Commercial Leasing 101

Posted on September 12, 2018March 5, 2019 by Spacie

Business owners wishing to lease a space or renew an existing lease can prepare by following these steps:

Utilize A Tenant Broker’s Expertise

A tenant-representative commercial lease broker can provide the market data, information, relationships, and experience needed to help a tenant reach a favorable lease with a prospective landlord. Use a broker for leases 1,000 square feet and up if you’re looking for commercial space Spacie.ca can help you find what you’re looking for.

The benefit of utilizing a broker is often at no extra cost to the tenant–landlords frequently pay a broker’s commission, which is then built into the tenant’s rental rates. Whether the tenant seeks out a broker’s consultation or not, the tenant’s rent will remain unaffected.

The tenant will want what’s best for their business: a prime location based on rewarding local demographics, traffic, and neighbourhood makeup. An experienced broker can help the tenant find their ideal location efficiently and accurately.

Commercial Lease Negotiation and Terms

It’s important to understand that the lease terms of commercial spaces differ from those of residential spaces–they contain stipulations that can affect the tenant practically and economically in their use of the space.

Upon finding a suitable space for lease, the tenant should procure a letter of intent to be signed by both parties. The letter of intent serves as confirmation that both parties are mutually interested in negotiating and pursuing the signing of a lease agreement, while including a structured path to do so. Keep in mind a committed landlord will be inclined to sign a letter of intent, whereas a non-committal landlord typically will be less eager.

The tenant can increase their chances of a favorable outcome in the lease negotiation if they stay conscious of these factors:

Area of leased space compared to area of building or complex
Length of lease
Creditworthiness and operating history
State of current leasing market, such as supply and demand of space
The value of your business’ brand to the landlord
The landlord’s status as an individual, regional or national property owner

At any given time, the lease market will fluctuate, generally leaning in favor of the landlord or the tenant. At times of high demand and low availability, the landlord has more leverage, and may adopt a “take it or leave it” approach. Conversely, the tenant has more negotiating clout in a market with low demand and high space availability, paving the way for potential concessions from the landlord such as more interior improvements funding, renewal and expansion rights, and better rental rates.

Submarkets also exist within a market. They appear as business districts, development corridors, outlying regions, and other types of areas undergoing development. The tenant should be aware of these submarkets and how each submarket brings with it its own favorable and less favorable market conditions, ensuring their own adaptability in pursuing and negotiating a lease.

Important Features of a Commercial Lease

The size of the tenant’s prospective space relative to the size of the entire property will bear weight on the lease terms. A single occupant renting an entire structure, for example, will have more sway in receiving concessions, such as prominent signage, from the landlord.

Landlords will also favor a business with a creditworthy background, based on the business’ history of operating, net worth, audited financial records, and/or publicly traded stock. Startups, on the other hand, won’t have the same advantage. Despite this, negotiating remains the same for both established businesses and startups: it is an opportunity for the tenant to make desired changes to the initial lease, which tends to be skewed in favor of the landlord.

Within a lease agreement are vital and essential terms hiding in plain sight. These terms create the reality of the tenancy and shouldn’t be overlooked. Watch out for these lease terms when reading over your lease agreement:

Rent

Tenants should be prepared to incur additional costs to the base cost of renting a space. Should the need for them arise, additional costs for maintaining the space should already be included in the tenant’s budget.

Full Service Versus Triple Net Rent

The operating costs of a space include taxes, insurance and utilities. Depending on the lease agreement the landlord will either cover these costs on behalf of the tenant (Full Service), or the landlord will charge the tenant for these costs (Triple Net). Tenants are urged to include audit rights in their lease agreement with the landlord, ensuring transparency in the calculations of operating costs.

Premises

Premises are the location of the leased space and its area coverage. Tenants be aware of the difference between Rentable Square Feet (RSF) and Usable Square Feet (USF), the former of which is the total space area, while the latter is space used for business activities.

Term

Term denotes the duration of the tenant’s lease and renewal right. A shorter term, such as three years, is recommended for a business that may require more flexibility in its future, for example, moving locations. Renewal rights provide further flexibility for a business with a short term, as they give the business the option of continuing to rent the space past the initial term. Lower rental rates in the future may also spur the tenant to seek a shorter term.

Prior to renting, a pre-rent commencement period term should be included in the lease agreement, stipulating a rent-free period for the tenant’s contractors to make interior improvements. Alternatively, the landlord may take the responsibility and cost of interior improvements into their own hands, and make the space available for rent upon their completion.

Security Deposit

A landlord will require assurance of payment in the lease agreement. The tenant may provide assurance in the form of upfront cash, a personal guarantee, or a letter of credit issued by the tenant’s bank. It’s important to keep in mind that a personal guarantee can diminish in scope during the span of term, depending on the conditions of the term.

Improved Allowance and Base Building

The tenant improvement allowance (TI) is the amount the landlord is willing to spend on the tenant’s renovating or retrofitting the space. The TI allowance is typically calculated by multiplying the square footage of the space by cost per square foot. More allowance will be provided for high quality Class A space, upwards of $80 per RSF, whereas Class C spaces might offer $12 to $20 per RSF in allowance. The tenant will want to make sure that the TI allowance is spent on improvements suited to their specific requirements. Amounts exceeding the tenant improvement allowance may be incurred by the tenant and reflected in the rent.

Use and Exclusive Clauses

The tenant should research any zoning laws applicable to the space they are seeking to lease, to ensure their intended use of the space is lawful. Exclusive restrictions, similarly, apply to the space and its permitted use. Tenants renting within a building or complex may wish to establish with the landlord exclusive clauses to curtail or limit certain activities or neighbours within the building or complex, for the sake of business protection or competition.

Assignment and Subletting Rights

A tenant at some point during their lease may wish to assign part or complete use of their space to a subletter or business successor seeking to rent the space or purchase the business. This process falls under Assignment and Subletting Rights, which must be included in the lease agreement with the landlord in order to be enforceable. Assigning and subletting space is ideal for a business that needs to reduce operating space and costs or close.

Other Important Lease Terms and Overlooked Terms

The tenant should read over the landlord’s lease carefully. More often than not, there initially will be gaps in the lease that leave the tenant vulnerable to potential situations in their business’ future. Consider the following terms:

Renewal Rights

The tenant should negotiate a renewal with their landlord long before the end of the lease term. Doing so will give the tenant the feasibility of relocating, the fact of which can be used as a bargaining chip in the negotiation with the landlord. It should be noted, however, this would only apply if the tenant had no significant interest in the current lease location, and might not easily apply to a business that has acquired location goodwill during its lease. The lease should permit the renewal election date at least 9 months to one year prior to the end of the lease term. Additionally, a renewal rent rate can be also be pre-established and included in the lease.

Expansion Right

Right to Expand is an important term indicating the tenant’s license to expand business-operating space, in the even of rapid growth, or relocate, in the event of unanticipated circumstances.

Heating Ventilation and Air Conditioning (HVAC)

HVAC is an important and necessary expense. The tenant and landlord should agree on a HVAC provision that considers standard hours cost, additional hours and cost, and potential demand for business operations.

Alterations

Cosmetic alterations, such as painting, for example, should not require the landlord’s consent. Landlord consent for non-structural alternations should not be unreasonably delayed or provided conditionally.

Environmental, Code Compliance

The tenant should ask the landlord for warranties regarding code compliance, although, if the interior build is in accordance with the tenant architect’s drawings, this responsibility, within the leased space, will be with the tenant.

Rent Abatement for Interruption in Use

Rent should be abated in the event that space or utilities essential to the proper functioning and use of the space are interrupted or cease working properly. Until the landlord rebuilds or fixes the damage or dysfunction, rent should continue to be abated. Business Interruption insurance, invoked when events disruptive to normal business operations occur, is available for the tenant to acquire.

Eliminate Removal/Restore Obligation on Tenant

Alterations made to the space during the lease term may have to be removed at the tenant’s departure, and potentially at the tenant’s expense. The tenant should be aware of any potential departure obligations and associated costs, and make sure they are properly represented in the lease.

Risk of Sub-tenancy

A sub-tenant leases from the tenant and generally has no relationship with the landlord, and is dependent on the tenant maintaining good standing with the landlord. To protect the sub-tenancy, a sub-tenant may seek a non-disturbance agreement from the primary landlord, should the tenant fail to make rent payments.

Make note of these important lease terms in leasing and occupying a commercial space–they are necessary to creating a durable and transparent lease between the tenant and landlord. A commercial leasing attorney can expand on these terms and introduce new ones to a tenant committed to pursuing a favorable lease.

Conclusion

The prospective tenant should consult a tenant broker and an experienced commercial leasing attorney prior to the negotiating of a lease agreement. Professionals experienced in the ins and outs of commercial lease documents know which terms to watch out for and which important details are often buried in the lease document. Going over a lease in progress with a tenant broker and commercial leasing attorney brings the opportunity for a favorable outcome and fewer unexpected surprises in the operational and economic future of the tenant’s business space lease. Need help finding the right office space in Toronto? Click the link to start your commercial real estate search https://www.spacie.ca/p/on/toronto

Prepared by www.spacie.ca

Top 8 Office Buildings In Vancouver

Posted on July 3, 2018March 5, 2019 by Spacie

spacie.ca

1) The Exchange

Merging European technologies with a West Coast appearance, The Exchange creates a distinct downtown working environment. The design of The Exchange is defined by the Pinstripe Principle. The pinstripes are aluminum louvres that begin at the ground level of the new building and stretch upwards above the original Edwardian building; thus producing a smooth integration between the two structures. The building is Vancouver’s first LEED Platinum heritage conversion – a collaboration between Iredale Group Architecture and Harry Gugger Studio. The best of the old structure is conserved by the new design, while conveying standards of sustainability, efficiency and comfort into the 21^st century.

Notable Tenants

National Bank
Hyper Wallet Systems

https://www.spacie.ca/p/british-columbia/vancouver/howe-street/475

2) Telus Garden

TELUS Garden is a 22-storey, 450,000 square foot office tower located at the northeast corner of West Georgia and Seymour streets. It is an expansion of the telecommunications giant’s headquarters office space on the city block. 1,000 TELUS employees work in the new space as well as several major, high-profile tenants including Amazon Canada, Accenture, Capstone Mining, and law firm Bull Houser & Tupper. Proponents have placed the building’s environmental footprint as a major priority. In fact, a number of TELUS Garden’s green design features have earned them the title of being Vancouver’s first LEED Platinum certified office tower and the distinction of submitting the highest LEED score card ever to the Canada Green Building Council.

Notable Tenants

Amazon
Telus

https://www.spacie.ca/p/british-columbia/vancouver/british-columbia-99-alternate/510

3) Bentall 5

Bentall 5 is an AAA office building located in the heart of downtown Vancouver’s business district, on the northeast corner of Burrard Street and Dunsmuir Street, one of the city’s most renowned intersections. It sits directly opposite to the Burrard SkyTrain Station and the 1.5 million square foot Bentall Centre complex. The structure encompasses a modern appearance, efficient design, first-class amenities and a wide range of services. A new technological standard has been set for downtown Vancouver due to an emphasis on mechanical, electrical, communication, life safety and security systems.

Notable Tenants

Bell
Gowling WLG

https://www.spacie.ca/p/british-columbia/vancouver/burrard-street/550

4) Shaw Tower

Shaw Tower is located on Vancouver’s most prominent waterfront location and is Vancouver’s only waterfront office building. It is among the tallest buildings in the city, standing at 489 feet and comprising of 24 stories of luxury condominiums with a unique live/work zoning designation, on top of a 16-storey office building. The structure is situated on Coal Harbour and adjacent to Harbour Green Park, the Vancouver Convention Centre and extension of Vancouver’s famous Seawall. Shaw Tower houses four of Western Canada’s leading companies: Shaw, Ledcor Construction (Shaw Tower’s contractor), Pattison Group, and Westbank office. The unique offices contain access to large decks overlooking Coal Harbour. A day care with an outdoor playground is located on the 5^th floor. Shaw Tower is considered one of the new premiere office building in Vancouver.

Notable Tenants

Shaw
The Jim Pattison Group

https://www.spacie.ca/p/british-columbia/vancouver/west-cordova-street/1067

5) MNP Tower

MNP Tower was designed and developed as a vision statement for Vancouver. In order to create its architecturally stunning and multi-award winning design, the structure had to endure a thoughtful and rigorous process. The building offers extensive views of the North Shore Mountains that visually expand indoor space, has floorplates designed to promote circulation and collaboration, and surpasses environmental considerations.

Notable Tenants

MNP
Korn Ferry

https://www.spacie.ca/p/british-columbia/vancouver/west-hastings-street/1021

6) 745 Thurlow

745 Thurlow is a world class building that has plenty of modern day amenities that help attract and retain top talent in today’s competitive environment. The building has two magnificent green roof spaces invluding a 3^rd floor terrace spreading around the west, south and east sides of the building. There is also a roof top tenant amenity area accessible to all tenants in the building, including an outdoor patio with seating, lounge and entertainment areas and a casual meeting area with a gas fire pit and barbeque. The building is equipped with a common area fitness facility, accessible to all tenants within the building.

Notable Tenants

SNC Lavalin
McCarthy Tétrault LLP

https://www.spacie.ca/p/british-columbia/vancouver/thurlow-street/745

7) 250 Howe St

Located at 250 Howe Street, PWC Place is Waterfront Properties newest and most impressive office tower. This AAA Class building features a marvelous grand lobby, which reflects the highest standards in design and finishing that are characterized throughout the building. The building is named after PricewaterhouseCoopers, one of North America’s largest and prestigious accounting services firms, and is home to numerous leading companies.

Notable Tenants

PwC
Dentons Canada LLP

https://www.spacie.ca/p/british-columbia/vancouver/howe-street/250

8) Park Place

Park Place is a 35-storey, Class AAA office tower located in Vancouver’s business district. The property’s one-acre park has frontage on three main streets. It is adjacent to Burrard Skytrain Station and walking distance from the Convention Centre and waterfront. A retail mall, meeting facilities, and a fitness centre are included in its amenities. Dedicated to environmental sustainability, this building has achieved BOMA BEST Level 3 and LEED® Gold EB:O&M certification. While the tower only uses 35% of the site, it stands at 698,000 ft², making it the largest office building in British Columbia. The remainder of the site is dedicated to open green space, which include water features and a small amphitheatre. The building’s facade comprises of pink granite with flush-mounted copper-glazed windows that match the granite’s appearance.

Notable Tenants

DLA Piper
RBC Capital Markets

https://www.spacie.ca/p/british-columbia/vancouver/burrard-street/666

To see more buildings in the Vancouver are check out https://www.spacie.ca/p/bc/vancouver

The following criteria was taken into consideration while making the list:

Proximity to Transit
Eco-Friendliness
Design
Integration of Technology
Natural Light
Amenities

Top 10 Buildings in Toronto for Tech Companies

Posted on May 24, 2018March 5, 2019 by Spacie

spacie.ca

1) Queen Richmond Centre West (134 Peter St)

Developed by Allied Properties REIT, the Queen Richmond Centre West (QRC-West) offers an excellent example of High-performance Workplace and adaptive repurpose through its incorporation of two existing heritage buildings into the establishment of a new 17-storey office building. The complex faces both Richmond and Peter Streets in Toronto’s Entertainment District due to its arrangement around an L-shaped atrium. This 302,000 square foot development adds a highly sustainable, new innovative office component which begins at the ninth floor. In addition, this state-of-the-art building features a retail component at grade and provides roof terrace access. The Mega Delta Frame structure is a unique structural solution that implemented the preservation and reuse of the industrial historic buildings on this site. Tech companies will be sure to appreciate this stunning custom-designed development and advanced innovative work space.

Notable Tenants

Allied (Owner)
Entertainment One Music Canada
Givex

https://www.spacie.ca/p/ontario/toronto/peter-street/134

2) MaRS (101 College St)

Located in the heart of downtown Toronto, the MaRS Centre is a vivacious area that has become the irrefutable hub of Toronto’s Discovery District. This urban location has direct access to Toronto’s subway line and is only a few short stops from the GO Transit system. 101 College is conveniently located and is easily accessible from all parts of the GTA. It is attached to the adjacent MaRS Heritage Building and reaches through an atrium and concourse-level food court. This office building is set to satisfy its tenants with its warm and lavish lobby, protective security, and pass card access to its elevators. Tech companies can benefit from its convenient downtown location with accessible transportation and close proximity to the vibrant city of Toronto.

The Heritage Building

The Heritage Building’s 4-storey brick structure houses tenant spaces that are occupied by professional services, industry associations, pharmaceutical companies and offices of Canadian universities and the Province of Ontario. The MaRS Centre has been honoured with the Heritage Toronto Award of Excellence for Architectural Conservation and Craftsmanship. The building was established in 1911.

The Atrium

The MaRS atrium is a glass-roofed building that offers public access through its walkway to Heritage Building tenants and retail vendors, and also access to the South and Medical Discovery Towers. The Atrium’s lowest level features a subdivided conference area that can host both public and private events. Events that span across Toronto’s arts, culture and urban community are sure to connect tenants to this exciting city. Its lower level also includes a media centre, video conferencing rooms and a public food court.

The South Tower

The South Tower is an 8-storey property that accommodates incubator programs and shared laboratory and research facilities. The 200,000 square foot building houses advanced mechanical and electrical systems, floors with enhanced load bearing capabilities and 15-foot slab-to-slab clearances.

The MaRS Incubator occupies the second and third floors of the South Tower, directly above the MaRS corporate offices. It is a dedicated area that comprises of offices and laboratories for about two dozen life science and technology companies.

Notable Tenants

AirBNB
AutoDesk
Klass Capital
Samsung

https://www.spacie.ca/p/ontario/toronto/college-street/101

3) The Balfour Building (119 Spadina Ave)

The Balfour Building is a historical tower landmark and represents one of Toronto’s finest examples of Art Deco style in the 1930s. This 12-storey structure is a premier location with its dazzling interiors, marvelous rooftop terrace, impeccable hardwood flooring, and forced air heating and centrally controlled air conditioning. Employees of the tech sector would enjoy an office building at this location with its stylish design, accessible transportation and attractive amenities. The Balfour Building is located at the Northeast corner of Spadina Avenue and Adelaide Street, and is situated near the Financial and Entertainment districts, Gardiner Expressway, and the LRT. The City of Toronto Heritage Property Inventory listed the Balfour Building as a Toronto Heritage Property in 2011.

Notable Tenants

Roadmunk
BiblioCommons Inc
Playground Incorporated.

https://www.spacie.ca/p/ontario/toronto/spadina-avenue/119

4) Carpet Factory (67 Mowat Ave)

The Toronto Carpet Factory is a remarkable historic building from the past. It has lasted throughout the years due to its fine craftsmanship and materials used to design this structure of lasting quality. Its integrity is preserved through its new state-of-the-art facilities that are meant to inspire new ideas. Tech companies will be sure to enjoy this unique work space as it can stimulate creativity and inspiration in their workers. The building is a constant reminder that they are part of a proud and inclusive tradition of creating. With an assortment of buildings taking up a full city block on the western edge of Liberty Village, this long-standing repurposed factory is Toronto’s epicenter of creative output. This nostalgic property features tall windows, soaring ceilings and big open spaces.

Notable Tenants

Jam Direct
Bridgeable

https://www.spacie.ca/p/ontario/toronto/mowat-avenue/67

5) 80 Atlantic (Under Construction)

At the heart of Liberty Village sits 80 Atlantic. Inspiration can easily be found in this magnificent building that was crafted with materials inspired by the past. This property features thoughtful details, collaborative spaces, high-design work environments, and innovative technologies that would be ideal for talented individuals working in the tech sector. As Toronto’s first new timber-frame commercial building to be built in a generation, 80 Atlantic integrates natural and high performance materials that set a new standard of development. Between 60 & 80, the courtyard attracts visitors into the site, which serves as a social space with public access, and is the spot of a signature patio area for Big Rock Brewery’s new concept restaurant and bar.

https://www.spacie.ca/p/ontario/toronto/atlantic-avenue/80

6) The Fashion Building (130 Spadina)

The Fashion Building is a renowned landmark of design and elegance and is located on the northwest corner of Camden and Spadina. It is conveniently located near the Financial and Entertainment Districts with the LRT right at the doorstep, and is just seconds away from the Gardiner Expressway. Not only does its convenient location make for the perfect work environment for busy individuals in the tech sector, the building is also spacious and visually-striking. This 8-storey heritage building features Neo-Gothic detailing, sun-filled space and a beautiful marbled lobby. Built between the years 1925 and 1927, it is an impressive warehouse-loft building with rental spaces that remain sought-after locations for today’s businesses. All suites in the building feature polished wood floors, 12ft ceilings and large operable windows. It contains barrier free access, a modernized elevator system, high speed data connectivity and energy efficient building systems.

Notable Tenants

Coinsquare
Canopy Labs

https://www.spacie.ca/p/ontario/toronto/spadina-avenue/130

7) The Reading Building (116 Spadina Ave)

The Reading Building integrates the convenience of modern contemporary design with the beauty of a past era. The 7-storey structure at 116 Spadina Avenue is located on the northwest corner of Spadina Avenue and Camden Street. Constructed in 1925, this astounding building was originally built as a warehouse loft. This solid concrete structure with its stunning red-brick exterior continues to attract a mix of corporate and creative tenants to its exquisitely restored brick and beam suites. Employees of the tech sector will be sure to appreciate its spacious interior and comfortable open work environment.

Notable Tenants

CrowdRiff
Logojoy

https://www.spacie.ca/p/ontario/toronto/spadina-avenue/116

8) The Tower Building (110 Spadina Ave)

The Tower Building is a magnificent Art Deco-style landmark located on the northwest corner of Adelaide and Spadina Avenue. An eye-catching copper covered pyramidal tower rises two storeys above its 10-storey main structure. Constructed in 1929, the loft structure was originally designed as a commercial warehouse and has endured a major renovation to its mechanical systems while conserving the integrity of its original design. It features marvelous high ceilings, maple floors, elegant concrete columns and large operable windows. Tech company employees can step into this spacious accommodating office building and feel empowered about their work space. Tenants of this property can also enjoy modern amenities that include an energy efficient heat pump HVAC system, thermal glass, entirely refurbished passenger elevators and high speed internet connectivity.

Notable Tenants

Zynga
Hello Fresh

https://www.spacie.ca/p/ontario/toronto/spadina-avenue/110

9) The Commodore Building (317 Adelaide St West)

The Commodore Building is a 10-storey loft building topped by a 2-storey tower that houses a mechanical room. Constructed in 1929, it was built as a commercial warehouse. This remarkable property features spectacular high ceilings, maple floors, sophisticated concrete columns and large operable windows. Tech company employees will be sure to value a wide spacious work environment where they can craft and exchange ideas comfortably and openly. Tenants can also enjoy modern amenities which include air conditioning, thermal glass, entirely refurbished passenger elevators and high speed internet connectivity. Currently, the building houses offices in the architectural, design, advertising, and internet sectors.

Notable Tenants

Jam 3 Media
Agilebits

https://www.spacie.ca/p/ontario/toronto/adelaide-street-west/317

10) 720 King St West

720 King Street West is a 350,000 square foot commercial office building situated in downtown Toronto at the corner of King Street West and Bathurst Street in King West Village. Constructed around 1974, the building underwent a major renovation between 1998 and 2004, which changed its original use of light industrial to a commercial class ‘A’ office occupancy. The property has undergone many interior renovations to accommodate tenant requirements. The 10-storey commercial office building borders the property lines along the south, west and east sides. A small surface parking lot of about 18,800 square feet extends to the property line on the north side. Even though over 90% of the building is used for office space, there is a mix of restaurant and personal service retail units on the ground floor for tenants to enjoy. This convenient downtown office location is suitable for tech companies to set foot in, while providing their employees with comfortable amenities.

Notable Tenants

Virgin Mobile
X Inc.

https://www.spacie.ca/p/ontario/toronto/king-street-west/720

To see more great office space in the Toronto area check out https://www.spacie.ca/p/on/toronto

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