Case Study – Industrial Facility, Mississauga, Ontario

If you have ever had to compromise on your lease, whether it be due to a lack of options or time, to get the right deal done, then you may want to read on. When looking to find the perfect long-term space, users always look for the right mix of features, size, location, and price. However, it isn’t always possible to get everything on your criteria list.

In today’s market, with such low availability rates and transactions occurring off the market, you may have to take your second (or even third) choice or be forced to wait until something potentially comes up on the market. Some occupiers are even pre-leasing years in advance to ensure they aren’t left without anything.

A lesser-known approach to maximizing your potential selection would be to consider less direct solutions, such as examining sub-leases, as well as differing lease lengths or product with excess space or land. In leaving a buffer around your requirements, you make finding opportunity easier – and – with a little bit of work, can turn an ‘undesirable’ property into a custom-tailored solution.

The Challenge

Team Toronto was tasked by a user with finding a warehouse facility with trailer parking; located as close as possible to Pearson Airport. As we touched on earlier, it was important to meet as many criteria as possible, in a timely manner, and within a certain budget. Doing all of these things, however, normally creates a tradeoff between price and features.

Features: 

  • Approximately 80,000 SF total
  • E3 Zoning
  • Approximately 6,000 SF office
  • 25’ Clear Height
  • Ideally-Located Close to Major Airport
  • Truck-Level and Drive-In Doors
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Transaction

Trying to keep as many options open as possible, we assessed the Client’s needs and prioritized the aspects that were most likely to drive a favourable outcome. In doing so, we were able to cast a wider net; even looking at the subleasing market, where a longer-term deal would make sense. Leveraging this approach when given a specific requirement in a low-availability market was crucial in putting together a creative solution.

And so, we conducted an analysis of potential opportunities and produced a detailed report to get a strategic understanding on behalf of our Client, things like: what they would have to pay in rent, what types of concessions they could receive, how much work (if any) had to be done, what they would have to long-term to renew, etc.

Results

As a result of searching on and off the market for viable options and tapping into our network of relationships, we came across a building that was available for sublease and that contained approximately 1 acre of unused excess land at the rear of the property.

While these deal features are not normally on many Tenants’ radar, we were able to successfully convert the sublease into a new 10-year Headlease. The Tenant also converted the raw land at the rear of the property to trailer parking, and renovated all brand-new office. And so, with some additional work by our Team, what many would have passed over ended up being a great fit for our Client.

An exceptional outcome to note here was that we locked in a rate for 10-years at below current market comparables.

In conclusion, this transaction shows the importance of working with knowledgeable experts who can see value, spot opportunities, and get the job done where others cannot.

So if you are looking for space yet are having trouble finding something with your specific requirements, 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.