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A Guide to Purchasing Commercial Real Estate in Toronto

Mon, 11 Feb 2019 18:47:14 GMT

Before you go ahead and sign any papers to purchase commercial real estate in Toronto, spend some time learning and understanding the market.

Investors in commercial real estate have to consider the following before they decide where they want to put their money:

Interest Rates

For the first time in 7 years, the Bank of Canada increased its interest rate in 2017. The interest rate set by Bank of Canada has a direct impact of the on the cost of taking out a variable rate mortgage as well as other loans.

Fluctuations in the Bank of Canada interest rates also influences the growth of corporations and consumer spending, which impacts the demand for both residential and commercial real estate.

Area Demographics

Gaining insights on area demographics is crucial to figuring out marketing dynamics before you make an investment in commercial real estate. Different demographic segments are attracted to certain locations so before you make any decisions, do study the neighbourhood.

For example, locations that attract families will have a demand for convenience stores, childcare facilities, eateries, etc. On the other hand, places with a large population of seniors will require healthcare facilities.

New developments will lure in more people and in turn lead to the growth of more commercial businesses like grocery stores, restaurants, cafes, support shops, etc.

Area demographics also serve as indicators for the following:

· Competition

· Federal and Provincial Tax

· Environmental Issues

· Investment Options

· Access to skilled labour

Keep in mind that the aspects listed above are constantly changing so you’ll need to update yourself regularly.

Once you have a strong grasp of Toronto’s commercial real estate market you can begin to look for listings that suit your requirements.

Commercial real estate properties in Toronto can be found through:

· Real estate listings: You can check out online platforms that carry information on recent listings.

· Real estate investment clubs (REI) : REI clubs are basically networking events that bring all kinds of real estate investors together. Members of these clubs get access to reliable resources, advertising material and even the opportunity to invest in commercial properties at wholesale prices.

· Approaching owners: Interested buyers have the option of contacting property owners directly. Note that most property owners work with real estate agents and will refer buyers to them, instead of handling transactions themselves.

· Real estate agents: It’s not just property owners who can hire real estate agents; interested buyers can use commercial real estate agents to find investment opportunities for them.

Pivotal Commercial Realty is an experienced commercial real estate brokerage based in Toronto. We help investors find lucrative investment opportunities in Toronto’s commercial real estate market. Contact us today at 800-908-6718 for more information.

Why is Canada’s Commercial Real Estate Market so Alluring for Investors?

Sat, 09 Feb 2019 15:00:55 GMT

Investors all over the globe think of Canada’s commercial real estate market as a safe haven. Even though there is some uncertainty about the rise of interest rates, the contrast between tight supply and growing demand for real estate in the country has been a driving force in the real estate market.

The commercial real estate market continues to be viewed positively by international real estate investors with Toronto and Vancouver being the most popular destinations. In 2018, Toronto was considered one of North America’s major real estate markets to invest in. In 2019, both Toronto and Vancouver are expected to be in the continent’s top 3 destinations.

The growth in commercial real estate is being pushed by the increased sales in office buildings. Even the political uncertainty between US and Canada did not hamper the success of commercial real estate in the country.

Major Markets

In 2018, Canada’s commercial real estate sector hit a record breaking $36.2 billion. This growth can be attributed to the increasing demand of industrial, office, retail, multi-family units and ICI land.

Those looking to invest in commercial real estate in Canada should consider Toronto, Vancouver, Calgary, Montreal and Ottawa. In 2017, most of the growth in the sector was driven by office buildings but in 2018, industrial real estate led the way.

In the near future, the demand for industrial real estate is expected to rise due to the increase of e-commerce business in the country that are looking to build fulfillment centers nearby for fast and easy delivery.

Looking Ahead

Canada’s steady economic expansion has set the foundation for more prosperity in the future. With unemployment rates being at an all-time low and people having more to spend, the demand for commercial real estate in the country will always exceed supply. As long the supply of commercial real estate in major markets remains tight, it will always make a lucrative investment.

In the meantime, property owners of commercial real estate will have to adapt according to the changes in the market. Owners of retail real estate will need to make serious upgrades to their spaces in order to attract customers and stay ahead of online businesses. Office spaces will likely have to be redeveloped to keep up the demands of a younger workforce that favours open concept offices and flexibility.

Are you interested in taking advantage of Canada’s commercial real estate market? Pivotal Commercial Realty can help by calling us at 800-908-6718

4 Key Disrupters in Commercial Real Estate in Canada

Fri, 08 Feb 2019 11:15:50 GMT

The commercial real estate market in Canada is continuing to flourish. However various factors are expected to make bring changes to the landscape in the future.

2018 proved to be a record-setting year for the commercial real estate sector in Canada due to an influx of new projects and high occupancy rates. With that being said, property owners are advised to monitor fluctuations in the market. Like all real estate, the commercial real estate sector of Canada is prone to disruption.

Let’s take a look at the key disrupters in commercial real estate in Canada:

Shared Workspaces

There has been a dramatic shift in the way people work in the country. Canada is experiencing a boom in the start-up community , many of which are led by Millennials.

Traditional office spaces are being replaced with co-working spaces that are designed to enhance collaboration, allow for greater flexibility and lower operational costs at the same time. Open offices are much cheaper than conventional cubicles. Younger professionals have found a way to work with limited office space.

Landlords can’t just lease out their building to select tenants, they have to redevelop their office space so it caters to the demand of the modern workforce. This can involve offering flexible suites or open concept office spaces.

Online Retail

For the longest time, the retail industry was wondering whether online shopping can actually replace physical stores. Physical shopping malls and boutiques may not have completely disappeared but they have definitely decreased; e-commerce retail is proving to be a major threat to traditional shopping outlets.

According to studies conducted by eMarketer , the sales of online retail outlets increased by around 30% in 2017 but industry experts have found that an omnichannel business model is most effective when in the retail sector.

Property owners in the retail sector should brace themselves for the shift in demand in the retail sector. There’s a need for property owners to work collaboratively with their tenants to create spaces that pull people out of their houses and into the stores.

The Growing Demand for Industrial Real Estate

Industrial real estate in Canada has the lowest vacancy rates (especially cities like Toronto and Vancouver) and the demand for industrial real estate is at an all time high. The need for industrial real estate in Canada is expected to rise in the very near future, so there’s a lot of potential for new developments in the sector.

E-commerce is the driving force behind the demand for automated distribution centers that provide quick access to major urban locations. For e-commerce businesses, quick response and fast-delivery are key differentiators.

Commercial property owners can protect themselves against fluctuating market conditions by diversifying holdings.

Digital Technology

The invention of digital technologies like lease management software can help property managers grow and manage their businesses more efficiently. They can also use virtual reality site tours allow them to reach out to new tenants.

If you’re interested in investing in commercial real estate in Toronto, contact Pivotal Commercial Realty. We’re office leasing agents, with a team that can assist you with site selection, negotiation, documentation and more. Call us today at 800-908-6718 for more information.

4 Ways to Add Value to Your Commerical Real Estate - Infographic

Wed, 06 Feb 2019 18:39:03 GMT

Following are 4 ways to add value to your commercial real estate!

Commercial Real Estate Agent - And What They Can Do For You

Wed, 06 Feb 2019 18:31:23 GMT

Following are the reasons to get a commercial real estate agent!

2019 is Expected to be Another Great Year For Commercial Real Estate in Canada

Mon, 04 Feb 2019 11:11:55 GMT

Canada’s commercial real estate market is expected to have another prosperous year thanks to the booming economy. The commercial real estate scene is benefiting from a tight supply and a reduced unemployment rate—the lowest it has been in 40 years!

The final statistics suggest that investment in commercial real estate in Canada reached a record high in 2018, beating CAD 36 billion of 2017.

Here are some of the highlights revealed from a 2018 study on commercial real estate in Canada:

Offices

· Vacancies of offices declined across most industries in Canada. This lowered the Canadian average to 11% by the end of 2018.

· The number of office spaces under construction almost doubled last year; they grew to 2 million sq m. The increase of office space in the country was led by Vancouver and Toronto. The added supply of office space will raise vacancies to 11.3% in 2019.

· Lack of space and soaring rents of downtown areas in major cities is expected to force tenants out of the city and into the suburbs.

Industrial

· At the end of 2018, vacancies in the industrial area plummeted to a mere 2.9% and are expected to decrease even more in 2019.

· Vancouver and Toronto witnessed the lowest vacancy rates of industrial real estate in all of North America. Vacancy rates for Vancouver were 1.5% and vacancy rates for Toronto were 1.3%. In 2019, Vancouver and Toronto are expected to list in the three tightest markets for industrial real estate in North America.

· In 2018, construction of industrial real estate grew from 14 million sq ft in 2017 to over 20 million sq ft.

Retail

· Real estate in retail has taken a bit of a hit as major chains have been forced to close down due to the increase of online shopping.

· Despite the rise of online shopping, discount and luxury retailers continue to grow. However, consumer spending is slowing down due to high debt and increasing interest rates .

· In 2019, landlords of retail real estate are expected to spend on making improvements to their properties. Large retail real estate spaces are expected to be converted or redeveloped to incorporate mixed-used elements like offices or housing.

Pivotal Commercial Realty has high hopes for the opportunities 2019 is going to bring to the commercial real estate environment.

If you’re looking to invest in commercial real estate ( retail , industrial or office leasing ) in Toronto, we can help you with site selection, negotiations, documentation and closing.

Call us today at 800-908-6718 for more information.

Warning Signs of A Bad Commercial Real Estate Deal

Thu, 03 Jan 2019 11:02:39 GMT

If you’ve invested in property before, you know exactly how nerve-wracking it can be signing an agreement with a seller. When it comes to real estate – especially commercial real estate – there’s a lot at stake.

A commercial or residential real investment property that goes bad affects your bank account and your portfolio. Overtime investors are able spot troublesome properties from a distance but investors that are just starting off have a hard time.

Newbies in the commercial real estate market should be on the lookout for the following warning signs:

Problematic Property

There are some properties that look like awful investments right away, others are better at hiding their flaws. At first glance, they may look great but after exploring the building in detail you may identify worrying details.

When investors are desperate, they often overlook warning signs. The sellers or real estate agents may convince them to invest in the property regardless of all its issues.

For buyers and investors, problematic properties rarely pay off; they become a burden.

If you find that your property was built on controversial land, is located in a bad neighborhood or has numerous structural and foundational problems, you should not proceed with the deal.

Bad Neighborhood

You may be offered unbelievable prices for properties in bad neighborhoods but is there really a point in investing in a commercial property that doesn’t attract businesses/customers?

Investors are advised to thoroughly investigate a neighborhood before making any commitments to a seller. It’s crucial to evaluate the sort of crowd that surrounds the property.

You can ask the authorities for statistics on crime rates and see what sort of traffic the neighboring buildings attract.

In addition to the location of the property, you’ll also need to pay attention to the property taxes of the area and accessibility of public transportation

Numbers that don’t add up

A property’s NOI is most important for a commercial property investor. Thankfully, there are a number of online tools investors can use to determine profitability of a property without spending a dime on it.

Put in your numbers and see what online tools have to say. Online tools are objective and fairly accurate; if they don’t show great numbers, you should not proceed with the deal.

It’s way too costly

Investors have a hard time turning away from investing in properties that look lucrative. With that being said, if the property is forcing you to dig into your life savings or cash out your portfolio, it’s simply not worth the risk.

Turn away from properties that are too expensive and go for ones that comfortably fit your budget.

Are you looking for commercial real estate in Toronto? Pivotal Commercial Realty assists investors and buyers with everything from site selection to setting a commercial real estate strategy. Call us today at 800-908-6718 for more information.

Canadian Commercial Real Estate – A Seasoned Investor’s Best Kept Secret

Wed, 02 Jan 2019 10:51:51 GMT

Politics today isn’t too different to a circus. World leaders have resorted to making extravagant promises to win votes and later are hit with reality.

Because the business climate is so volatile at the moment, investors have turned to the one industry they can rely on – Canadian commercial real estate.

Despite keeping a low-profile, commercial real estate has been that one industry that property investors can count on. It presents numerous investment opportunities that have proven to be lucrative year after year. In September 2018, commercial real estate investments reached a record high in Canada.

In an industry that is so cluttered, it can get tough to differentiate between facts and rumors. The truth of the matter is that commercial real estate in Canada has been rewarding investors for decades and today when the US market is experiencing political upheaval, Canada has become a safer alternative.

If you’re looking for prosperous investment opportunities, here’s why you should look into commercial real estate:

1. Strong Economic Conditions

The Canadian dollar is slightly undervalued so foreign investors from countries are able to accrue an exchange benefit that they wouldn’t get from investing in other countries. Like in other countries around the world, interest rates are expected to increase in the coming years but the Bank of Canada has stated that the increments will likely happen slowly.

2. Multi-Cultural Country

Canada is known for its diversity. According to statistics, about 40% of the residents of Toronto were born outside the country. In such a diverse country where every other individual has a different background, foreigners are bound to feel at ease. Assimilating to Canada is much simpler than it is to adapt to other countries around the world including the USA.

Foreign investors can easily educate themselves about socio-economical conditions in the country.

It helps for new investors to stay updated with major trade deals the country is involved in such as the USMCA aka “the new NAFTA” to have an idea about the major policies.

3. Stable Political Climate

Political turmoil hasn’t yet caught up with Canada and there’s a good chance that the country weathers the storm happening in other parts of the world.

As of yet, Canada’s political climate remains stable. Canada’s leaders have always valued stability and this will probably continue in the future too.

Compared to the US and countries in the Europe, Canada is a safe haven for residents, businesses and investors too.

Want to take advantage of commercial real estate in Toronto, Pivotal Commercial Realty helps buyers with everything from site selection to setting a commercial real estate strategy. Call us today at 800-908-6718.

4 Ways to Add Value to Your Commercial Real Estate

Tue, 01 Jan 2019 10:32:20 GMT

Commercial real estate presents great opportunities for investors. The increase of small businesses has further boosted the commercial real estate market.

Before putting their money down for a commercial property, investors should formulate a strategy to gain profit from the property and to enhance its value.

Investors can grow the value of your commercial real estate with the following tips:

Make Improvements that Count

Investors can opt to make cosmetic improvements and substantial improvements.

Cosmetic improvements consist of new flooring, carpeting, painting, landscaping and more. When you’re renting out property, it’s imperative that you maintain the building and invest in cosmetic improvements regularly.

Substantial improvements include building a storage space, adding an extra elevator, additional kitchens/ bathrooms, etc.

If your intention is to sell the property then there’s no need to spend money on substantial improvements. The buyer may have a vision in mind for the property so it’s better to give them the opportunity to modify it according to their needs.

Offer Rentable Square Footage

A large commercial property can be rented to multiple tenants based on its square footage. Usable square footage refers to all the wall-to-wall and door-to-door space available on a property can that can actually be used by businesses.

Bear in mind that shared spaces like storage rooms, rest rooms, stairs, lobbies, etc. are not counted as usable square footage.

You can monetize square footage by renting out portions of the commercial property to various businesses. The owner of the property will have to accommodate each business; however, they also receive better returns.

Add Personality

Even commercial buildings can’t afford to be dull and boring today. You can design and decorate the interior and exterior of your property based on the sort of tenants you want to attract.

Everything from the flooring, lighting to the furniture will help to add personality to your commercial real estate.

Adding cost-effective amenities such as a daycare, free WiFi, an outdoor sitting area, etc. will increase the value of your property substantially.

Make Investments that Reduce Expenses in the Long-Run

Some investments seem incredibly expensive upfront but help reduce expenses in the long-run.

For example, since green buildings are growing in demand, it will help to make modifications on your property that make it more energy efficient and environmentally friendly.

Enhance Security

Business owners want their offices and shops to be safe. Enhancing the security system of your building allows you to charge higher rates for your usable space.

Are you an investor looking for commercial real estate in Toronto? Pivotal Commercial Realty helps buyers with site selection, lease negotiation and commercial real estate strategy. Call us today at 800-908-6718.

Commercial Property Real Estate Inspections – Everything You Need To Know

Mon, 31 Dec 2018 12:41:37 GMT

Whether you’re a small business that is just starting out or a large corporation that has been ruling the industry for decades, choosing a location to run your operations is exciting. But before you sign an agreement for a commercial property, you should set up a formal inspection for the property to ensure that it’s the best place to run your business.

A property inspection brings forth any problems the commercial space may have and helps you determine whether it’s a worthy investment.

In Canada property inspectors are supposed to be licensed. There’s no central agency that overlooks property inspections in Canada but interested buyers are expected to consult a licensed property inspector before entering a commercial real estate contract.

A commercial property inspection should cover the following at the least:

Accessibility: This includes emergency exits as well as wheelchair access
Exterior: This consists of the parking lot, sprinklers and drainage
Interior: This includes lighting, ceilings and windows
Internal systems: This covers HVAC, electric circuits and plumbing

Inspecting the Structure of a Commercial Building

Foundation & Roof

The foundation and roof can be considered the most important part of the inspection because they’re a safety hazard.

The inspector should look for any cracks present in the foundation, signs of water damage and distorted walls. Major issues like these are red flags; they indicate possible problems you may face in the future.

Exits, Stairs and Parking Lot

Other structural problems include blocked emergency exits, crumbing stairs and a parking lot covered in potholes.

Electrical Wiring

Faulty electrical wiring also presents a major safety hazard. Property inspectors have to check for old wires that are fraying, electrical outlets that don’t work and broken or damaged cables.

Windows and Doors

Windows and doors have to be checked for possible drafts and leaks.

Selecting an Inspector

It’s best to work with an inspector who’s experienced. You can check out Canada’s Commercial and Home Inspector Association (CanNACHI). Take a look at the candidates and pick a candidate who has proven experience in inspecting commercial buildings. You can verify their license numbers and even ask for references if you want to stay on the safe side.

If major problems surface during the inspection, you should turn away from the transaction until they are addressed by the seller. A reputable inspector can keep you from making a bad decision that can cost you heavily.

Are you looking to buy commercial real estate in Toronto, contact Pivotal Commercial Realty.

Why a Residential Real Estate Agent May Not Be the Best Choice for Your Commercial Real Estate Needs

Wed, 19 Dec 2018 12:11:58 GMT

Setting a new record for commercial property deals in Canada with over $43 billion in transactions in 2017 , commercial real estate today is steadily on the rise. When dabbling in commercial real estate, you might have considered just asking your real estate agent to help you with the process. Stop! That might be a terrible idea and we’ll tell you why!

Here are some of the most major differences between a commercial and residential real estate agent that could make all the difference between a successful and unsuccessful deal:

Education and Training

While both residential and commercial real estate agents require a special license granted after completing and passing specific courses, usually a high school diploma is all the formal education required for a residential agent.

A commercial real estate agent, however, is required to have formal university education in either business or finance and have better, more extensive knowledge of business terminology, market trends and real estate terms such as gross rent multiplier, capitalization rate and more. This, in turn, means a specialized commercial real estate agent will be able to help you make better decisions when purchasing properties costing hundreds of thousands of dollars.

Specialization

A commercial real estate agent is used to handling large properties as well as smaller residential properties. From shopping centers, apartment buildings and office spaces to locations for small business start-ups, commercial agents constantly dabble with expensive properties for well-known retailers. This leaves no room for error, and explains why a more extensive training through mentorship programs is required to become a commercial real estate agent.

Industry Knowledge

Commercial real estate agents are expected to stay up to date with both the housing market and the general real estate market, capitalization rates for particular properties, past profits and losses for the property, demand and supply of properties in certain areas as well as have access to unlisted properties. A college degree in business sure comes in handy now!

Over years of working in the industry, a successful commercial real estate agent will be able to build industry connections and relationships, which can further help you get better financing options with lower interest rates, find properties in locations where your business meets city zoning codes and get you in touch with potential buyers if you’re selling property.

With over a decade of experience in the commercial real estate business, we at Pivotal Commercial Realty have successfully closed over $100 million worth of commercial real estate deals and over one million square feet of leased land since our inception. Housing some of the best commercial real estate agents in Toronto, Canada, we provide clients with everything from real estate consultancy to site selection and buying and selling of commercial real estate assets.

How to Get the Highest Price When Selling Your Commercial Property

Thu, 13 Dec 2018 12:57:16 GMT

Contrary to what you may have previously believed, selling a commercial property is nothing like selling a house! While the house selling process may be fairly easier and can often be done by anyone with basic real estate knowledge, commercial real estate requires a lot more attention to technicalities. This is also the reason why you need a formal university degree in finances and professional training before you can successfully sell a commercial property!

The first step of the process, choosing your listing price is rarely just any figure plucked out of thin air. There are a number of factors that can raise or lower the listing price of your property, some of which we’ll discuss here:

Location

Remember the old adage in real estate: Location, location, location. Everything from the safety of the area your property is in and its accessibility to its actual physical location pay a major role in the final asking price you can list. The more desirable the location of your property, the higher it will sell for. However, this does not always mean that a property in a less desirable place of town will never sell!

Condition

The final listing price of your property may be dependent upon its age and history. Generally, newer built buildings sell for a higher price but properly maintained, upgraded old buildings may be able to get you just as much—if not more than—as a newer building. However, if your building is associated with negative events—burglaries, fires or bankruptcies—it might affect the final asking price of your property.

Remember: the better you maintain your property from the get-go, the higher an asking price you can attach to it when reselling.

Market Conditions

Supply and demand is key when buying or selling commercial property. The higher the supply and lower the demand, the less a property will sell for. Conversely, if you’re selling at a time when demand is high yet supply is low, you might be able to get a higher asking price than you would have at any other point in time. Additionally, depending upon market trends, specific properties may be more in demand at specific times and sell for higher.

Long story short, enlisting the help of a professional commercial real estate agent to accurately conduct a comparative market analysis (CMA) will help you determine the right time and listing price for your property.

Get the expert opinion by contacting us at Pivotal Commercial Realty, the leading commercial real estate brokerage in Toronto, Canada. Having successfully closed over $100 million worth of commercial real estate deals, and over one million square feet of leased land since our inception, we can provide precise support in site selection, establish a commercial real estate strategy and help you select a valid listing price.

Get in touch with us today to book one of the top realtors in the country.

Tips To Increase the Value of Your Commerical Property

Sat, 08 Dec 2018 08:13:01 GMT

These are some useful tips to help you increase the value of your commercial property.

Selecting the Right Office Building: What You Need To Know

Sat, 08 Dec 2018 08:06:02 GMT

Whether you’re expanding your business and need a larger office space or are starting up a new business altogether, several factors play a part in whether the place satisfies your business needs. From looking at the location of your future space and determining safety and accessibility to paying attention to zoning codes of your city, the whole process can get quite daunting.

Luckily for you, here we have a short list of some of the most important factors you need to keep in mind when selecting an office space:

The Location

The first and most important factor: the location of the place. Look for a property that’s in an easily accessible part of town, both for your clients and your employees. Safety is paramount; you want to ensure your clients feel secure enough to return to your business, so having an office in a crime riddled part of time will affect your brand image and revenue. Also consider accessibility to coffee places, recreational facilities and gyms to keep both staff and clients happy.

City zoning laws may also prevent specific businesses from holding operations in particular parts of the city. Commercial properties in residential areas are rarely allowed, so make sure to find out the areas’ particular zoning codes before making your purchase!

Remember, if the price seems suspiciously cheap for a fairly good property, there’s likely a reason behind it!

The Building

Your employees are going to be working in your office space for more or less 8 hours every day. They want a place that’s roomy, secure and free from burglaries, break-ins and any other kind of crimes. On the other hand, the first impression a potential client will have of your business will actually be based on your office space! As such, if your office is in a shared location with multiple other firms, it might help to know who will be managing the building and front desk itself.

The Office Space

A cramped, noisy office space may reduce productivity. As a general rule, your office space should have a minimum of 70 square feet per person, though this may change depending upon your business’s individual needs and your budget. You also want to keep a little extra room in case you plan to expand in the next few years or you’ll have to go through the process all over again!

A business that requires high levels of concentration from its employees with an office in a busy, noisy neighborhood without proper soundproofing could prevent your employees from working as well as they can.

Get In Touch With Toronto’s Leading Commercial Brokerage

A full-service commercial real estate brokerage, Pivotal Commercial Realty houses some of the best CRE agents in the city, and has been helping customers make better real estate decisions for well over a decade. We have successful transactions in more than $100 million worth of commercial real estate, and over one million square feet of leased land since our inception, truly earning our place as a leading brokerage of Toronto.

What a Commercial Real Estate Agent Can Do For You

Wed, 05 Dec 2018 18:23:48 GMT

Whether you’re a beginner in the commercial real estate world or a seasoned veteran, having a commercial real estate agent helping you along the process of purchasing your dream property will save you from making some very costly mistakes. From helping you secure mortgage loans to everything from site selection, lease negotiations and discovering the best investment opportunities, a commercial real estate (CRE henceforth) agent may be your best bet at making a smart investment!

Here are a few ways in which hiring a CRE broker may be able to benefit you:

Time-Efficient

The amount of time you spend sifting through listings and looking for the perfect investment opportunity will be cut in half with the help of a dedicated CRE agent, saving you precious time better spent elsewhere. The right CRE brokerage will know exactly where to look, what to look for and will be able to provide you with more options that suit your particular needs than you would have been able to find yourself.

Industry Experience

Searching up properties, negotiating leases, and facilitating smooth transactions every day for a living, CRE agents build relationships and connections in various places. These then help you get access to unlisted properties, more financing options with lower interest rates, or even with zoning compliance. Extensive industry experience ensures they keep up with market trends, comparable building prices in particular areas and industry-specific resources when looking at properties.

Qualifications

While a residential real estate broker or agent might require a license to continue working in the profession in Toronto, a CRE agent usually requires formal, extensive training and university degree in finance. A CRE agent is usually more than capable of handling all kinds of business maths, and can provide you with accurate, calculated figures for your potential property and its future income value.

City Zoning Familiarity

Every major city in Canada follows a specific set of laws regarding coding zones that prevent certain business types from operating in certain areas. Imagine paying a hefty price for a property, only to find that you’re unable to use for business purposes because it doesn’t fall in the area’s zoning code! A professional CRE agent will be well-versed in Toronto’s various zoning codes, protecting you from making terrible real estate decisions.

Get In Touch With Toronto’s Leading Commercial Brokerage

A full-service commercial real estate brokerage, Pivotal Commercial Realty houses some of the best CRE agents in the city, and has been helping customers make better real estate decisions for well over a decade. We have successfully transacted in over $100 million worth of commercial real estate, and over one million square feet of leased land since our inception, truly earning our place as a leading brokerage of Toronto.

How the Equity Multiple Works in Commercial Real Estate

Mon, 05 Nov 2018 11:58:36 GMT

Purchasing commercial real estate is completely different to buying a house for one main reason—the investment is sufficiently higher.

Buying commercial real estate requires the use of various metrics for investor analysis; one such metric is the Equity Multiple

What Does Equity Multiple Refer To In Commercial Real-Estate?

The equity multiple happens to be a crucial and effectual financial metric that is commonly used in commercial real estate. The purpose of the equity multiple is to compare the amount of cash that was invested to the amount of money that particular investment generated during a specified period of time.

How Is The Equity Multiple Calculated For Commercial Proper ty?

Use the below formula to calculate the equity multiple for commercial properties:

Equity Multiple= Total Cash Distribution /Total Equity Invested

Consider the following example:

If an investor buys a commercial property for a price of $4million and received a net cash flow of $300,000 annually and then decides to sell the property for $4million 5 years later. They’re equity multiple will equal 1.37.

$300,000 5 years + $4 million = $5.5 million/$4 million = 1.37

Basically, for every $1 that was invested, the investor could expect to get a return (before taxes) of $1.37 after the completion of 5 years.

Equity Multiple Vs. Cash On Cash Returns

There’s little difference between equity multiple and cash on cash returns. Cash on cash returns are calculated as a percentage value which is expressed on an annual basis. Equity multiple is usually calculated for a multi-year period that incorporates the sale value of the property (when the investor sells it) in to the calculation.

Cash on Cash Returns

Use the following formula to calculate cash on cash returns.

Cash on Cash Returns= Total Cash Distribution (NOI) /Total Cash Investment

If we had to calculate the cash on cash returns for the above example over the course of the year, we would get:

$300,000/$4 million = 7.5% Cash on Cash Return

For a period of 5 years, we would have to multiply this number by 5. We would get the following:

7.5% × 5 years = 37%

We’ll then have to add 1 (to represent the sale of property at $4million) and we’ll get 1.37 – the equity multiple of property.

For more information on equity multiple and how it is used consider asking your commercial real estate agent for assistance.

Contact the expert real-estate agents of Pivotal Commercial Realty, Inc in Toronto. We’ll be happy to help you in any way we can.

A Guide to Becoming a Successful Commercial Real-Estate Agent

Mon, 05 Nov 2018 11:58:34 GMT

Thriving as a commercial real-estate agent requires a lot of dedication to the field. If you’re entering the field under the presumption that you’ll make money quickly in a minimal amount of time, you’re very wrong.

Working as a commercial real-estate agent requires a whole lot of work and even more perseverance. Without the right set of soft skills and work ethic, it becomes impossible to flourish in such a dynamic field.

If you’re interested in becoming a successful commercial real-estate agent, here’s what you need to think about:

Income

A commercial real-estate agent’s salary is primarily based on commissions. There are large real-estate firms that provide a basic supplemental salary and may even let guarantee a small amount of money for every sale but generally a commercial real-estate agent’s salary comprises of commissions.

Just like a residential real estate agent, commercial agents take around 3% of the closing amount as fee. Most brokerages usually will receive 35–40% of the fee while the agent keeps the rest.

Bear in mind that commercial real estate deals don’t close as fast as residential real estate deals; it can take up to a year to negotiate price, secure financing, sign documentation, close escrow and obtain ownership.

Compared to purchasing property, leasing transactions do take less time but for the real estate agent to receive commission, they’ll have to wait until the lessee assumes tenancy.

A commercial real-estate agent needs to get used to the idea of receiving paychecks irregularly. They’ll need to get comfortable with receiving paychecks irregularly; it can be months before they get paid for a sale they closed now.

Successful commercial real estate agents have a financial cushion that they can rely on for year’s worth of expenses. These funds are very important at the prime of your career when you have limited connections in the business and finding clients is tough. The financial cushion also comes in handy when the market isn’t doing well.

Personal Qualities

Real estate agents of any kind have to have to be superb salesmen. As you progress in your career, you’ll build a network of power players in the market consisting of competitors and potential clients.

As a commercial real estate agent, you’re expected to seek out leads. Get ready to introduce yourself in corporate gatherings and pass along business cards. Real estate agents are expected to be socially confident, persistent and incredibly patient. They need a level of charm and charisma to win over complete strangers as their client.

If you think you have what it takes to be a thriving commercial real-estate agent in Toronto, email us your resume . At Pivotal Commercial Realty, we’re always looking for new talent to join our team!

What You Need to Know When Looking For a Commercial Real Estate Agent

Fri, 02 Nov 2018 10:24:57 GMT

Your Guide to the Commercial Real Estate Closing Process

Fri, 02 Nov 2018 10:14:37 GMT

Commercial real estate closings are very different to closings of residential real estate since they are comparatively more extensive in procedure. They consist of many more parts and negotiations can take up to a year and sometimes longer.

Commercial real estate contracts don’t have as many protections for buyers which means there is more room for negotiations.

Here’s a quick layout of the various steps in closing a commercial real estate sale:

Escrow

During this phase of the process an impartial external party will hold the money until all the conditions of the escrow have been met or until one party decides back out of the deal.

The escrow is essentially an extra measure taken to address possible trust issues between the buyer and the seller. Until the terms of the seller and buyer are met, the escrow does not release the money.

Because the money in a commercial real estate transaction usually comes from multiple sources, the escrow is more controlled. In most commercial real estate dealings, the title agent is also the escrow agent.

Prior to capital being credited to the escrow account, both parties need to decide on the terms and conditions that need to be fulfilled in order for the escrow to release the payment.

Legal Entities and Authority

It’s normal for commercial real estate transactions to involve multiple entities as opposed to just two; these deals are also much more expensive than residential real estate transactions. Because there is so much money involved in these transactions, all parties aim to limit liabilities by creating legal entities solely for the purpose of commercial real estate transactions.

LLCs and LLPs take major risks when purchasing commercial real estate so it’s important to protect the buyers and sellers from losing personal assets or other properties.

Since specific people will be signing on behalf of authorities, documents will need to be handed in to prove that the papers are being signed by the correct individual. If either party fails to submit the needed documents, the escrow capital should not be released.

Due Diligence

In commercial real estate dealings buyers are usually looking to extend the time they are given to get out of the deal, while sellers are looking to limit this time.

These measures will be finalized in the due diligence process.

Buyers should check the following when purchasing commercial real estate:

· All tenant estoppels are delivered

· Confirmation of zoning compliance

· Outstanding taxes and or liens are paid off

· Review the seller’s books and records

· The contract is executed properly

· The due diligence deadline and termination notice conditions are correct

· They are given a receipt for the most recent title insurance policy

· They have a copy of the environmental review report

· They have an updated survey report

· They have true copies of all leases

Sellers will have to look out for the following:

· Assignment and assumption of leases were completed by the buyer

· Objections of the survey report and title have been addressed

· The conditions of the contract have been executed

· The down payment is delivered on time

Title & Closing Work

Both parties will have to agree on the title report and meet the terms of the closing documents (assumption of leases, environmental reports, deeds, warranties, zoning disclosures and assignment of liability).

Once all issues have been addressed and resolved, the final title report is generated and given to both parties for approval.

Because the closing process is so complex, it’s advised that buyers have a reliable commercial real estate agent to guide them through the paperwork.

If you’re looking to buy commercial real estate in Toronto, contact Pivotal Commercial Realty.

The Essentials of Commercial Real Estate Sale and Purchase Agreements

Fri, 02 Nov 2018 09:58:42 GMT

The sales contract for a commercial real estate is complex. There are no real rules as to how long a commercial real estate contract must be or what it should be contain; some CRE contracts are just a page long and others can be made up of more than a 100 pages.

With that being said, there are provisions for both the buyers and sellers, that are included in most commercial real estate purchase agreements.

Before we delve into the essential provisions of the CRE agreements, let’s take a moment to understand their purpose.

What does the CRE purchase agreement do? Why is it needed?

Purpose of CRE Contracts

A CRE contract has various purposes. Firstly, it clearly states the rights of both parties’ obligations, liabilities and rights. It clarifies the steps that need to be carried out to finalize the agreement and close the transaction.

Generally people are inclined to make CRE contracts concise and simple but a contract that is thorough, with a long list of provisions that address as many issues as possible, is a lot more reliable in times of conflict.

Contract Form, Negotiation & Drafting

The seller’s lawyer usually prepares the first draft of the CRE agreement. Once the agreement is ready, it is shared with the buyer for input.

The contract will go back and forth between both parties until they agree on a final document. The final CRE agreement will include the below provisions, however, each one will be customized for the sort of property and the deal.

The more complicated the transaction is, the longer the negotiation will take.

Common Sale & Purchase Provisions in CRE Contracts

The contract will begin by identifying both parties and as well as the effective date. This will be followed by the “Whereas Clauses.”

1. “Whereas” Clauses

“Whereas” clauses are sometimes called “recitals”; they aren’t considered a component of the operative provisions of the contract. If any of the party’s wishes a “whereas” clause to be binding, it needs to be removed from the “whereas” section and inserted into the body of the contract.

2. Property Description & “As-Is” Term

On a CRE contract, the property can be defined in three ways: real, personal and other.

Descriptions of real property provide details of the land and a list of improvements that will be transferred to the buyer.

Descriptions of personal property will contain specific details of the specific parts of the property that are being sold (in case the seller decides to keep part of the property). The more detailed and itemized the list is, the better it is.

Other property interests refer to contract rights, lease terms, intellectual property, licenses and warranty.

3. Transfer Documents (Assignments, Deeds, Bills of Sale)

All property types are transferred via various instruments that consist of the following:

i. Deeds:

There are several types of deeds and each provides a different amount of protection to the buyers. The contract will state the type of deed that is going to be used in the transaction.

Here’s a list of the deeds that can be used, going from the one that offers maximum protection to the least:

General Warranty Deed
Special Warranty Deed
Fiduciary Deed
Quitclaim Deed

The buyer should speak to their commercial real estate agent about which deed is best for their situation.

ii. Assignments

A seller will convey their interests in contracts, leases, permits, licenses, intellectual property along with other items. The buyer will determine whether or not the stated items are assignable and if they would like to assume them. If they do, the seller transfers all interests listed in the assignments during closing.

iii. Bill of sale

If the transaction involves personal property then a bill of sale will be used. It will also list all transferable items.

4. Purchase Price, Adjustments & Earnest Deposit

The purchase price of a CRE agreement is usually a set figure which is subject to adjustments during closing. In some cases, the purchase price is based on sq. ft.

The contract will state the adjustments that will be made to the purchase price during closing. They usually include real and property taxes, expenses, rents and security deposits and assessments.

The contract will define who will hold the deposit; usually it’s the title insurance company.

5. Buyer’s Contingencies

Buyers don’t know everything about a property until they actually begin using it. The contract will give buyers a certain amount of time to review parts of the property that are important. During that time if the buyer is unsatisfied with particular items they give the seller a chance to fix them, accept them as it is or terminate the contract.

This part of the CRE contact will also contain the following:

Buyer Financing
Title Review
Survey
Inspections
Commercial Tenant Leases
Property-related contracts and expenses
Land-use Approvals
Environmental Review

6. Default Provisions

The agreement will state what will be considered “default”, how an uncured default and termination of contract will be handled.

The contract will also contain a method of resolution in case a conflict arises or if the contract is breached in some way.

7. Seller Representations & Warranties

If the seller is making representations and warranties, they need to be clearly mentioned in the contract.

8. Continuing Management, Insurance, Damage to Property

The buyer will need to ensure that the property hasn’t been damaged during the negotiation process. The property, at closing, should be in the same condition as it was when the buyer first entered the contract.

The buyer will demand that the seller maintains, leases and insures the property properly and does not make any changes to it without consulting them.

9. Broker Involvement

This part of the agreement will name all brokers and state who is responsible for paying them.

10. Boilerplate Provisions

Most CRE contracts will end with a few pages of “boilerplate provisions”.

These usually include the following:

attorneys’ fees
dispute resolution
entire agreement clauses/merger
force majeure
forum selection/jurisdiction
governing law/choice of law
notice provisions
involved parties, signature blocks, etc.
the definition of the property

11. Closing

The Closing section will state when and where the closing will take place. If the closing doesn’t happen on the mentioned date the buyer has the right to terminate the contract.

During closing the following documents will be exchanged:

Assignments and assumptions
Bills of sale
Title insurance policies
Transfer deed
Other related documents demanded by the title insurance company.

These are just the essentials of the CRE contract. The purchase agreement is extensive and it helps to have a trusted commercial real estate agent in your corner to ensure your interests are protected.

If you’re looking to purchase commercial real estate in Toronto, contact Pivotal Commercial Realty to connect with reliable and experienced commercial real estate agents.