Office Leasing Terms: A Plain-English Glossary
The words you will run into when leasing office space in New York City, explained simply. If something here is unclear or you want help applying it to your own search, just reach out.
Tenant Representative (Tenant Rep)
A broker who represents the company leasing space, not the landlord. The landlord pays the commission, so in almost all cases it costs the tenant nothing to have their own advocate.
Rentable Square Feet (RSF)
The square footage a landlord bills you for. It includes your usable space plus a share of the building's common areas, like lobbies and hallways. This is the number quoted in most NYC listings.
Usable Square Feet (USF)
The space you actually occupy within your office, not counting shared building areas. It is always smaller than the rentable figure.
Loss Factor
The difference between rentable and usable square footage, shown as a percentage. New York has some of the highest loss factors in the country, typically about 25 to 40 percent and often higher on partially divided floors, so a space marketed at 2,000 rentable feet might give you closer to 1,300 usable.
Base Rent
The core annual rent for the space, usually quoted per rentable square foot (for example, $60 per RSF). It does not include escalations or additional costs like electricity.
Free Rent (Rent Abatement)
A period at the start of the lease where you pay no base rent, often around one month for each year of term. It is one of the most common concessions a landlord gives, and a good broker makes sure you get your share.
Tenant Improvement Allowance (TI)
Money the landlord contributes toward building out or renovating your space, usually expressed as a dollar amount per square foot. In today's NYC market, landlords often cover much or all of a standard build-out.
Build-out
The construction and improvements done to turn a raw or existing space into your finished office, including walls, finishes, and systems.
Pre-built Suite
A space the landlord has already built out and finished, ready to move into with little or no construction. These are popular with smaller tenants who want to move quickly.
Lease Term
The length of the lease, commonly three, five, seven, or ten years for NYC office space. Longer terms often come with better rent and more concessions.
Renewal Option
A clause giving you the right, but not the obligation, to extend your lease at the end of the term, often at a pre-agreed rate or at the market rate.
Escalation
The annual increase built into your rent, so the amount you pay rises each year. In NYC this is often a fixed percentage or tied to the building's operating costs.
Additional Rent
Costs beyond base rent that you are responsible for. These can include your share of real estate tax increases, operating expense increases (sometimes called a porter's wage escalation), and electricity.
Good Guy Guarantee
A common New York lease provision where an individual, often the business owner, personally guarantees the rent only until the tenant vacates and returns the space in good condition. It limits your personal liability compared to a full personal guarantee, and it is worth understanding before you sign.
Letter of Intent (LOI)
A non-binding document that lays out the main business terms of a deal, such as rent, term, free rent, and build-out, before the formal lease is drafted. It is where most of the negotiation happens.
Sublease
When an existing tenant leases out their space, or part of it, to another company for some or all of the remaining term. Subleases can offer below-market deals but come with their own considerations.
Direct Lease
A lease signed directly with the building's landlord, as opposed to a sublease taken over from another tenant.
Class A, B, and C
An informal grading of office buildings. Class A buildings are the newest or most prestigious with the best amenities, Class B are solid and well-located but older or less flashy, and Class C are older, more basic, and typically the most affordable.
Commencement Date
The official date your lease begins and your obligations start, including rent after any free-rent period. It is often tied to when the space is ready for you to occupy.
Security Deposit
Money held by the landlord as protection, typically a few months of rent for office leases, and sometimes structured as a letter of credit on larger deals.
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