The concrete jungle of New York City has endless business opportunities. It doesn’t matter whether you’re a startup, multinational law firm, or hedge fund. However, the soaring costs of commercial spaces often pose a formidable barrier for businesses aiming to plant their flag here. The quest for a suitable workspace within budget can feel like a relentless marathon with the finish line constantly moving farther. However, unbeknownst to many, the city government has a network of real estate incentive programs to assist businesses in overcoming the high cost of leasing commercial space in NYC.
These incentive programs, especially prevalent in Lower Manhattan and pockets of Brooklyn, Queens, and The Bronx, are the city’s way of helping businesses, making the dream of having a NYC address more attainable. Yet, many commercial tenants do not know about these incentives, leaving a chunk of financial aid unclaimed and the path to reduced real estate costs unexplored.
While many remain unaware of New York City’s major real estate incentive programs, you don’t have to be among them. Below, we’ll set the stage for you. You’ll learn the various programs available, ensuring you’re well-informed on how the city can ease the financial burden of leasing commercial space in NYC.
Among the best-known New York City real estate incentive programs, the Commercial Revitalization Program (CRP) offers a respite to businesses in Lower Manhattan. This program paves the way for a real estate tax rebate of up to $10 per square foot (SF) over five years, trickling down from the landlord to the tenant. Moreover, the savings structure is segmented across multiple years. It commences at $2.50/SF for the initial three years, scaling to $1.67/SF in the fourth year, and concluding at 83 cents/SF in the final year. Eligibility hinges on the landlord’s capital improvements, creating a mutual benefit for all parties involved.
The program offers tax abatements for eligible leases in commercial and industrial spaces built before 1975. Additionally, benefits extend for three or five years based on the lease term.
The LMREAP is a boon for companies moving staff to Lower Manhattan from outside NYC. It offers a $3,000 tax credit per employee, extending up to 12 years for significant savings. This credit covers each job relocated or added within 5 years of the move. To qualify, companies must operate for 24 months before relocating and secure property via purchase or a minimum three-year lease in Lower Manhattan, south of Houston Street.
Energy costs can be a thorn in the side of businesses. However, the ECSP and LMEP come to the rescue with a subsidy of up to 45% on electricity costs over 12 years. The LMEP, in particular, provides savings of up to $1.00 per rentable square foot in electricity costs. A building must be either renovated or newly built to qualify for the LMEP. Initially, the utility issues a rebate to the landlord. Subsequently, the landlord disburses this rebate to the tenant. This process applies to both direct leases and subleases.
The REAP program is a sibling to LMREAP, albeit with a broader geographical scope. Companies relocating staff to The Bronx, Queens, Brooklyn, or Manhattan (north of 96th Street) from specific areas can receive a $3,000 tax credit per employee over 12 years. This program helps businesses eyeing a move to these boroughs, unfurling substantial savings over time.
This incentive exempts new leases at specified locations from the Commercial Rent Tax. Specifically, the Commercial Rent Tax Special Elimination and Reduction program grants cost savings over 5 to 12 years for leases at places like 7 World Trade Center and 130 Liberty Street, given a minimum five-year lease term. Moreover, this exemption extends to retail leases south of Murray Street between West and South Streets under similar conditions.
This program provides up to 25-year property tax abatements for upgraded industrial and commercial buildings in designated NYC areas. The upgrades must represent at least 30% of the property’s taxable assessed value within four years from either the initial building permit issuance or construction start if no permit is needed.
This program offers a one-time tax credit of $1,000 to industrial and manufacturing firms per relocated employee. The catch? They must move to one of the City’s 21 Industrial Business Zones (IBZs). Firms already relocating within an IBZ also qualify.
Securing a commercial space in New York City is a significant milestone. Yet, it often comes with a hefty price tag. However, nestled within the city’s framework are real estate incentive programs designed to alleviate these financial hurdles. These programs, though overshadowed, are the city’s way of nurturing business growth.
Uncovering these incentive programs can lead to significant savings. It’s not just about finding a space; it’s about using the city’s resources to improve your financial footing. By taking advantage of these government programs, your business can thrive in NYC more cost-effectively and flourish amidst a vibrant yet competitive commercial scene.