Case Study – Industrial Facility, Mississauga, Ontario

Is renewing always your best option as an occupier? As you may know, the answer to that question depends entirely on the situation, the people involved, and their objectives.

One thing is for certain; when renegotiating your lease, it is imperative to put a strategy in place to maximize the chances of a successful outcome. The step-by-step execution can vary, however, no matter what type or size of space you occupy, starting early can be your strongest advantage. 

It would be easy if you could simply extend and maintain the deal you’ve grown comfortable with and go on with your day. However, forces outside of our control – as well as the established norms of leasing cycles – often dictate the rates and prices that landlords can push for. Therefore, it is necessary to conduct a professional analysis, identify the best strategy for your specific situation, and execute both ahead of time. 

The Challenge

Team Toronto Industrial was tasked with renewing the tenant’s lease while mitigating any rental rate increases as much as possible. As we have already said, changes that occur in the market during the term of the initial lease, such as overall vacancies, rents, and new construction, can affect potential outcomes. So when it came time to negotiate the Client’s lease, we had to keep these factors in mind, as well as manage expectations that rate increases may be unavoidable.

Features: 

  • Approximately 100,000 SF
  • E2 Zoning
  • 28’ Clear Height
  • Truck Level and Drive-In Doors
  • Heavy Power
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Transaction

Wanting to give them the best chance of success, we encouraged the Client to start the process with us prior to the renewal notification period in order to give due time, gain market insight, and gather intel on potential alternatives. In doing so, we looked to maintain negotiating leverage as much as possible.

Alongside assessing the Client’s needs, we conducted our own analysis by compiling a detailed report of comparable properties in both the immediate and wider municipality to get a picture of what similar tenants’ situations were, as well as identify a shortlist of spaces should the tenant decide to relocate.

In addition, because leasing rates are not widely published, we leveraged both our internal database and our deep network to see where rents may have moved and what it would take to do a new deal in a similar building.

Results

We successfully renewed the tenant’s lease at rates in line or slightly below initial expectations that included concessions from the Landlord. We were able to accomplish this due to our research and access to data and relationships; which allowed us to present what we felt were fair market rates.

Further, in the event that an agreement could not have been reached, we had sourced multiple options for relocation. As we have mentioned earlier and in previous case studies, both Landlords and Tenants can benefit from continuation in occupancy and a lack of disruption in their businesses. With both Parties working towards mutually beneficial solutions, and with timing on our side, we were able to get the deal done.

If you are moving closer toward the expiry of your current lease, please give us a call and we would be happy to discuss your unique situation.

Daniel Smith is the Vice President and Principal of Lee & Associates Toronto, specializing in the acquisition, disposition, and leasing of industrial properties, as well as providing clients such as local and national corporations, landlords, and developers with a full range of real estate services.

ABOUT LEE & ASSOCIATES

Lee & Associates is a commercial real estate brokerage, management and appraisal services firm. Established in 1979, Lee & Associates has grown its service platform to include offices in the United States and Canada.

Lee & Associates provides superior market intelligence in office, industrial, retail, investment, and appraisal to meet the specialized needs of our clients. For the latest news from Lee & Associates, visit leetoronto.com.

To get clarity and direction when looking for space or going through a lease renewal, or to discuss any other real estate needs, please contact Daniel at 416.628.8173, email at dansmith@lee-associates.com, or visit www.leetoronto.com.