Utility & Miscellaneous Monthly Charges
Got the rent covered? Excellent. Be sure now to factor in the additional expenses for which you may be responsible. Above and beyond the base rent, New York City commercial tenants are expected to shoulder the cost of electricity as well as a few other utility charges and operating expenses. Here’s the basic breakdown:
Heat & Electricity
The good news is that in New York the cost of heat is always included in the base rent. Electricity, on the other hand, is always billed separately. You’ll get hit with the bill in one of three ways:
1. directly from Con Edison (direct meter),
2. from the landlord who monitors tenants’ electricity use (sub-metered), or
3. billed on a per square foot basis and tacked onto the base rent each month (rent inclusion). Note that the charge for electricity on a rent inclusion basis ranging from $3.00-$4.50 per square foot.
Extras That Aren’t Always Extra
Utility and other miscellaneous charges for tenants, which can include everything from water to cleaning services, vary among Class A, B and C buildings. Here’s an overview of how buildings are classified and, subsequently, which buildings offer what amenities and for how much:
Class A-- The Rolls Royce of commercial real estate. Class A’s have lots going for them inside and out: high-quality construction and infrastructure, safe and highly visible locations, professional management. Naturally then, they command the highest rents which—if you’re considering leasing in one, you’ll be glad to know—always include the cost of water, sprinklers and guard services. As a bonus, cleaning services and rubbish removal are usually included in Class A buildings for no additional charge.
Class B-- Not quite as swanky as Class A’s, but nicely maintained and generally well situated. The rent won’t give you quite the sticker shock that a Class A rent might, but landlords of Class B buildings often charge tenants an extra nominal fee for water, sprinklers, guard services, cleaning services and rubbish removal.
Class C--Entry-level commercial space (because everybody starts somewhere). These are older buildings (older than 20 years) generally located on side streets. They usually aren’t the prettiest and maybe have fewer elevators, no central air, or common areas that are not as meticulously maintained as those in Class A and B buildings (lobby, bathrooms, corridors, etc.). The rents are the most affordable, but landlords charge for water and sprinklers, and often forgo frills like guard services and cleaning services.
A Word of Advice
Make sure that your broker spells out all additional monthly charges entailed with renting a particular space. When they’re dedicated to helping you find the right space for your business, brokers will take the time to help you understand the full cost of renting a commercial space so that you can budget accordingly—and be successful.
Need more information? Contact Alan Rosinsky at (212) 447-5403, Principal Broker of Metro Manhattan Office Space, Inc.
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