Choosing a suitable retail space in Manhattan may feel overwhelming. Will you know the perfect storefront when you see it? However, once you dig into the retail space for rent available in your desired area and crunch the rent numbers, you may feel like the rent is too high for the space you need.
Talking to your commercial real estate broker can help, but you might still feel like you don't know why some spaces cost so much and others seem like a bargain.
The truth is that the market (among other factors) is what sets the rental market—when there is high demand for space, the rent cost per square foot is likely to rise over time. So, what else impacts rental rates? Today we talk about a few elements that contribute to the cost.
As with many residential leases, a shorter term of commitment for a commercial lease will often yield a higher rent cost when you're shopping for rental space. If you've been trying to find a place that will offer month-to-month leasing or let you only commit for six months or a year while you determine whether the location is a good fit, you might be the prices are higher than if you signed a lease for a longer term.
In Manhattan, location is crucial! Distance to public transportation, distance to shopping corridors, and proximity to the most critical sites in NYC can impact whether you'll pay top dollar—or a little less than top dollar—for your property. It's key to realize that some micro-neighborhoods, including the most iconic parts of the city, will be disproportionately more expensive than even one or two blocks off the beaten path.
A commercial broker can help you decide how much a prime location is worth you vs. your budget. If high prices for prime locations price you out of a space, remember that plenty of retail stores have done well by selecting storefronts in perfect spots that don't require paying a premium for the space.
Some commercial real estate has pricing expressed in terms of the square footage that is exclusive to you and your retail location. However, many buildings contain amenities that are valuable to you, your customers, and your staff. These areas include entrance corridors, shared restrooms, or foyers.
These amenities are often factored into the rent rate by adding up all footage shared by all renters in the building and divided by your portion of the total rentable space in the building. This is where rentable vs. usable square footage becomes relevant to you.
So if your retail space is 20% of the available rental space in the building, you might also pay for 20% of the space you share with the other renters. While your actual rental rate may divide out in a few different ways, a building with more interior common areas may have a higher rental rate. It's wise to be aware of this.
Buildings are classified into Class A, Class B, and Class C based on the condition and location of the property.
Class A commercial properties tend to be iconic buildings that are beautiful, reasonably new or updated, and full of amenities. They are also often in prime locations and, as such, have some of the highest rent prices when it comes to retail space for rent. Class C buildings, on the other hand, tend to be less desirable locations, with less infrastructure, older retail spaces, and very few amenities or extras.
Class B rental spaces are somewhat in-between: these retail properties could be a stately but old building that has quality space but could still use some upgrades or a newer building that is slightly outside of the most in-demand locations and therefore not quite as in-demand as Class A. The reputation of the building itself will impact your square footage calculator for what is reasonable to pay for that retail space.
Verada is the retail space broker you need to fully understand rent rates for the ideal space you need. Our approach to connecting landlords and business owners to build communities means you get the answers you need about what matters most to you and the success of your shop or restaurant. So reach out to our team to find the space you need in Manhattan and the surrounding areas!
To evaluate retail space for rent in Manhattan and the rest of NYC, check out our free "Guide to Choosing Your Next Rental Space" today.