Commercial realty - rental - Toronto
May 6, 2013 11:06 AM Subscribe
I want to rent a retail spot in Toronto to move an already established business into. I know absolutely nothing about commercial realty. Help me get the best deal I can without looking like a moron...
So I run a successful business in a very busy neighborhood. The store has been there for 25 years and is the longest-running on the block. But it's too small and I want to relocate to a spot a few blocks south.
The rent on the new space is $5k plus $1600 TMI. This is about $1000 or $1500 more than I'd like to pay. Because my business is a success and well-known, the landlord and his realtor have indicated they're open to negotiating.
I know what that means to me, but I don't know what it means to them. What's realistic?
Here are the facts:
The store:
- previous tenant stopped paying rent after 18 months and was therefore evicted.
- two tenants ago left after 15 years because he thought rent was too high.
- store has currently been empty for 2 months and there are 6 other stores available on both sides of the street (some of them for more than 6 months) within 2 blocks.
- store is in good shape but has some unusual walls, some of which I've been told can be knocked down. Most of which I'd like knocked down.
My business:
- among the top in the city/country at what we do
- second longest running of its type in the city
- very well known and respected in the neighborhood (empty location is part of that 'hood)
- longest running business on our block (since 1987)
- neighborhood is very "rich" and businesses turn over around here very often. For instance, I am on the second floor, presently. The store underneath us has had at least 10 different businesses in it while we've remained steady. With the exception of a pub and a bank, my shop is the only one on the block that was there even 10 years ago.
***
Knowing jack-shit about realty, what are my chances of getting the rent down to $5500 including TMI?
Barring getting the rent knocked down, what can I negotiate for that would make up for that $12k - $15k per year? For instance, is it normal when moving into a place to try and get a free month or two at the head when you can build new shelving and do other work like that during which you would not be serving customers? (Two months free rent would be equiv of a year at $1000 less rent).
Also, regarding knocking down walls and such and maybe changing lighting or removing old store's signage... that's landlord's responsibility or mine? What's normal?
I have a second realtor who'd be working for me who I'm meeting tomorrow, but I'd like to be prepared for that meeting and not look like a moron by suggesting he try and get me things that are simply not possible or standard. Also, I assume I pay this person... what is standard for negotiating a lease like this?
Thanks.
So I run a successful business in a very busy neighborhood. The store has been there for 25 years and is the longest-running on the block. But it's too small and I want to relocate to a spot a few blocks south.
The rent on the new space is $5k plus $1600 TMI. This is about $1000 or $1500 more than I'd like to pay. Because my business is a success and well-known, the landlord and his realtor have indicated they're open to negotiating.
I know what that means to me, but I don't know what it means to them. What's realistic?
Here are the facts:
The store:
- previous tenant stopped paying rent after 18 months and was therefore evicted.
- two tenants ago left after 15 years because he thought rent was too high.
- store has currently been empty for 2 months and there are 6 other stores available on both sides of the street (some of them for more than 6 months) within 2 blocks.
- store is in good shape but has some unusual walls, some of which I've been told can be knocked down. Most of which I'd like knocked down.
My business:
- among the top in the city/country at what we do
- second longest running of its type in the city
- very well known and respected in the neighborhood (empty location is part of that 'hood)
- longest running business on our block (since 1987)
- neighborhood is very "rich" and businesses turn over around here very often. For instance, I am on the second floor, presently. The store underneath us has had at least 10 different businesses in it while we've remained steady. With the exception of a pub and a bank, my shop is the only one on the block that was there even 10 years ago.
***
Knowing jack-shit about realty, what are my chances of getting the rent down to $5500 including TMI?
Barring getting the rent knocked down, what can I negotiate for that would make up for that $12k - $15k per year? For instance, is it normal when moving into a place to try and get a free month or two at the head when you can build new shelving and do other work like that during which you would not be serving customers? (Two months free rent would be equiv of a year at $1000 less rent).
Also, regarding knocking down walls and such and maybe changing lighting or removing old store's signage... that's landlord's responsibility or mine? What's normal?
I have a second realtor who'd be working for me who I'm meeting tomorrow, but I'd like to be prepared for that meeting and not look like a moron by suggesting he try and get me things that are simply not possible or standard. Also, I assume I pay this person... what is standard for negotiating a lease like this?
Thanks.
If $5k is more than you'd like to pay, do you have any market research to show that the asking rent is out of line, or is it just over your budget? Your realtor can help you figure out the market in the area.
Not paying rent until tenant improvements are substantially complete is normal for my market, but maybe not if yours is really hot.
Free rent after you move in may also be possible depending on your Lessor. Lessors often prefer giving free rent over a rent reduction for a few reasons. It looks better to the bank to have a higher rent and the one time concession could be disguised as something other than a discount to them. Also when your lease is up for renewal the Lessor wants to base that adjustment off of a higher rent amount.
Having the previous tenant's sign removed would be the Lessor's responsibility in my market, but maybe not yours.
The advertised rent may include a contribution towards your tenant improvements. Discuss with you realtor.
Also discuss with your realtor renewal options and how the rent for those with be calculated.
Your realtor is likely paid out of the commission given to the listing broker. If you were going in unrepresented I would ask for a discount based on that, but it sounds like you could really benefit from the assistance.
posted by Crashback at 12:11 PM on May 6, 2013
Not paying rent until tenant improvements are substantially complete is normal for my market, but maybe not if yours is really hot.
Free rent after you move in may also be possible depending on your Lessor. Lessors often prefer giving free rent over a rent reduction for a few reasons. It looks better to the bank to have a higher rent and the one time concession could be disguised as something other than a discount to them. Also when your lease is up for renewal the Lessor wants to base that adjustment off of a higher rent amount.
Having the previous tenant's sign removed would be the Lessor's responsibility in my market, but maybe not yours.
The advertised rent may include a contribution towards your tenant improvements. Discuss with you realtor.
Also discuss with your realtor renewal options and how the rent for those with be calculated.
Your realtor is likely paid out of the commission given to the listing broker. If you were going in unrepresented I would ask for a discount based on that, but it sounds like you could really benefit from the assistance.
posted by Crashback at 12:11 PM on May 6, 2013
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But if you are super diy - I would start by calling all those other empty storefronts and figuring out what they are asking for $/sq. foot (or meter or whatever you guys use to measure things up there :) ). You could also ask them some questions like, who is in charge of signage/lighting/etc. Since you aren't negotiating with them they might give you some sort of baseline for what is normal.
Last time my company rented commercial office space there were provisions in the lease for things like outdoor signage, new paint, new carpet stuff like that. They were definitely all negotiated but this was office space not retail space.
posted by magnetsphere at 11:14 AM on May 6, 2013