Commercial property

Will One of Blackberry’s Commercial Properties Be the Site of Your Next Corporate Expansion?

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Considering moving your business to a new commercial facility? Well, if you had your sights on the Mississauga, Waterloo or Ottawa regions, one of Blackberry’s commercial properties might just be right for your business.

Last week, Blackberry announced that it is planning to sell off their 19 Canadian commercial properties totalling over 3-million square feet of commercial space.  What does that mean for other Canadian businesses?

Well it may change competition in the marketplace as businesses, both domestic and foreign, will now have the opportunity to increase their presence in the Canadian market place.

Companies that , at one time or other, wanted to move into the Waterloo, Mississauga or Ottawa commercial properties that Blackberry originally purchased will now have their  chance to claim those properties for their own corporate expansions.

But who is going to jump at the chance?  Will other educational institutions follow the example of the University of Waterloo, which bought four of the 19 commercial properties to expand their campus?  Will property management companies purchase the buildings and lease the space out to small or medium-sized companies.  Will other Canadian companies band together to purchase these commercial properties?  Will foreign investors jump at the chance to own some of the property holdings?

Regardless of the mix of potential buyers, one thing is certain – Blackberry remains committed to maintaining its Canadian presence.

Though Blackberry is selling off their commercial properties, the company plans to lease back some of the space needed for their corporate operations.  They are already leasing back space in two of the buildings that the University of Waterloo has purchased.

CBRE is handling the sale and leasing of the properties.  Transactions are expected to happen between now and the spring 2014.

So, with all this in mind, I ask:  Looking for a new location to expand your business?

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‘Commercial Property for Sale’ Demand Drives Anticipated Double-Digit Increase in Vacant Leased Office Space in GTA by 2016

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Major real estate companies agree—the current demand for commercial property for sale will definitely impact vacancy rates of leased commercial property within the GTA over the next three to four years.

A report by commercial leasing company, Colliers International, notes that demand and vacancy rates for leased commercial property, particularly office space in the GTA region, has been steadily decreasing over the last two quarters of 2013, so much so that the vacancy rates in Toronto’s downtown core hit an all-time low of 3.9 percent in the third quarter of 2013 (1.2 percent less than last year). At the same time, a recent annual commercial report from RE/MAX noted that demand for industrial buildings and retail storefronts for sale along the subway and other major transit lines has remained unprecedented despite the lack of inventory of such commercial property for sale.

Such demand activity for commercial property for sale seems to be driven primarily by the arrival of smaller investors, young professionals and end users taking advantage of the low interest rates and healthy rates of return and looking to buy shops and other commercial properties rather than rent, because they know the rental market remains so tight and vacancy rates are so low in Toronto that, according to commercial realtor Michael Davidson, they could easily lease out units above a store for top dollar.

“There’s a lot of money chasing a limited supply of commercial product, be it multi-unit residential, industrial, or retail storefront,” says Gurinder Sandhu, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. “In some areas of the country, we’re seeing unsolicited offers on product not available for sale—often well above market value.”1

Currently, in response to the current commercial property demands, the City of Toronto has more than 7.3 million square feet of new commercial property space under construction, largely in fast-growing areas such as the new South Core between Union Station and Lake Ontario.

“But there’s no doubt that tenants are keenly anticipating the coming glut of new office space and “trying to hit the opportunistic window” by signing leases now that only last until 2016 or 2017 so they are more firmly in the driver’s seat and able to negotiate renewals or moves with incentives or lower rates as vacancy rates are likely to soar close to double digits”. Susan Pigg, Business Reporter, Toronto Star 2

References:

1 RE/MAX Media Newsroom, “Tight commercial inventory levels impede sales activity in most major Canadian real estate markets, says RE/MAX”, Mississauga October 29, 2013,

2 Susan Pigg Business Reporter, Toronto Star, “Glut in office space to hit GTA: report”, October 9, 2013 (Reposted October 29, 2013)

3 Susan Pigg Business Reporter, Toronto Star, “Commercial real estate a hot commodity in GTA”, October 29, 2013

4 Colliers International, “GTA Industrial Report for Fall 2013”

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The BIGGEST MISTAKE Tenants Make When Their Commercial Tenancy Agreement is up for Renewal

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It happens more often than it should. Once commercial tenants sign a lease, they tend to put it to the wayside for five or 10 years…when they know their Commercial Tenancy Agreement is due to expire or be renewed. Some tenants may start reviewing their Commercial Tenancy Agreement approximately six months to a year prior to the renewal date, but then find themselves either scrambling to negotiate and make physical changes to the current facilities or moving into new facilities in order to meet the new standards or needs of the company, or simply renewing the same Commercial Tenancy Agreement for another five to 10 years in the hope that the current agreement will be sufficient to meet their current and future business needs.

The truth is making such important decisions in a relatively short amount of time could prove to be costly in the long run. Not allowing enough time to explore and consider all the options available to the organization in relation to their facilities is the biggest mistake tenants make when their commercial tenancy agreement is up for renewal.
So, how can commercial tenants avoid this mistake?
First, do not take your commercial space for granted. Believe it or not, your commercial space contributes to the current and future success of your business, so you need to allow enough time to consider whether or not your current space is designed to meet your current and future business needs as well as explore other commercial spaces that could potentially meet those needs. This alone could
take anywhere from six to 12 months.
Second, recognize that if you are considering alternate commercial facilities, your current commercial tenancy agreement may contain a notification clause stipulating a time period by which you must inform your current landlord of your intentions. Similarly, if you are choosing to stay, it will take time to renegotiate the terms of the agreement. Either decision could involve anywhere from three weeks to six months of time prior to the actual renewal date.
Third, consider your team– Not just your internal team who could eventually be affected by your decision to renew or not renew the commercial tenancy agreement, but also your external team—the commercial real estate agent who would be involved in researching commercial facilities, arranging property analyses and negotiating or renegotiating your commercial tenancy agreement; the design,
construction and moving teams or full service renovation and relocation company that would be involved in your relocation or renovation of your facility. You not only need time to find the right team members, but every team member involved would require sufficient time to do their part in making the final result of your decision happen.
So how much time is enough time to review your commercial tenancy agreement? We suggest a minimum of two years prior to the renewal date. That way, your company is in a better position to thoroughly consider all its options and be confident that the final decision whether,renewing or exiting a commercial tenancy agreement, is the best decision for the company.

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