How long does it take to lease commercial real estate in New York City?
The TechOfficeSpaces.com Team is often asked how long it takes to move into new office space in Manhattan. Though the answer is a moving target- as the process typically includes many variables (e.g. the amount of work required in each specific office space, technology and infrastructure needs, timing for the installation of data and cable lines, whether a unit is furnished or not, etc.), below is a loose timeline for the typical office leasing process in New York City.
1-2 Months: Identifying potential spaces and getting educated on the marketplace. This includes touring available office spaces, determining “likes and dislikes”, assessing relative value and getting comfortable with the building stock in the geographic locations you are contemplating.
1 Month: Negotiating deal terms with multiple landlords and preparing a final offer sheet indicative of the basic lease terms.
During this time period the basic lease terms, such as base rent, free rent, landlord’s work, base years, escalations, electricity, etc. will all be negotiated. The primary goal is to have a number of spaces in consideration and have the landlord’s compete for your tenancy. There is no better leverage than having multiple viable alternatives and being able to say with confidence, “the best economic deal will be the deal I am going to make”.
1 Month: Negotiating the lease or sublease document.
A lease is a legally enforceable contract between a landlord and tenant. It is commonly a long document, at times in excess of 100 pages. The process of going back and forth between you and your real estate attorney (in consultation with your broker) and landlord and landlord’s attorney (in consultation with their real estate broker) often takes longer than all parties would like.
1 Month (For Subleases only): The overlandlord consent process
After negotiating a sublease document with the sublandlord, the document is sent to the building’s ownership for consent. The landlord must be reasonable with their decision to accept or deny the subtenant in question. This process can oftentimes take close to a month.
1 Month: Making minor changes to the space.
If a space is fully built, it still takes a few weeks to a month to make minor changes (repainting, replacing carpets, adding outlets, taking down a wall, building additional offices, etc.)
3 to 4 Months (or more): Building out space from scratch.
If a space is whiteboxed or in raw condition, the build-out process can take anywhere from three to four months (or more) from the date that floor plans are finalized. Also, the landlord typically will not start the process until a lease is signed.
If your company has an existing office lease with a pending expiration, not only do you have to identify and negotiate for a new space (assuming the existing location no longer suits your needs) but you also have to time it perfectly so there is little overlap between the date you can move into the new space and expiration of your existing obligation. Nobody wants to pay rent at two locations! It is crucial to avoid “holding over” (remaining in office space past the lease expiration) as it is common to be charged a holdover penalty of double (and at times triple) the monthly escalated rent, even if you do not stay for the entire month.
In an effort to properly strategize for a seamless transition, we highly recommend planning for a move at least six months prior to the desired possession date. Since most immediate office space requirements do not afford the luxury of a six month process, when timing is of the essence, we suggest only considering built and furnished options. (Looking for built and furnished office space? Click here for our free search.) It is never too early to begin educating yourself on the market and considering opportunistic transactions that may not exist during a protracted space search. We can all agree we spend more time in our office than we do in our residences and therefore, this is an important decision and one that should not be rushed!
Office Space Timeline – When can you plan on being in your new space?