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| Sep 30 2007 | Richmond Commercial Property Market
Leasing Activity
Retail Leasing Activity:
Demand for retail space in Richmond is still strong in the neighbourhood shopping centres that are anchored by supermarkets & drugstores. Retail space demand in the Town Centre of Richmond has been steadily incresing since 2005 despite current construction of the Canada Line (Skytrain) along No 3 Road, although a few Centres are experiencing slower re-leasing, but should be temporary.
Retail lease rates are increasing in the neighbourhood centres since 2005 in the range of $25.00 per square foot per annum to a high of $35.00 per square foot per annum, plus the operating cost range of $9.50 per square foot per annum to $12.00 per square foot per annum.
Town Centre lease rates range from a low of $20.00 per square foot per annum to a high of $45.00 per square foot per annum. There are numerous older existing retail centres in the Town Centre that have demolition or re-development clauses in the Leases will affect the retail lease rates downward.
Office Leasing Activity:
The demand for Office space in the Town Centre has improved over the past several months. More office space opportunities are available in the established office business parks located in East Richmond as opposed to the Town Centre of Richmond, although lease rates are slightly lower than in the past few years. In the Town Centre office space comprises of Class A , B & C categories, with potential view space found in Class A. The Town Centre provides numerous financial and other commercial services where the office business parks provide larger single floor plates and easier accessibility from outside of the Richmond area (eq. highways, parking, more landscaping)
Office lease rates have been more stable in the Town Centre and in the office business parks due to better demand than in pre - 2006 demand. The Town Centre lease rates range from a low of $10.00 per square foot per annum for Class C type space to $14.50 per square foot for Class B type space and finally $16.00 + per square foot per annum for Class A type space. Operating Costs will range from a low of $10.00 per square foot per annum to a high of $15.00 per square foot per annum within the Town Centre, and lower in the office business parks.
Warehouse Leasing Activity:
The demand for warehouse space is still strong in the Richmond area, especially for newly developed large logistics and tech space in excess of 20,000 square feet with high ceilings. Vacancy is low in the newer buildings that maintain high ceiling heights (min 22 foot range). Older and dated warehouse buildings close to high traffic areas in the 15,000 to 30,000 square foot range are not experiencing as much demand, and are very competitively priced in around $7.00 per square foot range, although higher for new buildings.
Warehouse lease rates range from a low of $6.00 per square foot per anunum to a high of $8.00 per square foot per annum, subject to floor size and office component. The operating costs are in the range of $3.00 per square foot per annum for warehouse, slightly higher if substantial office component included.
| | Sep 30 2007 | Determining The Monthly Rent From Quoted Per Square Foot Minimum Rent:
If the Minimum Lease Rate (Basic Rent) is $20.00 psf pa (Per Square Foot Per Annum), you then multiply this by the floor area of the Premises (Unit), for example : $20.00 psf pa X 1,000 Square Feet Floor Area = $20,000.00 Minimum Lease Rate Per Annum. To determine the Minimum Monthly Lease Rate (Basic Rent), then divide $20,000.00 by 12 Months, for example $20,000.00 / 12 Mo = $1,666.67 Per Month. The Minimum Monthly Rent is then $1,666.67 Per Month (Basic Rent) | | Sep 30 2007 | Glossary of Commercial Real Estate Terms :
Minimum Rent : the quoted rental rate not including taxes and operating costs. Sometimes referred to as "Base" rent, or "Net" rent.
Operating Costs : the quoted rate of expenses apportioned to the premises occupied by the tenant, that includes items such as property taxes, property insurance and common area maintenance. Sometimes referred to as "Common Area Maintenance (CAM)", or "Additional Rent" or "Triple Net Charges".
Deposit : The amount to be paid by a tenant to secure a Lease for a premises. The amount is usually based on the total amount of the first months Minimum Rent & Operating Costs (including GST) and a last months Minimum Rent (including GST) or instead of a last months Minimum Rent, a Security Deposit based on an agreed amount to secure the Lease based on a number of factors (without GST)
Lease Terms : the amount of time the Lease for the premises will run for. Usually it is 3 years or 5 years in duration. Sometimes there will be extensions of the Lease Terms - this is referred to as Options To Renew.
Subject Conditions : these are common in Offers To Lease or any interim lease agreements whereby both the landlord and the tenant need to verify certain requirements after negotiating the basic terms of such Offers To Lease or interim lease agreements. Sometimes there will be Subject Conditions for the Landlord to, 1) approving the credit worthiness of the tenant, or 2) approving the detailed use and improvements proposed by the tenant. For the Tenant, 1) approving the form and content of the Landlords final lease, or 2) approving final inspection and proposed costing of Tenants improvements for the premises.
Floor Area of Premises : this can be determined a number of different ways depending on if the premises are used for retail, office or warehouse uses. Standard measurement method is BOMA.
Most common measurement of premises is determined from the exterior outside wall and common area walls, to the glass of any storefront, to the middle of walls to adjacent tenants.
Net Rentable Area : The gross building square footage minus the elevator core, flues, pipes, shafts, vertical ducts, balconies and stairwell areas. |
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