Search
This Site
2007 Commercial Leasing Report
Courtesy:
Shawn
Biggings, Commercial Real Estate Services Inc.
www.canmorecommercialrealestate.com
|
Partners in Economic Development
Town of Canmore
Tourism Canmore
The Biosphere
Institute
BOWDA
Mountain Arts
Foundation
Canmore Community
Housing Corporation
MD of Bighorn # 8
Chamber of Commerce
Associate Membership
Canmore Business Registry
Commercial Leasing and Sales - What to Expect
Lease rates are typically quoted per square foot per year and paid monthly. In addition to basic rent, the tenant is expected to pay for all of their own utilities as well as a proportionate share of the costs to operate the building, such as property taxes, utility and maintenance expenses for services for the common areas of the property. The phrases; “triple net”, “common area costs”, “Operating Costs” (CAC or CAM), or “additional rent” all refer to the expenses that a landlord passes on to the Tenant for the maintenance of the property.
The amount of additional rent will vary from property to property depending on how it is serviced. For instance, one landlord may have a lower common area than the next because utilities are separately metered, another may have a higher charge because heat and power are included in his CAM. Regardless of the CAM charge, comparable properties will have similar total expenses once the utilities are added in. Amenities like elevators, parking and common washrooms will add to the common expenses.
Most Landlords will require a security deposit of about two months rent and may further require a personal guarantee from a tenant to secure the lease. The “Term”, or duration of a lease is often five years, but may be longer or shorter. Tenants are responsible for maintaining their own space and for any improvements they need in the space. In the case of new construction, some landlords may assist a tenant in improving the space with an allowance or some free rent; but this is negotiable and less available when space is scarce.
There may also opportunities to purchase commercial space. Commercial property is often valued by capitalizing the lease rate. In very simple terms, the capitalization rate is divided into the annual lease rate to yield a price. (This is a gross oversimplification of the process, and meant simply to assist the reader in understanding the principal). Price increases as the capitalization rate falls. For example, a 1000 square foot space that would rent for $10.00 per square foot per year that sells for $100,000.00 has a 10% cap rate. If the cap rate is higher, say 12%, the price drops to 83,300. A lower cap rate increases the price; so 8% yields 125,000.
These principals are meant only as very introductory guidelines to commercial real estate. It is very important to completely understand every document. Commercial tenants are not governed by any landlord act. A lease or an offer is a legal contract. Read it carefully and understand what you are signing! If you do not understand something, ask a knowledgeable professional (a commercial expert or a lawyer) for advice.
This article provided by Commercial Real Estate Services Inc., Shawn Biggings
Shawn Biggings, the broker and President of CRS, has 30 years experience in the commercial real estate industry. She has held senior positions with some of Canada’s leading developers and shopping centres and been responsible for leasing and management of millions of square feet of AAA properties.
Since its inception, CRS has worked with hundred of businesses and completed the vast majority of commercial transactions locally. CRS is the only commercial broker in the area and offers expertise in sales and leasing of all commercial properties in Canmore, Exshaw and Banff. Shawn has earned a reputation for integrity and professionalism. She has maintained valued relationships with international brokerages that enable her to provide services far beyond the normal scope of a small town brokerage.