Study No.03
The Loss Factor
A DLS Commercial Real Estate study on New York office leasing.
In NYC office leases, the loss factor is the gap between rentable and usable square footage — typically 25–35% in Manhattan towers — meaning you pay rent on space you cannot occupy. DLS Commercial Real Estate measures usable SF independently so the rent you sign for matches the space you actually get.
The mechanics
This section walks the clause from first principles — what it is, where it appears in the lease, and why it moves real money over a full term. The narrative below is structural; specific dollar figures and percentages are illustrative until first-hand DLS data is stamped in.
Where it lives in the lease
The provision typically sits in the body of the lease and the rider that follows it, and its cost is governed by definitions set early — the base, the tenant’s proportionate share, and the rights a tenant retains to verify what is billed. Each of those is negotiable, and each is where DLS Commercial Real Estate concentrates.
A worked example
Consider an illustrative tenant taking space in a Midtown tower on a ten-year term. The example below shows how the clause compounds year over year and what a single negotiated definition is worth over the life of the lease. All values shown are placeholders for explanation only.
| Year | As drafted | As negotiated by DLS | Tenant savings |
|---|---|---|---|
| Year 1 | — | — | — |
| Year 5 | — | — | — |
| Year 10 | — | — | — |
| Term total | — | — | — |
Where DLS stands
This clause is not boilerplate. It is one of the handful of definitions that decide what a lease actually costs — and it is settled long before the rent number is. DLS Commercial Real Estate negotiates it from leverage, for the tenant, and never for the landlord.
Questions
Who pays for tenant representation?
In a standard New York office lease the tenant representative’s fee is customarily landlord-paid out of the transaction, so DLS Commercial Real Estate’s representation typically costs the tenant nothing.
How is this study used in a real negotiation?
DLS uses each study as a checklist against the actual lease in front of a tenant — every clause it covers is one DLS Commercial Real Estate negotiates line by line before a tenant signs.
Are the figures in this study specific to my building?
No. The worked examples are illustrative. DLS Commercial Real Estate measures and models the numbers for the specific building and term a tenant is considering before any advice is given.