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Size and Layout
What is the square footage? Is there room to expand your business over time? Is the ceiling high enough? Does the floor plan work well for what you want to do with it? Do you have enough space for storage of your supplies/inventory? Is there enough yard space?
Parking and Transportation
Does the parking lot have adequate space for the amount of employees and customers or clients that you may have at any given time? Are there enough loading docks for your business?
Cost Considerations
What is the purchase price? Is it a fair, competitive price? What kind of options are available for financing? What kinds of operating costs come with this property? Will you be leasing, and if so, would it be a Triple Net lease agreement, or would some maintenance and costs be covered?
Environmental and Sustainability Features
Does the building have modern, energy efficient features such as upgraded insulation, LED lighting, and an efficient HVAC system? This can greatly lower your overhead operating costs by keeping your power and heating bills lower, and can also give you tax benefits if your building has a sustainability certification. Learn about Canada’s Clean Economy Investment Tax Credits here.
Contamination and Hazardous Materials
Has the building/property been inspected by professionals? Are there any hazardous materials (such as asbestos or lead paint) that need to be carefully removed and disposed of? Are there any signs of soil contamination? All of these problems can be extremely expensive to deal with.
See case “Home Exchange (Alberta) Ltd. v Goodyear Canada Inc.” in which the plaintiff (Home Exchange (Alberta) Ltd. purchased a piece of commercial property from Cottonwood Developments Inc., which was originally owned by the defendant, Goodyear Canada Inc. After purchasing the property, the plaintiff spent $47,850.54 on the removal of the contaminated soil on the property, as well as backfill, and attempted to take Goodyear Canada Inc. to court to pay for that amount, plus an additional $4280.00 for the coordination of the project. Goodyear Canada Inc. was the owner of the property when the underground petroleum tank was decommissioned in 1978, when there were no regulatory guidelines for petroleum hydrocarbons in place at the time. The defendant never made an effort to hide the fact that there was contaminated material, and the plaintiff never had an environmental study done before purchasing the property, even though they had every right to. Due to these factors, the new owners of this property were found to be responsible for the costs of cleaning up the previous owners mess.
Renovations and Timeline
If substantial renovations are required in order for your business to begin operating, how long will these renovations take? Underestimating the scope of renovations needed can lead to spiraling budgets and missed deadlines. This is especially true if surprises like asbestos or lead paint are discovered during construction. Have you negotiated a Free Rent Period to help offset the money lost during the time that renovations may be occurring?
Hidden Overhead/Maintenance Costs
- Could deferred maintenance such as old roofing, plumbing issues or an outdated HVAC system lead to ongoing maintenance costs?
- How old is the building? Is there any damage to the structure(s)? Could either of these factors lead to increased/ongoing maintenance costs?
- Is this property in a flood zone, or in an area that could make it prone to natural disaster, such as a wildfire?
- It is important to note that all 3 of the above factors could make it very difficult and costly to properly insure the property
- Maintenance and service agreements: Are there existing service contracts? Are they reasonable? Could they be difficult and/or expensive to renegotiate?
Marketability and Appeal
Is the appearance of the building important to your business, and if so, does it have the correct aesthetic appeal? Is there space for the necessary signage and branding? Is there a lot of traffic (and eyeballs) passing by your signage on a daily basis? And if not, would that money on signage be better spent at a different location? Could money (spent on advertising) be saved in the long-term by choosing a property closer to a main road? Learn about Edmonton’s guidelines and regulations regarding different types of signs here.
Technology and Connectivity
Do properties in this area have access to high speed internet and telecommunications, if required?
Lease Smarter, Not Harder
By leasing the right space to begin with, you can avoid many common construction pitfalls, saving time, money, and frustration. Start your search with a clear understanding of your business needs and invest time in evaluating each property thoroughly. Partnering with experienced real estate agents and commercial general contractors can further streamline the process, keep you on time and on budget, and ensure you choose a space that sets your business up for success.
We encourage you to continue reading more Key Considerations by following the link to our External Factors below.
