What is net effective rent in a NYC commercial lease?

Net effective rent in a NYC commercial lease is the total rent over the lease term minus the value of free rent and TI allowance, divided by the lease term in months. This calculation produces the true effective monthly cost of the lease. Net effective rent is the proper basis for comparing two LOIs with different concession packages. Headline base rent alone often misleads tenants because larger TI and longer free rent periods can offset higher headline rent in net effective terms.

What is a use clause in a NYC retail lease?

A use clause in a NYC retail lease specifies what the tenant is permitted to use the space for. A narrow use clause might limit the space to a specific concept such as a coffee shop, while a broad use clause allows any general retail use. Narrow use clauses limit the tenant's ability to pivot the business or assign the lease. Broad use clauses preserve flexibility. Negotiate for as broad a use clause as the landlord will accept, particularly if you anticipate business model changes.

What is a holdover clause in a NYC lease?

A holdover clause in a NYC lease governs what happens if the tenant remains in the space past lease expiration without signing a renewal or new lease. Standard holdover rent is 1.5 to 2 times the base rent rate. Some leases set holdover rent higher. The clause exists to incentivize tenants to either renew or vacate promptly at lease end. Tenants should read the holdover clause carefully and negotiate the multiplier if it is materially above the 1.5 to 2 range.

What is an SNDA in a NYC commercial lease?

SNDA stands for subordination, non-disturbance, and attornment agreement in a NYC commercial lease. The clause governs what happens to the tenant's lease rights if the landlord defaults on the building mortgage and the lender forecloses. Non-disturbance language protects the tenant by allowing the lease to continue under the new owner. Without an SNDA with non-disturbance protection, the tenant's lease could be wiped out in a foreclosure. Always request and document SNDA non-disturbance protection in writing.

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Tenant & Landlord EducationJuly 26, 20266 min read

The NYC Commercial Retail Lease Glossary

Every term in a NYC retail lease that matters, defined plainly, with notes on what to negotiate and where the landmines hide.

Jack Baum·Gravity Realty Group

Most NYC retail lease language is the same across landlords. The terms are dense. The meanings are not always obvious. Misunderstanding any of them can cost real money over a 10-year lease.

Here are the terms that matter, what they mean, and where to push.

Base rent

The headline annual rent figure. Usually quoted in dollars per square foot per year. Base rent does not include passthroughs, utilities, or any other charges. It is the starting point, not the total cost.

Net effective rent

The total rent over the lease term, minus the value of free rent and TI allowance, divided by the term in months. This is the number that compares two LOIs fairly. The headline rent does not.

Passthroughs

Charges in addition to base rent. Real estate taxes, building insurance, common area maintenance. The structure depends on the lease type. See net lease vs gross lease for the breakdown.

Base year

The year against which future passthroughs are measured. A 2026 base year means the tenant only pays for tax and operating expense increases above 2026 levels. A 2018 base year means the tenant has been paying for eight years of increases. The base year matters.

Free rent

Months of rent forgiven at the start of the term. Sometimes used to cover the construction period. Sometimes a real concession beyond the construction period. Calculate which.

TI allowance

Tenant improvement allowance. Landlord contribution to the tenant's build-out cost. Typically paid as reimbursement after construction is complete. See the full TI negotiation piece for how to structure the disbursement.

Personal guaranty

Provision making the lease signer personally responsible for the tenant company's obligations. The most negotiable clause in the lease. See the guaranty negotiation piece for structures and tactics.

Good guy guaranty

The most common compromise on personal guaranty. Personal liability ends when the tenant properly vacates the space. The corporation remains liable for the lease term, but the individual signer is off the hook after handing back the keys.

Burn-off

A structure where the personal guaranty reduces over time. Year one full liability. Year five partial or zero. The exact slope is negotiated.

Escalation clause

How the base rent increases over the lease term. Fixed annual percentage, CPI-indexed, or porter wage. See the full escalations piece for the trade-offs.

CAM

Common area maintenance. Charges for upkeep of shared building areas. The lease should define what is included, how the tenant's share is calculated, and whether there is a cap on year-over-year CAM increases.

Use clause

Provision specifying what the tenant can use the space for. A narrow use clause limits the tenant. A broad use clause gives flexibility. Negotiate for as broad a use clause as the landlord will accept.

Exclusive use

Provision preventing the landlord from leasing other space in the building or the neighborhood to a competing concept. Common for F&B and some specialty retail. Less commonly granted than it used to be.

Assignment and sublease rights

Provisions governing whether and how the tenant can transfer the lease or sublease the space. Landlord consent is typically required. Negotiate for consent not to be unreasonably withheld.

Holdover

Provision governing what happens if the tenant stays past lease expiration. Standard holdover rent is 1.5 to 2 times base rent. Some leases set it higher. Read the clause.

Cure period

The time the tenant has to cure a default before the landlord can take action. Standard cure periods are 5 to 10 days for monetary defaults and 30 days for non-monetary defaults. Push for longer cure periods.

Yield-up clause

Provision governing the condition in which the tenant must return the space at lease end. Some clauses require the space to be returned in original condition. This can mean demolishing tenant improvements. Negotiate carefully.

SNDA

Subordination, non-disturbance, and attornment agreement. The clause covering what happens to the tenant's lease if the landlord defaults on the mortgage. Non-disturbance language protects the tenant. Get it in writing.

Read all of these together with the broader tenant primer. Lease terms interact. Negotiate the package, not each clause in isolation.

Frequently asked questions

What is base rent in a NYC commercial lease?: Base rent in a NYC commercial lease is the headline annual rent figure, usually quoted in dollars per square foot per year. Base rent does not include passthroughs for taxes and operating expenses, utilities, or any other charges. It is the starting point of the rent calculation, not the total cost. To compare leases fairly, calculate net effective rent that incorporates free rent, TI allowance, and passthroughs alongside the base rent number.
What is net effective rent in a NYC commercial lease?: Net effective rent in a NYC commercial lease is the total rent over the lease term minus the value of free rent and TI allowance, divided by the lease term in months. This calculation produces the true effective monthly cost of the lease. Net effective rent is the proper basis for comparing two LOIs with different concession packages. Headline base rent alone often misleads tenants because larger TI and longer free rent periods can offset higher headline rent in net effective terms.
What is a use clause in a NYC retail lease?: A use clause in a NYC retail lease specifies what the tenant is permitted to use the space for. A narrow use clause might limit the space to a specific concept such as a coffee shop, while a broad use clause allows any general retail use. Narrow use clauses limit the tenant's ability to pivot the business or assign the lease. Broad use clauses preserve flexibility. Negotiate for as broad a use clause as the landlord will accept, particularly if you anticipate business model changes.
What is a holdover clause in a NYC lease?: A holdover clause in a NYC lease governs what happens if the tenant remains in the space past lease expiration without signing a renewal or new lease. Standard holdover rent is 1.5 to 2 times the base rent rate. Some leases set holdover rent higher. The clause exists to incentivize tenants to either renew or vacate promptly at lease end. Tenants should read the holdover clause carefully and negotiate the multiplier if it is materially above the 1.5 to 2 range.
What is an SNDA in a NYC commercial lease?: SNDA stands for subordination, non-disturbance, and attornment agreement in a NYC commercial lease. The clause governs what happens to the tenant's lease rights if the landlord defaults on the building mortgage and the lender forecloses. Non-disturbance language protects the tenant by allowing the lease to continue under the new owner. Without an SNDA with non-disturbance protection, the tenant's lease could be wiped out in a foreclosure. Always request and document SNDA non-disturbance protection in writing.