Commercial Leases… It’s In The Details
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Commercial leases—they can be very overwhelming to read through, not only because of the legal jargon but because of the details on every topic they cover. But, the details are necessary to protect the property owner or landlord and the tenant, to make certain that there is no room for ambiguities or misinterpretation between the parties involved, and to ensure that all parties have the same understanding of a lease’s terms of agreement.
Some details a commercial lease should cover include the following:
- Lease Term – Is the lease for one, two … five years? Is there a restriction on how soon a tenant’s business can move in and operate once the lease is signed? Is there a renewal clause? Is there an exit clause? Is there an option to sublet? What are the terms of each?
- Area or square footage – Does the lease only apply to the square footage of the office or that the tenant’s business would occupy? What about common areas such as lobbies, hallways, washrooms, etc.—are these (or a percentage of these areas) governed by the lease a well?
- Parking, Signage – is signage included in the lease? Is there a designated parking area included in the lease?
- Renovation – Does the lease allow the tenant to have the space renovated to better suit their business needs? If so, what are the parameters and restrictions?
- Maintenance, Utilities and Repairs – Who is responsible for what repairs and operating costs? Is this to be a shared responsibility?
- Rate – What does the rent rate cover? When is it subject to rate increases?
- Insurances – what insurances are required by the lease and who is responsible?
Assumptions are not an option. If there are any ambiguities within a commercial lease, they need to be clarified and spelled out in detail. If any party does not agree to the details, an amendment can be written and initialed by both parties as part of the negotiation process.
Final tips:
- A commercial lease should be drafted, edited and finalized by professional underwriters and lawyers. (Believe it or not, there have been cases where commercial leases were drafted by the tenant only to later lead to lawsuits based on lack of details)1
- All details and fine print should be read.
- No party should sign anything until all can agree to everything.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931, email [email protected], or visit our website to complete our contact form.
Do Commercial Tenants Need to be Protected from Lease Fraud?
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Lease Fraud…it happens in both the residential as well as the commercial real estate world. Commercial lease fraud mostly occurs at the title or owner level with the fraudster manipulating documents and going through legal channels to assume the role of an executor or officer of a commercial or mixed-use property and then placing a high mortgage on that property (unbeknown to the real executor, officer or owner) and using the money for personal use.
Now I should clarify that commercial lease fraud in Ontario is extremely rare – less than 2% of all commercial leases end up being reportedly fraudulent and the entities affected are usually the owners, investors, lawyers and brokers. But what about tenants? Can they be affected by lease fraud?
Well, truth be told, tenants should not be affected by lease fraud because property owners usually have professional underwriters and lawyers draw up and edit their lease agreements and insurance brokers that outfit them with the proper insurances (e.g. title insurance) to protect their real estate from any issue of “lease fraud” before such issues can affect the tenant.
However, there is the possibility of a tenant’s lease being interrupted or cancelled by the property owner due to circumstances beyond his control. Lease fraud? Not likely. But such an interruption can have serious implications on a tenant’s business.
So what can a commercial tenant do to protect itself from such a possibility? Here are some thoughts:
- Review your lease with your own professional lawyers to see if there is a clause that speaks to such interruptions and details the responsibilities of both the tenant and the property owner. (If in the lease negotiation or renewal stage, this is a great clause to negotiate on so that the terms are fair for all parties involved)
- Seek the professional aid of an insurance broker to ensure your business has the proper rental property and lease-related insurances it needs to protect itself against the unexpected (e.g. rental interruption due to natural disaster, leasehold insurance for situations where your lease is cancelled due to circumstances outside of your control)
- Remain in good standing with your landlord or property owner. A good business relationship with your property owner could cause the property owner to “fight” to keep you as a tenant by recommending one of their other commercial sites to you.
- Do not sign anything you do not fully agree to.
Like lease fraud, lease interruptions are a rarity, but protecting your business from such possibilities can certainly be a game changer for the survival of your business.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Tips on Finding a Good Designer for Your Office Space
Whether you are planning to redesign your current office or are moving to a new one, an office space designer will be necessary to take you through the process. But, how does one find a good office space designer?
Well, the best way to find a designer is through referrals. Your real estate agent may have a few designers that he/she could recommend. You may also ask your fellow business contacts whose office spaces you admire who their designers were.
Once you have a few names to choose from, do your homework to help narrow down the designers you may want to use. A good designer would have the following qualities:
- Experience in commercial office space design– There are two types of designers: ones that specialize in residential projects and ones that specialize commercial projects. You want a designer that specializes in designing the same or similar office space as you have or are planning to be in. So, if you are in (or are planning to be in) a commercial office space, you want a designer who specializes in designing commercial office spaces.
- Experience in higher budget projects – Commercial office space designers could have a variety of experience but you want the one(s) that have experience in higher budget projects or at least projects about the same size as yours. Upon your request, a good designer would be willing to provide you with a sample package of examples, including photos and detailed descriptions, of office spaces they have designed that are similar to your office space in size and/or layout. Note: their sample package is a great way to determine the style tendencies of the designer as well. For example, a designer that many have the tendency to be quite trendy may not be a good fit for a business that prefers to stay quite traditional in style.
- Client-focused – It is in the creative nature of a designer to see a space and immediately begin offering suggestions without learning about or understanding a business’ needs or goals. A good designer would take time to understand your business, your company culture, your business flow or style, your company size, your collaboration and/or non-collaboration needs, etc., before offering suggestions for your office space
One of our client’s invited us to their new office space and said, “We need a private area, reception area, a testing area, bathroom….you figure it out”. Because we took the time beforehand to understand the flow of their particular business, we were able to present a design for their office space that was unique and tailored to them. When the client saw the plan, he responded, “You’ve got it…right on the money.”
My point: A designer with the above qualities is sure to help you design your office space in a way that is ideal for your business.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931, email [email protected], or visit our website to complete our contact form.
Case for Commercial Office Furniture
Non-commercial and commercial office furniture can look good and function well in any office space, but if you were to ask us to recommend a grade of office furniture for your business, nine times out of ten we would likely recommend going with commercial office furniture if your budget permits. Here is why:
Expansion and Moveability. Commercial office furniture disassembles and reassembles well and can survive relocations.
Longevity. Commercial office furniture is built to withstand frequent usage and high levels of business activity, therefore has the potential to look “as good as new” for a longer period of time (i.e. will not delaminate or scratch as easily) despite frequency of usage.
Storage & Sound Barriers. If physical storage space is an important element for your business, then commercial office furniture has physical storage space usually included in its system package and is of better quality. Similarly, if your office space is divided into cubicles and sound barriers are required to lessen interferences with business calls, then commercial office furniture is ideal.
As mentioned in a previous blog, office furniture is a viable asset to your company. Hence, when considering the longevity of your business and your office furniture, investing in commercial office furniture would be a better long-term investment.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Commercial vs Home Office Furniture—Which is Best for Your Business?
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Office furniture can play a crucial role in substantiating a business, however, with different grades of office furniture to choose from — namely home-graded vs commercial graded office furniture– how does one decide which office furniture is best for their office space?
First, I should probably clarify what I mean by home-graded vs commercial graded office furniture. Please take note of the chart below:
| Home Graded Office Furniture | Commercial Graded Office Furniture |
| Made out of low-grade laminates with limited colour choices | Made out of higher quality laminates, solid wood, contemporary fabrics, stronger internal hardware, and have a wide selection of colour choices |
| Available at stores catering directly to consumers (e.g. IKEA, Staples, Best Buy, etc) | Available at warehouses and stores that mostly cater to office space designers or interior designers |
| Usually has a lower upfront cost | Usually a higher upfront cost |
| Built to withstand light to medium usage | Built to withstand frequent usage, high levels of activity |
Both types of furniture have their place in an office space, but what is best for your business is typically determined by the following factors:
The Business Itself—Stage, Size, Culture
In our experience, we have seen companies with roughly 25 or less employees utilize home-graded office furniture, whether or not their office space is in a home or commercial space, whereas companies with more employees lean towards commercial-graded office furniture. The differences are usually based on the stage the company is at (i.e. a start-up company versus. a company beginning to grow versus an established corporation), the industry of the business (IT vs industrial), and sometimes the company culture (for example, we have one client whose culture includes having new employees build their own desk the first day on the job).
Business activity:
The amount of business activity involving the usage of your furniture is one good way to determine whether to invest in home-grade office furniture or commercial grade office furniture. For example, some businesses (like IT businesses) function best with just a telephone to make or take calls and laptop at the desk. In our industry, that would be considered a light to medium usage of the office furniture simply because wear and tear on the furniture itself would be relatively minimal …… perfect for home-grade office furniture. Other businesses, however, use their office furniture more frequently for a variety of business activities such as storage and filing, collaboration meetings, conferences and so on. For businesses that have higher levels of business activities that involve more frequent or heavy usage of their furniture, we usually recommend commercial grade office furniture.
Budget:
Budget is a “bottom-line” determinant in choosing the type of office furniture for a business. In short, we have seen businesses with lower upfront budgets purchase the home-graded office furniture for their businesses, regardless of company size or business activity, while businesses with higher upfront budgets are more apt to purchasing commercial-graded office furniture.
The bottom line is that office furniture is a viable asset to your company. So, if your company is small (i.e. less than 25 employees), has a low up-front budget, and is the type of business in which the activity and usage of the office furniture is relatively light, then home-graded office furniture might be the right choice for your company right now. Otherwise, if your business activity involves high usage of the furniture and your budget allows, then commercial-graded office furniture is the way to go.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Celebrate Canada’s 148th Birthday, July 1st!!
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
The Link Between Lease Negotiations and A Rushed Office Relocation
We see this quite often. Companies that know that they will need to relocate to a new office space start the process two, sometimes three years in advance, but they still end up rushing the physical office relocation procedures to within the last three months prior to their scheduled relocation date. Why is that?
Well, let’s look at the process. Companies planning an office relocation begin by engaging a real estate agent whose main focuses are to (a) find an ideal office space and (b) negotiate and close the lease. Often, however, the new location requires some redesign or reconstruction to “fit” the image and culture of the business that is moving in. That process requires a designer to be engaged to view the new location and draw up the plans for the company’s approval before office construction or build specialists are brought in to do the work…
Stop. Here is where the common error lies—Companies often are led to believe that they should not engage a designer until the lease is 100% finalized and signed. Getting to that stage of the lease negotiation process, however, could take up most if not all of the two or three years set aside for planning and putting into motion the physical office relocation!
So, when should a designer be brought into the picture?
Well, despite what most real estate agents may advise, we suggest that when there is an 80% commitment to the lease, even though the lease is not signed, that a designer be brought in to learn about the company’s goals and vision for the new office space, view the new office space, and draw up office design plans for approval. By the time the final office design plan is approved (an approximate three month process), the lease should be fully finalized, which means the office construction and build process along with the furniture research, purchase, delivery and set-up, and finally employee relocation-in can happen.
Leases are an important part of the office relocation process but they should not be the main cause of a rushed office relocation.
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DJ McGauley and Associates Inc. is your Office Relocation, Design, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office relocation or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office relocation/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Celebrating Fathers!
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Why Your Employees Should Not Manage Your Office Move
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One of my clients recently moved to a new office building and in an attempt to save on moving costs, decided to have members of their staff coordinate the office move.
The next business day after the move was complete, the employees went into the office only to find that their phone lines were not working– someone forgot to contact the phone company to inform them of their move date. As a result, employees were forced to use their personal cellphones to conduct business.
In addition, they found out that all the company mail was still going to their old location — someone forgot to contact the postal service and alert them of both the move date and the change of address. So, the receptionist took two to three hours out of her work day to travel back to the old office location to retrieve the mail and distribute it to the staff accordingly for an entire week.
Is this a question of incompetency of the staff assigned to coordinate the office move? Hardly! They are experts in performing the job they were hired to do….which I bet was not to coordinate an office move.
Having company staff coordinate such a demanding project as an office move, I believe, is an incompetent decision. Here are four reasons why:
- An office move is a full-time project. From coordinating the move date with all stakeholders and third parties, to planning and implementing a communication strategy with all parties involved, to working with all utility companies, postal services and all other external services your company relies on to stay operational, plus working with construction managers if the new site requires reconstruction, the furniture movers, the moving truck and on-site lease managers, an office move could be considered a full-time contractual job.
- Unless you are a moving company, your staff would most likely not be trained to know and handle every detail of an office move.
- Your staff already fills a 40hr week applying their skills and talents to other duties related to your business operations. Adding an additional full time project to their plate that is not directly related to your business operations would only be a recipe for important details (like not informing the phone company and post office of your office move) being missed and neither job being done well.
- The thought of saving your company money via using your office staff in an office move is a myth. If five of your staff members were assigned to coordinate the office move and they each earned approximately $300 – $900/day, the cost to you would be $1,500 – $4,500 per day on staff being diverted from their regular business responsibilities. Add the loss of incoming revenue because of missed business opportunities (an estimated average of $ 10,000 per day), and the added cost of mistakes like those described at the beginning of this blog (mobile fees, extra mileage expense payouts), and you have an idea of how much it really costs to have your staff involved in an office move.
So what is the solution?
If your business is moving into a 2000sqft or more office space, consider finding an office move project management company in your area to take the lead and handle all the details related to your office move. Your company will be better off financially, incur minimal disruption, and enjoy hitting the ground and running once in your new office space.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
10 Reasons an Office Move is Not Like a House Move
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Whether you are moving into a new house or moving into a new office space, a move is a move, right? Well it may seem like that on the surface, especially when some of what needs to be done in both an office move and a residential move is the same (e.g. arrange change of address, pack, call the phone company, etc). In comparison, however, an office move has a much greater impact and greater risks associated with it, so it cannot be fully treated the same way as a residential move.
There are many factors that effect and that are affected by an office move that may have minimal to no effect in a house move. Some of those factors are outlined in the chart below:
| A House Move… | An Office Move… | |
| 1. | Impacts a family unit | Impacts 5 – 25000 + employees |
| 2. | Causes a mild interruption to family life | Can cause a major interruption to all employees |
| 3. | The cost of making a mistake (e.g. forgetting to arrange the forwarding of the mail) is minimal | The cost of making a mistake (e.g. forgetting to arrange the forwarding of the mail) could have a significant impact regular business operations |
| 4. | Minimal to no effect on incoming household income | Possibility of significant revenue being lost due to regular operations being disrupted and sales opportunities being missed |
| 5. | Minimal moving expenses (i.e. expenses can be limited to renting a moving truck and having friends help load and unload for a pizza meal) | Moving expenses being limited to renting a moving truck means higher expenses incurred by company to pay employees and disrupt regular business operations |
| 6. | No strict packing rules – items can be packed in irregular sized boxes | Strict packing rule – all items must be packed in boxes of the same dimensions to facilitate easy stacking in the truck |
| 7. | One family member can take time off of work to focus on the move on moving day | One staff member can be assigned to coordinate the office move but will be unfocused as that staff member would also be expected to fulfill his/her regular 40hr/week business duties |
| 8. | No operating expenses involved in family life | Organizations are obligated to pay staff even if their attention is diverted away from performing regular business duties |
| 9. | Lead time required for a successful move is two months | Lead time required for a successful move is two years |
| 10. | DIY approach can work successfully | DIY approach is not recommended |
These issues will be discussed in more detail in upcoming blogs. In the meantime, if your company has five or more employees and is planning to move into a 2000sqft – 25000sqft office space, why not contact us to arrange a 20-minute no-obligation site meeting. We’ll be able to advise you on what to expect, what to budget and how we can help.
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DJ McGauley and Associates Inc. is your Office Move, Reconstruction and Reconfiguration Project Management Company of choice for the Toronto, GTA and surrounding areas. If an office move or reconstruction of your 2000 – 25,000sqft office space is a remote possibility, consider contacting us to arrange a no-obligation site meeting. We guarantee that by the end of that meeting you will know all that would be required to make your office move/reconstruction project a successful reality.
Call 416-239-1931 , email [email protected], or visit our website to complete our contact form.
Corporate Space Planning & Relocation Advice 