Many entrepreneurs aspire to purchase or construct their own building. The prime reason many are not successful in purchasing their picture-perfect property/building is because the space is not for sale. Many locations that are perfect for a business are already owned by a landlord who wishes to lease his property, not sell it. But, the success for any business can be determined by location! It may be more beneficial to lease a space in an excellent location than to buy a space where the location is not ideal for your business.

When viewing commercial properties, it is important to use your time wisely. John Mattiello and Associates will ensure that you view properties that will be functional for your business. The size, layout, and appearance should all tie in with the ideal location you have chosen for your business.

Buying real estate is a costly undertaking, and business owners need to exercise due diligence every step of the way. Without proper planning, entrepreneurs can face a host of problems, including inadequate financing, unexpected construction costs, inefficient layout, and environmental lawsuits.

Although real estate costs have shot up in recent decades, it is still usually better to buy than to rent. When you rent, you will be faced with rent increases, but when you buy the property may appreciate in value. Plus, a buyer can deduct the value of a loan, mortgage interest or depreciation in the value of a building from company taxes—something that can't be done when renting.

Here are five key issues to consider for making a successful acquisition.

1. Understand the local real estate market
Before making a decision on what to buy, entrepreneurs should pay heed to where they're buying. Each local market has its own tax rates, land inventory, and environmental issues. The supply of skilled labour in the area also needs to be considered.

2. Get your financing in order
Affordability is a big issue in commercial real estate today. Before you go to a bank, work with an accountant to determine your budget. Bankers will want to see high-quality financial statements and evidence that the profits you generate are being retained by your company. All of this will play a big role in determining whether you get the commercial real estate loan you want.

Shop around for the best financing package. The interest rate is important, but it’s not the whole story. Other factors, such as what percentage of the purchase a financial institution is willing to finance are equally, if not more, important.
Resist the temptation to sway lenders with overly optimistic forecasts—payment problems down the line can boost costs and reduce your manoeuvring room.

3. Get expert help with tax issues
Tax implications can be complex in real estate transactions. That’s why it’s smart to consult an accountant who knows the ins and outs of real estate deals.

He/she will be able to tell you, for instance, whether the purchase should be considered a corporate or personal transaction. Other issues include succession planning, transition financing, and decisions about how assets will be broken up when the business is sold.

4. Plan your layout well
Whether it's an existing building or one you’re renovating, layout has a major impact on operational efficiency. That’s why it’s often a good idea to hire an operational efficiency expert to advise you on how to optimize your layout.

5. Choose the right builders
Look for quality builders who have a good reputation and are responsive to your needs. Key traits of good builders include experience, timeliness, and a knowledge of your industry.

For example, if your building must meet food-industry standards, your builder should have expertise in that sector. A builder's financial history should also be considered. You don't want a situation, for example, where a contractor is taking your deposit to fund a previous job where they ran out of money. If you have any doubts, do a credit check.

It may be a difficult time to be in business, but it's a good time to find a new space for a business. As with housing, there is a glut of commercial real estate on the market. Two years ago, it was a whole different market. A commercial lease is a long and complex document, and negotiating one can be daunting. A prospective tenant has a great deal of leverage. It has always been true in principle that everything in a lease is negotiable, now, it's true in practice too.

1. Set Terms; Get Free Rent
Negotiate the term, or duration, of the lease and the rent you will pay, which is usually figured per square foot. Leases typically include an option to renew at the end of the term, at either a specified rent or "prevailing market conditions." Small-business advisers generally recommend the shortest term possible: one-year, with as many as 10 one-year renewal options. One advantage of doing this is that your business won't be trapped in a space if things don't go well; or if things go so well that the business needs more space. A disadvantage is that landlords are less likely to grant concessions to tenants that won't promise to stay for longer. Businesses that are willing to sign longer leases, will have increasingly substantial concessions. Commercial properties are generally valued according to the square-foot rental rates in lease contracts. Landlords like to hold firm on the contracted monthly rates even while they offer rebates off the monthly rent. Measure the space before you sign a lease. The space may have been reconfigured over time, and often leases are based on an old floor plan that's not accurate. After the lease is signed it’s too late to change the terms.

2. Mind the Extras
Expenses: Landlords tend to pass on expenses to their tenants, one way or another. In a triple-net, the landlord bills separately for taxes, insurance, and operating expenses or common area maintenance. A gross lease includes everything, at least in theory. This term, too, means different things to different people. For instance, to some brokers, a full-service lease is synonymous with a gross lease; others say full-service includes utilities, but gross does not. And gross leases will usually pass on annual increases in expenses. Either way, make certain that your expenses won't increase within the first 12 months of your occupancy.

Maintenance and repair: Most landlords attempt to hold tenants responsible for maintenance and repair of anything other than the roof, exterior walls, and parking lots. Some require renters to replace failing equipment, including the heating, ventilation, and air conditioning systems, a potentially enormous outlay.

3. Plan an Escape Clause and Other Provisions
Leases almost always favor the landlord. But you can build in clauses that level the playing field.

Co-tenancy: Many shopping centers rely on big anchor stores to draw traffic. If an anchor closes its doors a co-tenancy clause lets a renter escape the lease if the landlord doesn't replace the anchor in a specified period.

Most landlords will insist on a personal guaranty from the tenant.

An exclusivity clause guarantees a direct competitor won't move into the same development.

Small-business counselors advise against leaning too heavily on your broker when it comes time to negotiate. All contract details should cross your lawyer's desk.

If you are locked into a lease, you still have leverage to renegotiate, particularly in the current environment. Given the time and cost involved, most landlords will be reluctant to sue a tenant that is forced by circumstances to break a lease. Moreover, it takes time to find somebody new, and when they find somebody, they're going to want free money. A landlord has a lot of incentive to work out a deal if you can convince him or her that you are going through a tough period. Most landlords are willing to do something that's short term.

A sublease allows a tenant to sublet space to a complementary business. A salon, for instance, might sublet to a massage business. This allows you to turn your fixed costs into variable costs.

A good real estate lawyer, who really does work for you, can recommend brokers who will advise you in good faith.

Commercial real estate divides into three segments: retail, office, and industrial. Each involves different issues and market trends. The amount of free rent available, for instance, will vary both by geography and market.

Land Use Zoning classifies the type of development allowed on a parcel of land.

The following descriptions provide general information on the various land use zones, including: residential, commercial, industrial, urban services, agricultural and direct control. There are two types of land uses, permitted and discretionary, in every zone. Permitted uses are those which must be approved by the Development Officer.

Discretionary uses are those which may be approved or refused at the discretion of the Development Officer, depending on how the proposed uses relate to surrounding areas and any applicable statutory plans.

All decisions of the Development Officer on a Development permit may be appealed to the Subdivision and Development Appeal Board (SDAB). However, the public will only be notified of their right to appeal in discretionary land use decisions.

Residential Zones

2.10 RS - Small Scale Residential Zone

Purpose:

To allow for a range of small scale  Residential  development up to 3  Storeys  in  Height  , including detached, attached, and multi-unit  Residential  housing. Limited opportunities for community and commercial development are permitted to provide services to local residents.

2.20 RSF - Small Scale Flex Residential Zone

Purpose:

To allow for a range of small scale  Residential  development up to 3  Storeys  in  Height  , including detached, attached, and multi-unit  Residential  housing. This  Zone  has site and building regulations that provide additional development flexibility in appropriate contexts, such as new neighbourhoods and large undeveloped areas. Limited opportunities for community and commercial development are permitted to provide services to local residents.

2.30 RSM - Small-Medium Scale Transition Residential Zone

Purpose:

To allow for a range of small to medium scale  Residential  development up to 3 or 4  Storeys  in  Height  , in the form of  Row Housing  and  Multi-unit Housing  in developing and redeveloping areas.  Single Detached Housing  ,  Semi-detached Housing  , and  Duplex Housing  are not intended in this  Zone  unless they form part of a larger multi-unit  Residential  development. The scale of development in this  Zone  may act as a transition between small scale  Residential  development and larger scale  Residential  development. Limited opportunities for community and commercial development are permitted to provide services to local residents.

2.40 RM - Medium Scale Residential Zone

Purpose:

To allow for multi-unit  Residential  development that ranges from approximately 4 to 8  Storeys  and may be arranged in a variety of configurations.  Single Detached Housing  ,  Semi-detached Housing  , and  Duplex Housing  are not intended in this  Zone  unless they form part of a larger multi-unit  Residential  development. Limited opportunities for community and commercial development are permitted to provide services to local residents.

2.50 RL - Large Scale Residential Zone

Purpose:

To allow for high-rise Residential development that ranges from approximately 9 to 20  Storeys  .  Row Housing  is not intended in this  Zone  unless it forms part of a larger multi-unit Residential development. Limited opportunities for community and commercial development are permitted to provide services to local residents.

2.60 RR - Rural Residential Zone

Purpose:

To allow for rural residential development while prohibiting further subdivision of rural residential lands.

Mixed Use Zone

2.70 MUN - Neighbourhood Mixed Use Zone

Purpose:

To allow for neighbourhood scale pedestrian oriented mixed use development anticipated in Local Nodes, as directed by  statutory plans  , that is integrated with the neighbourhood and intended to serve as a community focal point for commercial businesses, services, social gathering, and Residential  Uses  .

2.80 MU - Mixed Use Zone

Purpose:

To allow for varying scales of mixed use development that enables the growth and development anticipated in the Nodes and Corridors as directed by  statutory plans  . This  Zone  allows for a range of  Uses  and supports housing, recreation, commerce, and employment opportunities.  Site  and building design in this  Zone  promotes development that enhances the public realm and publicly accessible amenities to create vibrant, walkable destinations at a scale inviting to pedestrians.

Commercial Zones

2.90 CN - Neighbourhood Commercial Zone

Purpose:

To allow for small scale activity centres to support Local Nodes, as directed by  statutory plans  , that become community focal points for commercial businesses, services, social gathering and limited Residential  Uses  that are integrated with the neighbourhood. These activity centres can accommodate both vehicle-oriented and pedestrian oriented developments.

2.100 CG - General Commercial Zone

Purpose:

To allow for a variety of commercial businesses that range from low impact commercial and office activities with limited opportunities for Residential  Uses  , to higher impact activities including larger shopping centres and malls in areas generally outside of the Nodes and Corridors, as directed by  statutory plans  .

2.110 CB - Business Commercial Zone

Purpose:

To allow for a variety of commercial businesses and limited light industrial activities that require large  Sites  or a location with good visibility from a  Street  . This  Zone  is generally located along major roadways,  Abutting   Arterial Roads  , or within Non-Residential Areas where appropriate as directed by  statutory plans  .

Industrial Zones

2.120 BE - Business Employment Zone

Purpose

To allow for light industrial and a variety of small commercial businesses with a higher standard of design that carry out their operations in a manner where no  Nuisance  is created or apparent outside an enclosed building. This  Zone  is intended to be compatible with any  Abutting  non-industrial  Zone  , while also serving as a transition  Zone  to buffer medium and heavy industrial  Zones  . This  Zone  is generally located on the periphery of industrial areas,  Abutting   Arterial  and  Collector Roads  , or along mass transit routes.

2.130 IM - Medium Industrial Zone

Purpose:

To allow for light to medium industrial developments that may carry out a portion of their operation outdoors or require outdoor storage areas, with limited supporting commercial businesses. Any  Nuisance  conditions associated with such developments are minimal. This  Zone  is intended to be used as a transition  Zone  to buffer between light industrial and heavy industrial  Zones  and is generally located on the interior of industrial areas  Abutting   Collector  and  Local Roads  and separated from non-industrial  Zones  .

2.140 IH - Heavy Industrial Zone

Purpose:

To allow for heavy industrial developments that may have the potential to create  Nuisance  conditions that extend beyond the boundaries of the  Site  , and to allow for industrial operations that have large land requirements. This  Zone is generally located in the interior of industrial areas or other locations where it does not present a major risk to the health and safety of the general public, the enjoyment of  Abutting  developments, or the integrity of the natural environment.

Open Space and Urban Services Zones

2.150 A - River Valley Zone

Purpose:

To preserve natural areas and parkland along the river, creeks, ravines, and other areas designated for environmental protection while allowing for passive and active park  Uses  in designated areas.

2.160 NA - Natural Areas Zone

Purpose:

To conserve, preserve and restore identified natural areas, features and ecological processes.

2.170 PSN - Neighbourhood Parks and Services Zone

Purpose:

To allow for limited development on parkland intended to serve neighbourhood-level needs and users. This  Zone  is intended to accommodate features like community league buildings, active or passive recreation opportunities, and playgrounds in community parks, pocket parks, and greenways.

2.180 PS - Parks and Services Zone

Purpose:

To allow for development on parkland that is intended to serve educational, recreational, and community needs at the city-wide, district, and neighbourhood level.

2.190 PU - Public Utility Zone

Purpose:

To allow for development and protection of infrastructure, systems and facilities that provide a public benefit.

2.200 UF - Urban Facilities Zone

Purpose:

To allow for larger facilities that provide institutional services, community services, or recreational activities.

2.210 UI - Urban Institution Zone

Purpose:

To allow for site-specific regulation of large-scale educational, cultural, and institutional facilities with complementary commercial and recreational opportunities.

2.220 AJ - Alternative Jurisdiction Zone

Purpose:

To identify  Sites  that do not require a  Development Permit  as these  sites  are regulated by federal or provincial law, or are  Additions to Reserves  /Reserve Creation. This  Zone  also provides direction for what  Zoning Bylaw  regulations will apply to these lands if their legal status changes and they become subject to this Bylaw.

Agricultural Zones

2.230 AG - Agriculture Zone

Purpose:

To conserve agricultural land and allow activities that support the Agriculture  Use  . Subdivision of agricultural  Lots  is not permitted unless it occurs in accordance with applicable  statutory plans  and the regulations of this  Zone  .

2.240 FD - Future Urban Development Zone

Purpose:

To allow for agricultural and rural  Uses  that do not prejudice future use until the lands are required in accordance with a  Statutory Plan  .

Overlays

2.250 FPO - Floodplain Protection Overlay

Purpose:

To mitigate the potential negative effects of a flood event and ensure the safety of those living in lands partially or wholly contained within the defined floodplains of the North Saskatchewan River and its tributaries.

 2.260 RVO - North Saskatchewan River Valley and Ravine System Protection Overlay 

Purpose:

To provide a development  Setback  from the North Saskatchewan River Valley and Ravine System and mitigate the risks associated with top-of-bank landslides, erosions, and other environmental hazards.

2.270 APO - Airport Protection Overlay

Purpose:

To allow for the safe and efficient operation of the Edmonton International Airport near the City of Edmonton’s southern municipal boundary, and the Edmonton Garrison Heliport near the City of Edmonton’s northern municipal boundary through the regulation of development within the provincially and federally mandated boundaries.