(Partner Article) The New York market is an "el dorado" for many French entrepreneurs who dream of conquering America. One of the first steps when setting up in New York is looking for a commercial space, whether to establish offices or a shop. This step is crucial. It is therefore to be approached with a lot of attention, especially since the French and New York real estate markets are very different.
Stéphane J. Brenot, a real estate agent specializing in the search for commercial premises and offices in Manhattan, draws up a list of 7 pitfalls to avoid :
1 / The Loss Factor
The Loss Factor is a typically New York phenomenon that wants the surfaces indicated on the contract are always more important than the real surfaces (measured by a surveyor). On paper, the surfaces shown include walls, common areas, and sometimes even a portion of the sidewalk or yard. This Loss Factor is even more important in the case of upstairs offices, withec sometimes 40% to 50% difference with the measured area. Some will say that it is scandalous – there is however no recourse possible, and no binding regulation as in France. You just have to make sure that the area of the premises is adapted to the needs of your company, and let your real estate agent negotiate the rent and all other benefits.
2 / Do not think that a large inventory means that prices will be easily tradable downward
While walking in the streets of New York, we see a lot of commercial space for rent. One could then say to oneself "With so many offers on the market, the prices must be easily negotiable!". Think again: the owners rarely want to lower their rents because it devalues their property and endangers a possible refinancing by a bank. On the other hand, they may be more inclined to grant "tenant allowances" such as rent months free of charge, new air conditioning, or the creation of a new ventilation for a restaurant for example.
3 / The deposit is much more important in the United States than in France
The amount of your deposit will have nothing to do with what you could have expected in France. This is even higher for foreign companies with no history or tax return: if this is your case, expect to have to pay the equivalent of 6 months to 1 year rent.
4 / Provide for upstream work
In case of works, do not wait until the last minute to involve an architect and / or contractor to evaluate the renovation work and the duration of obtaining a building permit. You have to think about this upstream so that the shop opens as quickly as possible (time is money, especially with New York rents!).
5 / Do not try to go directly through the owner
In reflective according to the logic of the French real estate market, we would tend to think that going directly through the landlord is always a good way to save money because this saves agency fees. However, we must not reason so in the United States because the system is different: the owners seldom manage their own property, they almost always have a dedicated real estate agent whose fees they have to pay anyway, whatever the way final tenant will be found.
6 / Do not call the number listed on the showcase
This is the real estate agent's owner, his only goal is to find a tenant who will be the most profitable for the owner. You, commercial tenant, will not do a good business in these conditions. But then how to do it if you do not have to call the number listed on the window, or directly the owner?
You must actually have a dedicated real estate agent for you tenant. This dedicated agent will know the market and its customs as well as the available inventory, which will enable him to negotiate the best conditions of the commercial lease for you: amount of the rent, number of free months, delivery conditions of the premises, etc. In addition, the fees of your Real estate agent will in most cases be supported by the owner when signing the lease. You benefit from the advice of a professional, which will allow you to make substantial savings and avoid all traps, without having to pay for its services.
7 / American law vs French law
One of the biggest mistakes to avoid is to think that US real estate law would be similar to French law. In the United States, the owner has many more rights than the tenant. It is hardly exaggerated to say that he has all the rights. It is his lawyer who drafts the lease, a document of several dozen pages, and the regulations he will have to respect is minimal. For example there is no lease type 3/6/9, the duration is usually 10 years. Duration during which the tenant is responsible for the payment of rents during the whole term. There is usually no possibility of notice of termination. To have a commercial lease that meets good conditions for you, it is essential to have in addition to his real estate agent a New York lawyer specializing in commercial real estate leases.
You are now better prepared to set up your business and / or offices in New York. Certainly, opening your business in New York requires a solid preparation and a significant investment, but the prospects for results are up to the challenge, and surrounded by good professionals you will know how to lead your boat and exceed your growth objectives. After all, New York is the 2nd largest city in the world venture capital paid to start-ups, this is one of the capital cities of retail and fashion, and the center of the world of finance. It also hosts the largest number of students in the world. A study by the Martin Prosperity Institute indicates that if New York City's economy were compared to a country's, its GDP of $ 1.5 trillion would put it in the top 20 of the world's economies, both in Canada and the United States. Spain!
To conquer the New York market, contact Stéphane J. Brenot.
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