How much Security Deposit should you budget?

When you rent New York commercial real estate landlords require payment of a security deposit at the time of lease signing. It will be returned to you at the end of the lease provided you’ve complied with all relevant lease terms. Unlike residential properties, commercial real estate landlords have much greater freedom in the amount of security deposit they can demand.

Manhattan real estate security deposits usually range from 2 to 12 months depending on the Landlord’s perceived financial risk. Established companies with strong financial statements will pay less security than new ventures that are just establishing their profitability.

As your commercial real estate agent we will help you find the best value for your budget and credit history and help you negotiate favorable lease terms with respect to your security deposit.

How Landlords Determine Your Creditworthiness & Their Financial Risk

To determine your creditworthiness and their financial risk, commercial real estate landlords will analyze the following:

1.  How much money they will need to spend on your occupancy (i.e., construction costs and free rent). 2.  Your business and credit history as evidenced by the last two years of your corporate tax returns and/or financial statements prepared by a CPA.

Ensuring That You Do Not Pay An Excessive Commercial Real Estate Security Deposits

Working with a broker who understands the ins and outs of New York City commercial real estate strategy will ensure that you secure the best financial deal. Metro Manhattan Office Space brokers have been helping commercial tenants negotiate security deposits since 2004. We know which properties and landlords are flexible and where your negotiation power lies. In order to minimize the amount of your security deposit we look for and analyze many factors including the following:

1.   Landlords with a reputation for being pragmatic as opposed to conservative landlords known for being tough on security deposits. 2.  Spaces that are built out and already meet your architectural requirement as opposed to raw spaces that require construction costs by the landlord (increasing their risk and therefore your security deposit). 3.  The ability to negotiate a “burn-down” in your security deposit under the lease terms whereby your security deposit decreases over time following periods of consistent and timely rental payments. 4.  The amount of security deposit that would be reasonable given your type of business and financial history. 5.  Whether the security deposit should be paid with a letter of credit and whether the terms of a good guy guarantee can be made more favorable.

There is nothing worse than finding an ideal property but having a large security deposit requirement kill the deal – we don’t want this to happen to you.

With Metro Manhattan Office Space finding your ideal office space in Manhattan is only the first step, we then help ensure that all of your interests are being protected. We know that avoiding excessive costs can mean the difference between success and failure in your business.

Contact Alan Rosinsky, Principal Broker of Metro Manhattan Office Space, Inc., for a FREE consultation today: