With national office vacancies hovering around the 5.0 per cent mark according to a recent Cushman & Wakefield analysis, commercial tenants are finding it challenging to find the space they need. The low vacancy rate is pushing up rents in major centres like Toronto, Vancouver, and Calgary.
In downtown Toronto, the average rate for commercial rental properties increased by 21 per cent to $22.64 per sq. ft. since January of 2010. Commercial tenants who are looking to rent space in the city’s most prestigious Class A space in the premium towers located at Bay Adelaide Centre and Bookfield Place will need to dig deeply into their leasing budget to be able to justify the steep price tag of over $80.00 per sq. ft.
Since demand for commercial space is on the rise and cost are increasing, what can business owners do to make sure they are getting the best deal for their needs? Here are some helpful tips:
It’s a good idea to interview several agents before choosing one to work with. The ones who should be placed on the short list will be people who ask questions with a view to finding a space which will fit the business owner’s long-term needs, as opposed to simply finding a property and making a sale right away.
The commercial real estate agent should be knowledgeable about the local market conditions and properties available at various price points per sq. ft.
Business owners should look at their plans for the next few years in light of their needs for commercial space to ensure that they are addressed when determining which features are most important when looking for commercial space.
If market conditions are tight, commercial landlords may be in discussions with more than one prospective tenant at a time. It’s a good idea to start looking for properties which would be suitable well before the current lease expires (12-18 months is a good time frame) and to have more than one option in mind if the first one is not available.
Commercial tenants who are willing to commit to a longer term may find it easier to get into a space than ones who are looking only to sign a lease for a year or two.
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