Engineers prepare schematics for renovation, plumbing, electrical, fire system and other works that have to be conducted. They also help understand the risk of investment and help to make the investment decision objectively.
One of the crucial things is to prepare financing sources for real estate purchases in NYC. It is important to prepare financing in advance. Doing preparation in advance will make it possible to execute the purchase immediately after signing the contract and without delay. Any delay may cause a missed opportunity in purchasing the real estate. Legal counselors can provide advice and analysis of different and most efficient funding sources.
So, to buy or lease commercial property in NYC – what do you say?
Whatever the decision is between leasing and buying a commercial real estate the facts are clear. The commercial real estate market is much different than the residential real estate market. It is more complicated and requires more research and professional help and advice. Always be sure to recruit professional help to make a sound business decision.