THE ABC’S OF ACQUIRING OFFICE SPACE BY LEASE OR SALE
The costs for tenants leasing office space are typically expressed on a per square foot per annum basis. There are two main components to the rental costs, the “Net” or “Basic” Rent and the “Additional Rent”. The Net rent provides a return on investment to the Landlord on its real estate asset. The Additional Rent typically includes real estate taxes, maintenance, and building Insurance. The “Gross Rent” is the sum of the Net Rent and the Additional Rent. Total annual costs equal Gross Rent per square foot per annum times the square footage occupied. If the building is a low rise type or free standing building then utilities costs and other services such as garbage removal and janitorial services are usually in addition to the Gross Rent. If the building is a high rise office tower then these costs are typically included in the Additional rent. Another factor that will impact costs is the amount of Leasehold Improvements which are required by the Tenant. Many landlords will provide an Allowance for leaseholds and its impact on the Net rental rate is usually negotiated depending on the length of term of the lease, Tenant covenant etc. Confirmation of all costs is recommended. In acquiring an office property most companies lease their space as opposed to a sale primarily due to the large capital investment required in purchasing an office property and due to the lack of availability of well priced suitable properties on the market. The length of lease term is negotiable but in the Greater Toronto Area a lease term of 5-10 years is most common with the tenant often having renewal rights.
Office buildings for sale or lease in Toronto
These sample properties below have been chosen to provide general information on rental rates and costs for office space in the greater Toronto area. The information has been obtained from sources believed to be reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisers should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. These properties may not currently be available. They are not necessarily active listings with CBRE and the information is not intended to promote a registrant or the business of a registrant. Rates and availability are subject to change.