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The Beginner’s Guide To Leasing Commercial Property

 

Entering the business world is complex. It requires a baseline understanding of many different concepts and processes commonly involved in running a business effectively.


One of the most important steps for prospective business owners, particularly those whose business is not based online, is securing a leased location to carry out operations. Not only does attention need to be given to the price of these arrangements, but also the various terms and conditions involved in a commercial leasehold contract.  


In this blog post written specifically for those new to the commercial leasing process, I will break down the key ways to prepare for this undertaking as well as the various things to look out for along the way. Please note that this is intended as a jumping-off point, rather than a definitive guide.


Let’s get started!



What Exactly Are Your Needs?

This seems like an obvious question, but hear me out. When most people enter the market for leased property, they have a general idea of what they need that space for.


However, it is highly recommended that you think deeply about your exact needs of the space you intend to occupy. Are you a retail location that also needs adequate water pressure for product needs? Are you a storefront that also requires a small space for light manufacturing? Are you an industrial company that will also require extra space on the property for parking? Think about your business and the things you need to keep it afloat, as it applies to the property.
 

Additionally, you will also need to be pre-approved for financing. This may require consulting with your financial advisor or accountants, for example. Knowing your financial position is crucial to a successful leasehold property search.


You may see what I’m getting at here: Before searching for property, you must know the precise range of your needs, as well as your inherent limitations. This commences a type of “process of elimination” whereby you and your commercial Realtor can more accurately determine which properties you need to see, and which ones can be safely ignored. With this foresight, you will avoid spending unneeded time at showings trying to find a diamond in the proverbial rough. 


Zoning, Zoning, Zoning


Now that you’ve detailed your range of needs, you can move on to the zoning requirements.


Zoning bylaws are enforceable municipal rules, designed in accordance with the Official Community Plan, that designate land with allowable uses and prohibited uses. This is why industrial companies tend to occupy the same part of town, and “main street” (think Vernon!) is mainly storefronts. This is because of zoning designations.

 
Take the list of needs you’ve compiled, and cross-reference it with the zoning bylaws in your particular city. For Vernon residents, this can be found here. For those residents outside of city centres, you may need to refer to your local regional district. For Vernon residents outside of city limits, for example, this can mean referring to the Regional District of North Okanagan. You want to figure out what zoning bylaws apply to your desired location, and which bylaws will allow for the use that you require. You also want to figure out which zoning bylaws specifically prohibit your intended use. The collection of this information will narrow down your list of compatible properties, which is an effective way to formally begin your property search.
 

The Basics Of Lease Terms & Conditions


Now that you’re ready to commence your property search, let’s give you the basics of some crucial lease terms:


Term

The term is defined as the exact time-frame that you intend to occupy the commercial space. Generally, this is listed in the contract as a specific amount of years or months. It is important to note that most landlords prefer at least a 3-5 year term, and the demand for less time will usually require other trade-offs from your side of the transaction. If a landlord prefers 3 years or more, and you come in asking for a term of 18 months, they may require a higher monthly lease price or other concessions. 


Triple Net

Every property listing you visit will have different obligations that pertain to certain costs, such as those involved in a “triple net” lease. You will notice that some listings will have a given price, coupled with the term “triple net” as being additionally payable. Triple net refers to a landlord or tenants’ obligation to pay property taxes, insurance, and ongoing maintenance costs. Take extra care to know if the approximate triple net costs are included in the agreed-upon lease price, or if it is expected to be paid over and above the base lease cost. 


Utilities

When you decide that a property you’ve viewed could be a great fit, be sure to inquire about approximate utility costs. It is immensely helpful if the landlord has historical utility cost records, in which case you will need to request them. Like previous steps, you will also want to be sure if some or all of these costs are included in the agreed-upon lease price, or if they’re above and beyond them. This step will continue to strengthen your costing forecasts and give you confidence when making offers.



Renovations

Have you found the perfect space, but it needs a fresh coat of paint and a wall removed? Or, perhaps you need a more extensive renovation? Understand that not all landlords are willing to renovate to your needs, or renovate to your particular standards. If renovations are likely needed, discuss this with the landlord. Just be aware: If a landlord agrees to carry out renovations on your behalf but at their expense, it could lead to a higher lease price. Conversely, you may be able to save on the monthly lease cost by carrying out renovations yourself. It’s a give-and-take process, and it’s highly variable and specific to each property and landlord. 


Inclusions & Exclusions

In some of the previous examples, we’ve highlighted the importance of figuring out which costs are included, and which costs are not. Take this step even further into consideration with other important aspects of the property. Are there kitchen supplies and appliances in your new space? If so, are those included for use in the lease terms? What about a piece of machinery you noticed on-site, is the use of that included? Anytime you find yourself wondering “hmm, I wonder if that’s included”, write it down and include it in forthcoming conversations with the landlord. This will save you from hassles and potential disputes over inclusions down the road. 


Conclusion

Your business requires so much more than meets the eye. Your customers may know you for the products you sell or the service you give, but your range of view is far more expansive. Understanding your lease terms is an important step in figuring out the costs of your product or service, and thus, the health of your entire business. Using the above steps, you are well on your way to negotiating a favourable lease that will successfully enable you to bring your ideas to the market. 


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Declaration period to Begin for BC Speculation & Vacancy Tax ...


Here is important, time sensitive information on the completion of a declaration and registration of an exemption regarding the speculation and vacancy taxation.... click on the link below for detailed information....


Speculation & Vacancy Tax declaration - click here




_________________________________________________________________





BC Home Sales Continue at Slower Pace

Vancouver, BC – December 14, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 5,179 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in November, down 33.1 per cent from the same month last year. The average MLS® residential price in BC was $718,903, a decline of 1.9 per cent from November 2017. Total sales dollar volume was $3.7 billion, a 34.3 per cent decline from November 2017.


“BC households continue to struggle with the sharp decline in purchasing power caused by the B20 mortgage stress test,” said Cameron Muir, BCREA Chief Economist. “Most BC regions are now exhibiting relative balance between supply and demand.”

Total active residential listings were up nearly 31 per cent to 33,500 units in November, compared to the same month last year. However, it should be noted that this compares to 2017, when active listings for the month of November were at their lowest level in more than 15 years.

Year-to-date, BC residential sales dollar volume was down 23.1 per cent to $53.4 billion, compared with the same period in 2017. Residential unit sales declined 23.6 per cent to 74,847 units, while the average MLS® residential price was up 0.7 per cent to $713,302.

-30-

For more information, please contact: 

Cameron Muir  
Chief Economist  
Direct: 604.742.2780  
Mobile: 778.229.1884  
Email: cmuir@bcrea.bc.ca  

The British Columbia Real Estate Association (BCREA) is the professional association for about 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province's 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

To demonstrate the profession's commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada's real estate boards to ensure maximum exposure of properties listed for sale.


__________________________________________________________

Zoning By-Law changes for cannabis

approved by Council



(December 11, 2018  ... News)

Vernon City Council has approved the changes to the Zoning Bylaw to permit cannabis sales, processing and cultivation in many of its commercial and industrial zones....


Click Here - for full story........


_____________________________________________________________________



RLP Downtown Realty

Disclosure of Representation in Trading Services Form

A complimentary introduction to the Real Estate Council of British Columbia's new requisite form meant to inform consumers about the types of representation they may receive from a REALTOR in a real estate transaction.


Helping You is What We Do!


Click Here -  Disclosure of Representation in Trading Services


__________________________________________


BC Home Sales to Rise in 2019 
BCREA 2018 Fourth Quarter Housing Forecast

Vancouver, BC – November 8, 2018. The British Columbia Real Estate Association (BCREA) released its 2018 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 23 per cent to 80,000 units this year, after recording 103,768 residential sales in 2017. MLS® residential sales are forecast to increase 12 per cent to 89,500 units in 2019. The 10-year average for MLS® residential sales in the province is 84,800 units.


To read the entire article -  click here..


______________________________________________

New Legislation makes it clear:  Farmland is for Farming.......




Legislation introduced on Monday, Nov. 5, 2018, makes it clear that land in the Agricultural Land Reserve (ALR) is for farming and ranching in British Columbia, not for dumping construction waste or building mega-mansions.

To read the entire article, see below....


Click Here to read entire Article


_____________________________________________________________


Province targets speculators and vacant homes, supports housing affordability


The British Columbia government has introduced legislation to tackle speculation in B.C.'s housing market and help turn empty properties into homes for people...


https://news.gov.bc.ca/releases/2018FIN0075-002014

BCREA’s Position on Drug Operations

When a property has been involved in drug production, it can pose serious health and safety risks to the public resulting from mould, chemicals thrown out in the backyard, electrical fires and invasion by criminals looking for drugs, even if the property is no longer being used for drug production. It’s important for members of the public to be informed if a property they are interested in moving into was ever identified as having a history of drug production. Unfortunately, there is no consistency across the province on how municipalities make this information available, nor is there a provincial standard of remediation for buildings used to produce drugs.


To read full article - Click Here

The Beginner’s Guide To Leasing Commercial Property

 

Entering the business world is complex. It requires a baseline understanding of many different concepts and processes commonly involved in running a business effectively.


One of the most important steps for prospective business owners, particularly those whose business is not based online, is securing a leased location to carry out operations. Not only does attention need to be given to the price of these arrangements, but also the various terms and conditions involved in a commercial leasehold contract.  


In this blog post written specifically for those new to the commercial leasing process, I will break down the key ways to prepare for this undertaking as well as the various things to look out for along the way. Please note that this is intended as a jumping-off point, rather than a definitive guide.


Let’s get started!



What Exactly Are Your Needs?

This seems like an obvious question, but hear me out. When most people enter the market for leased property, they have a general idea of what they need that space for.


However, it is highly recommended that you think deeply about your exact needs of the space you intend to occupy. Are you a retail location that also needs adequate water pressure for product needs? Are you a storefront that also requires a small space for light manufacturing? Are you an industrial company that will also require extra space on the property for parking? Think about your business and the things you need to keep it afloat, as it applies to the property.
 

Additionally, you will also need to be pre-approved for financing. This may require consulting with your financial advisor or accountants, for example. Knowing your financial position is crucial to a successful leasehold property search.


You may see what I’m getting at here: Before searching for property, you must know the precise range of your needs, as well as your inherent limitations. This commences a type of “process of elimination” whereby you and your commercial Realtor can more accurately determine which properties you need to see, and which ones can be safely ignored. With this foresight, you will avoid spending unneeded time at showings trying to find a diamond in the proverbial rough. 


Zoning, Zoning, Zoning


Now that you’ve detailed your range of needs, you can move on to the zoning requirements.


Zoning bylaws are enforceable municipal rules, designed in accordance with the Official Community Plan, that designate land with allowable uses and prohibited uses. This is why industrial companies tend to occupy the same part of town, and “main street” (think Vernon!) is mainly storefronts. This is because of zoning designations.

 
Take the list of needs you’ve compiled, and cross-reference it with the zoning bylaws in your particular city. For Vernon residents, this can be found here. For those residents outside of city centres, you may need to refer to your local regional district. For Vernon residents outside of city limits, for example, this can mean referring to the Regional District of North Okanagan. You want to figure out what zoning bylaws apply to your desired location, and which bylaws will allow for the use that you require. You also want to figure out which zoning bylaws specifically prohibit your intended use. The collection of this information will narrow down your list of compatible properties, which is an effective way to formally begin your property search.
 

The Basics Of Lease Terms & Conditions


Now that you’re ready to commence your property search, let’s give you the basics of some crucial lease terms:


Term

The term is defined as the exact time-frame that you intend to occupy the commercial space. Generally, this is listed in the contract as a specific amount of years or months. It is important to note that most landlords prefer at least a 3-5 year term, and the demand for less time will usually require other trade-offs from your side of the transaction. If a landlord prefers 3 years or more, and you come in asking for a term of 18 months, they may require a higher monthly lease price or other concessions. 


Triple Net

Every property listing you visit will have different obligations that pertain to certain costs, such as those involved in a “triple net” lease. You will notice that some listings will have a given price, coupled with the term “triple net” as being additionally payable. Triple net refers to a landlord or tenants’ obligation to pay property taxes, insurance, and ongoing maintenance costs. Take extra care to know if the approximate triple net costs are included in the agreed-upon lease price, or if it is expected to be paid over and above the base lease cost. 


Utilities

When you decide that a property you’ve viewed could be a great fit, be sure to inquire about approximate utility costs. It is immensely helpful if the landlord has historical utility cost records, in which case you will need to request them. Like previous steps, you will also want to be sure if some or all of these costs are included in the agreed-upon lease price, or if they’re above and beyond them. This step will continue to strengthen your costing forecasts and give you confidence when making offers.



Renovations

Have you found the perfect space, but it needs a fresh coat of paint and a wall removed? Or, perhaps you need a more extensive renovation? Understand that not all landlords are willing to renovate to your needs, or renovate to your particular standards. If renovations are likely needed, discuss this with the landlord. Just be aware: If a landlord agrees to carry out renovations on your behalf but at their expense, it could lead to a higher lease price. Conversely, you may be able to save on the monthly lease cost by carrying out renovations yourself. It’s a give-and-take process, and it’s highly variable and specific to each property and landlord. 


Inclusions & Exclusions

In some of the previous examples, we’ve highlighted the importance of figuring out which costs are included, and which costs are not. Take this step even further into consideration with other important aspects of the property. Are there kitchen supplies and appliances in your new space? If so, are those included for use in the lease terms? What about a piece of machinery you noticed on-site, is the use of that included? Anytime you find yourself wondering “hmm, I wonder if that’s included”, write it down and include it in forthcoming conversations with the landlord. This will save you from hassles and potential disputes over inclusions down the road. 


Conclusion

Your business requires so much more than meets the eye. Your customers may know you for the products you sell or the service you give, but your range of view is far more expansive. Understanding your lease terms is an important step in figuring out the costs of your product or service, and thus, the health of your entire business. Using the above steps, you are well on your way to negotiating a favourable lease that will successfully enable you to bring your ideas to the market. 


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Post Your Comment:

Housing Supply Not Keeping Pace With Demand in Most BC Regions...

 

 

Vancouver, BC – June 13, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 12,402 residential unit sales were recorded by th

e Multiple Listing Service® (MLS®) in May, down 7.9 per cent from the same period last year. Total sales dollar volume was $9.33 billion, down 4.0 per cent from May 2017. The average MLS® residential price in the province was $752,536, a 4.2 per cent increase from the same period last year....

 

Click here to read entire article...