Selling your commercial property

General information, not tax or legal advice. Rules and rates change, and every situation is different. Talk to your lawyer and accountant before you act on anything here.

Know the property first

Before talking price, I go through the rent roll, every lease, the operating costs, the building’s condition and the zoning. I also look at what it could become: a lease coming up at below-market rent, vacant space, or density the zoning allows. Buyers pay for what they can see, so we make it easy to see.

Two prices

The same property can be worth different amounts to different buyers. One has cheaper financing, another wants the building for their own business, another sees a renovation nobody else has priced. Every buyer has two numbers in mind: the price they’d like to pay and the price they’ll pay to win it.

When several qualified buyers are looking at once, offers tend to move toward the second number.

How I run a sale

1. Price it on evidence. Comparable sales, the income, and what different kinds of buyers can pay.
2. Prepare the package. Clear numbers, lease summaries, photos and plans. Fix the small things that would worry a buyer.
3. Reach the right buyers. Owner-users, private investors, family groups and larger buyers, through the listing services and direct outreach.
4. Compare offers properly. Price, deposit, conditions, financing, timing and how likely each buyer is to close.
5. Manage the conditional period. Inspections, lease reviews and financing, with issues dealt with quickly so the deal keeps moving.

Tenants and leases

Buyers look closely at the tenants. I can help you get estoppel certificates (tenant confirmations of the lease terms) ready, and tell you which leases help the price and which ones raise questions. If a big lease ends soon, it may be worth renewing it before you sell.

Taxes and structure

How you sell affects what you keep. Selling the property and selling the shares of the company that owns it are very different, for you and for the buyer. Talk to your accountant before you list.

Terms matter as much as price

The deposit, the length of the subject period, how certain the financing is, the completion date, a vendor take-back mortgage, a leaseback and what’s included can all be worth more to you than a slightly higher price. I compare offers on all of them.

When something comes up in due diligence

Most deals hit an issue during the buyer’s subject period: a roof, a lease clause, an expense that doesn’t line up. A price credit or a repair often keeps the deal together. Once the buyer removes subjects, the deal is firm and their deposit is at risk.

Getting the property ready to sell

• Price for the area and the buyer. There’s a buyer for nearly every property if it’s priced and positioned right. Good income is hard to give up, so a well-prepared, sensibly priced listing stands out.
• Building data: area calculations, last permit dates, sprinkler and fire certifications, elevator records, roof age, power and past common area costs.
• Environmental reports, if any exist, especially for industrial sites or former gas stations and body shops.
• Title and strata: a current title search from the LTSA, and for strata the bylaws, minutes, depreciation report and Form B.
• A written disclosure statement on the property’s condition, even where it isn’t strictly required, saves arguments later.

Confidentiality before the numbers

You can share the rent roll and statements with a serious buyer early without putting them in front of your tenants or competitors. The buyer signs a confidentiality agreement first, then gets the detailed package. Early access to real numbers gives you firmer offers and fewer surprises in due diligence.

Questions people ask

How do you price a commercial building?

Mostly on the income and comparable sales, adjusted for the leases, the building’s condition and what different buyers could do with it.

Should I renew my tenants before I sell?

Often it helps, because buyers and lenders like longer leases. It depends on the rent and the tenant, so we’ll look at each one.

Can I sell my building and stay as a tenant?

Yes. That’s a sale-leaseback, and it can work well for owner-users.