Glossary & Definitions

Building Types: NYC has three classes of buildings. Each class may vary in quality depending upon location, Avenue or Side Street. The following is a quick generalization:

  • Class A: NYC’s finest, full service buildings (Citicorp, Grace Building, etc)
  • Class B: Good, clean, well managed buildings, (generally constructed as an office building before 1970).
  • Class C: Lower end, converted lofts, few amenities, usually as-is.

Negotiating Terms:

  • Business Points: The specific terms negotiated between you and the landlord.
  • Legal Points: The actual lease language that is negotiated between your attorney and the owner’s attorney.

Size Related Terms:

  • Square Feet (sq. ft.): The geometric measurement of space to determine its size in square feet (length x width).
  • Rentable (sq. ft.): Term owners use to represent the amount of space that is “rentable”. This includes a pro-rata share of all common areas such as halls, elevators and rest rooms.
  • Usable (sq. ft.): The actual sq. ft. as determined by measuring from walls to windows. What the tenant can actually use.
  • Loss Factor: The difference between rentable and usable sq. ft. (twenty-five to thirty-three percent is standard)

Rent Cost Related Terms:

  • Asking Rent: The price for “rentable sq ft” sought by owner
  • Base Rent: The actual annual rent for the first 12 months of the lease
  • Additional Rent: Any other lease charges from annual escalations to water charge.
  • Fixed; A fixed number such as four percent compounded annually throughout the lease term.
  • CPI: Consumer Price Index. The annual increase is based upon the excess of CPI (which measures inflation) over your base year.
  • PW, PPW, PPPW & PPPWF – porter’s wage, penny porter’s wage, penny-for-penny porter’s wage, penny-for-penny porter’s wage with fringe. The annual increase is based upon the commercial building worker’s collective bargaining contract negotiated every 3 years.
  • Electricity: There are three kinds of electricity charges: Direct (meter in your name with Con-ed), sub-metered (owner measures a sub-meter showing exact power usage to your space and charges a small fee that is billed monthly with rent), Rent Inclusion (a fixed dollar amount per sq. ft. billed with rent; $3.00 per foot is common).
  • Electrical Survey: In a “rent inclusion” charge, the owner may hire an electrical engineer to survey the appliances and power usage to determine if the current price per foot is insufficient to the demand and should be increased.
  • Gas: When gas is available it is usually free or directly metered.
  • Water: This can be charged either by a fixed monthly amount or price per sf.
  • Sprinkler: Same as above.
  • AC: Either tenant controlled or owner supplied. Tenant is usually responsible for the annual maintenance contract.
  • Heat: Owner supplied from October 15th – May 15th.
  • Days and hours: Owners suppliying heat and AC may shut them off.

Guarantees:

  • Performance guarantee (good guy clause): Officers must personally guarantee that the tenant’s rent, additional rent and all other charges will be paid. If the tenant defaults, but the rent is paid to date, the guarantee is voided upon “surrender of the space” (moving out and returning the keys) and the officer is released of personal responsibility. However, the tenant (corporation) may still be liable. Generally security is not returned in this event.
  • Term guarantee: An officer personally guarantees the lease performance until a certain date or time reference.
  • Unconditional Guarantee: An officer personally guarantees all of the lease terms and conditions until the lease term expiration.
  • Conditional Guarantee: An officer personally guarantees all lease terms until a certain “condition” is met — such as adding additional security.
  • Co-Signer: A third party (person or company) that guarantees the full lease performance on behalf of the signing tenant.

Certain Important Lease Terms:

  • Indemnification: Tenants must indemnify the owner from any liability of other brokers not named in the lease claiming a right to a commission. Of concern only to “open customers” who may have been introduced to the building by a previous broker. Owners look to you to handle such disputes.
  • Assignment: Assignment permits the tenant to sign the lease over to a new party, thereby releasing the tenant from all lease obligations. It formally designates the assignee as the new tenant of record under the same lease terms.
  • Sub-Let: A sub-let agreement is signed by the tenant as “over-tenant” and the new sub-tenant signs as “under-tenant”. The sub-let agreement becomes a binding contract between the parties. However, the “over-tenant” continues to be the responsible tenant of record and continues to pay the rent.