Commercial sales in the GTA — 007Realty Corp., Brokerage

The market data on this site is residentialThe benchmarks, sales counts and days-on-market figures published across these pages come from TRREB's residential releases. They do not cover commercial property and nothing on this page is derived from them. Ask us for commercial evidence and we will assemble it for the specific asset — it is a different exercise, not the same numbers relabelled.

We act on commercial purchases and sales across the Greater Toronto Area. Compared with residential the deal count is lower, the diligence is longer, and almost everything turns on documents rather than on impressions.

What the value rests on

Income, and how secure it is. That means the leases: who the tenants are, what they pay, when it escalates, when it expires, what renewal rights they hold and what the landlord is obliged to spend. A building with a strong covenant on a long term is a different asset from an identical building let month to month, at the same rent.

Comparable evidence exists but is thinner and less public than in residential. It has to be assembled per asset from transactions of similar type, size and location — which is why we will not quote you a price per square foot on a first call and call it a valuation.

Diligence is the transaction

Environmental. A Phase I assessment as a matter of course, and a Phase II where the history or the Phase I calls for it. Contaminated land is the risk that does not cap itself.
Zoning and permitted use. Confirmed with the municipality for the use you intend, not the use currently there. A legal non-conforming use may not survive a change of occupancy.
The leases, in full. Plus estoppel certificates from the tenants confirming the terms, arrears and deposits held.
Title, survey and building condition, including easements, encroachments and any work order on file.

Tax and financing

Commercial transactions generally attract HST, and how it is handled depends on registration status and on how the agreement is written. Financing is underwritten on the asset and the covenant rather than on a personal ratio, and lenders will typically require an appraisal and an environmental report. Both take real time; both belong inside the conditional period rather than after it. Settle the tax treatment with your accountant early — it is not something a brokerage should be answering.

Also

Taking space rather than buying it is commercial leasing. Residential purchases and sales are buying and selling, where the published market data does apply.

Tell us the use, the area and the timing.

Six stages, from the requirement to the closing date.

A commercial purchase is a longer file than a residential one, and the conditional period carries almost all of the risk. Here is the sequence and what has to be settled at each stage.

Requirement

Use, area, capital available and the return you need. Whether you intend to occupy or to hold changes what is worth looking at, and it changes the financing entirely.

Underwrite

Rent roll, the actual leases rather than a summary of them, operating costs, vacancy and the capital already deferred. The number that matters is net operating income, and it is rarely the one on the marketing sheet.

Offer

An agreement of purchase and sale built around a due diligence period long enough to complete the work below, with the deposit staged against it rather than fully at risk on signing.

Diligence

Environmental assessment, zoning and permitted use confirmed with the municipality, survey and title, building condition, and estoppel certificates from tenants confirming that the leases say what the vendor says they say.

Finance

Commercial lending is underwritten on the asset and the covenant, not on a personal ratio. Expect an appraisal and an environmental report as conditions, and allow real time for both.

Close

Conditions waived or the agreement ends. Then adjustments, rent and deposit transfers, tenant notification, and HST treatment settled with your accountant well before the closing date.