Frequently Asked Questions

FAQs

Q: How do I calculate my monthly rental obligation, if commercial property rent is quoted on a per square foot a year basis?

A: Commercial property rental payments are the sum of the Net Rent, the Additional Rent (sometimes referred to as the T.M.I.) and the applicable G.S.T. Your monthly property rental rate would be calculated by multiplying your rentable square footage by the yearly net rental rate, and then dividing the result by 12. A similar calculation is done for the Additional Rent.

For example, if you have 1000 rentable square feet, and the annual net rent per square foot is $6.00, 1000 x $6.00 = $6000. $6000 / 12 = $500.00 a month in rent.

Similarly, if the annual additional rent per square foot is $3.42, 1000 x $3.42 = $3,420. $3,420 / 12 = $285.00 a month in rent.

The monthly property rent payable would be the sum of the net rent and additional rent ($785.00 in the example above). 5% G.S.T. is then added for a total monthly property rental in the amount of $824.25.

Q: If we plan on either opening a new business or relocating an existing business, how much time do we need to find the right commercial property and move in?

A: Begin your search for commercial property early. If you are opening a new business, you do not want to find yourself under time constraints dealing with issues which you may not have considered. If you are relocating an existing business to a new property, allow yourself more time than you feel you may need because you will be conducting business as usual in your existing location during this time. Generally speaking, you should begin your business property search efforts 4 - 6 months before your move date. By planning well in advance, time will be your ally, not your enemy.

Q: What are the differences between: Gross Rent and Net Rent?

A: Gross Rent is the total rent calculated inclusive of all non-structural recoverable building and exterior operating costs (T.M.I. - property taxes, maintenance and insurance) whereas Net Rent is the rent calculated before including such recoverable costs.

Q: Will I be able to sublease or assign my lease?

A: Most commercial property rentals allow the existing tenant to sublease or assign their premises. Typically, the Landlord is unable to unreasonably withhold consent to a sublease/assignment. A prudent Landlord however will consider the strength of covenant being offered by the incoming sub-tenant when deciding whether or not to offer its consent. A Landlord will usually only accept a sublease/assignment if the financial position/security of the proposed sub-tenant is the same or better than that of the existing tenant.

Q: What additional costs am I responsible for over and above net property rent and operating expenses?

A: In addition to a pro-rata share of property operating expenses, tenants will generally be responsible for the cost of gas and electricity; non- structural interior maintenance and repair expenses such as light bulb replacement; premises cleaning; maintenance, repair and replacement of doors and windows; furnace and air conditioning (if available) maintenance, repair and replacement; pest control, telecommunications; etc. Items defined as structural e.g. roof deck, exterior walls, etc. are the responsibility of the Landlord.

Q: What is a "Make Good"?

A: A "Make Good" is the tenant's obligation to return the premises to their original condition at the end of the lease term as existed prior to the time the tenant took possession. Normal wear and tear is excluded.



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