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THE ABC’S OF ACQUIRING INDUSTRIAL SPACE BY LEASE OR SALE

The costs for tenants leasing industrial space by are typically expressed on a per square foot per annum basis in the Toronto area market. There are two main components to the rental costs, the “Net” or “Basic” Rent and the “T.M.I”. The Net rent provides a return on investment to the Landlord on its real estate asset. The T.M.I. typically includes real estate Taxes, Maintenance, and building Insurance. The Gross Rent is the sum of the Net Rent and the TMI. Utilities costs and other services such as garbage removal and janitorial services are usually in addition to the Gross Rent. Total annual costs equal Gross Rent per square foot per annum times the square footage occupied plus utiliities and other incidental costs. Confirmation of all costs is recommended. In acquiring an industrial or warehouse property most companies lease their space as opposed to a sale primarily due to the large capital investment required in purchasing a property. The length of lease term is negotiable but in the Greater Toronto Area a lease term of 5-10 years is most common with the tenant often having renewal rights.

 

The sample properties below have been posted to provide general information on rental rates and costs for industrial and warehouse space in the greater Toronto area.