Real Estate

Commercial lease renewal? Ok to negotiate?

  • Last Updated:
  • Dec 4th, 2020 4:52 pm
[OP]
Newbie
Sep 23, 2017
85 posts
39 upvotes

Commercial lease renewal? Ok to negotiate?

Hello,

Looking for some info on how to proceed with the commercial lease renewal?

We are currently leasing a warehouse and office space in Vaughan, have been there for 5+ years now. Our lease cost was reasonably steady in first years, but for past 3 years landlord started to raise the price claiming maintenance increases by the condo corporation. Our neighbouring units are owned, when we spoke with the owners they said that corporation has not raised maintenance costs in a long time now, plus there is no actual repairs/maintenance that landlord does inside our unit.
Our lease is still quite reasonable compared to other available units in the area, so it might be that they are trying to make up their returns on their investment.

What would be the best way to negotiate a new lease agreement if they try to increase the cost again? Would we just ask them to send in a new lease and just counter offer? Just don't want to be taken advantage of specially in this tough times, and don't want to spook the landlord so they don't renew our lease.

Thanks for your help :)
5 replies
Deal Addict
Mar 2, 2017
1396 posts
2543 upvotes
Toronto
Certain warehousing space right now is in very high demand and moves fairly quickly, especially certain sq. ft. range and if you have specific zoning and multiple available uses. It's probably a case of where the landlord is looking get up to market because he/she knows they can get more money if you move.
Realtor, Investor, CPA
Deal Addict
Jul 3, 2007
3317 posts
3644 upvotes
Toronto
fabricatordog wrote: Hello,

Looking for some info on how to proceed with the commercial lease renewal?

We are currently leasing a warehouse and office space in Vaughan, have been there for 5+ years now. Our lease cost was reasonably steady in first years, but for past 3 years landlord started to raise the price claiming maintenance increases by the condo corporation. Our neighbouring units are owned, when we spoke with the owners they said that corporation has not raised maintenance costs in a long time now, plus there is no actual repairs/maintenance that landlord does inside our unit.
Our lease is still quite reasonable compared to other available units in the area, so it might be that they are trying to make up their returns on their investment.

What would be the best way to negotiate a new lease agreement if they try to increase the cost again? Would we just ask them to send in a new lease and just counter offer? Just don't want to be taken advantage of specially in this tough times, and don't want to spook the landlord so they don't renew our lease.

Thanks for your help :)
do some research on nearby lease costs
Jr. Member
User avatar
Aug 14, 2020
173 posts
163 upvotes
Hamilton, ON
RichmondCA wrote: Certain warehousing space right now is in very high demand and moves fairly quickly, especially certain sq. ft. range and if you have specific zoning and multiple available uses. It's probably a case of where the landlord is looking get up to market because he/she knows they can get more money if you move.
One of you can educate me on this: is a commercial lease not different than a residential lease in Ontario in that you are not limited to specified annual increases? Now that the lease is due, can the landlord not simply make a new offer at market or whatever he thinks he can get and the OP can take it or leave it? The OP would by wise then to play ball and negotiate a favourable long term lease if possible? I may be wrong, I am asking the question.
_



Getting a mortgage is like writing a test...except you're allowed to work with someone who knows the answers!

Kirby Reschny
Mortgage Agent
Real Mortgage Associates (FSRA #10464)
Deal Addict
Feb 16, 2018
1291 posts
1294 upvotes
aeromortgage wrote: One of you can educate me on this: is a commercial lease not different than a residential lease in Ontario in that you are not limited to specified annual increases? Now that the lease is due, can the landlord not simply make a new offer at market or whatever he thinks he can get and the OP can take it or leave it? The OP would by wise then to play ball and negotiate a favourable long term lease if possible? I may be wrong, I am asking the question.
You are not wrong. When the lease is over the landlord can ask whatever they want and the tenant has to pay or go. The exception to that is if there was an option to renew in the lease at a pre-determined rate. It's the exact opposite of a residential lease. In commercial, the landlord has all the power.
Jr. Member
User avatar
Aug 14, 2020
173 posts
163 upvotes
Hamilton, ON
HghSsociety wrote: You are not wrong. When the lease is over the landlord can ask whatever they want and the tenant has to pay or go. The exception to that is if there was an option to renew in the lease at a pre-determined rate. It's the exact opposite of a residential lease. In commercial, the landlord has all the power.
Thank you. This is what I thought. Better rules for landlords but may be harder to fill vacancies depending on demand/area.
_



Getting a mortgage is like writing a test...except you're allowed to work with someone who knows the answers!

Kirby Reschny
Mortgage Agent
Real Mortgage Associates (FSRA #10464)

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