Supply is Greater Than Demand, That Means Better Deals…Right?

 

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More office space was vacated than leased across the country during the first quarter of this year, to the tune of 1.5 million square feet.” – The Globe and Mail

weak tenant demand [has reduced] national absorption by 3.2 million square feet over the past five months.” – The Financial Post

Lately, the news has been bursting with stories about how lopsided the commercial real estate market has become, with supply substantially dwarfing demand.

Great news for tenants, right?

Not necessarily.

In an earlier post, I discussed what commercial landlords really look like. The truth is, the majority are not small, individual investors whose livelihoods depend on filling up one building; they’re medium-to-large sized pension funds, insurance companies, and REITS – large institutions with deep pockets and diversified portfolios. These types of landlords can not only weather tepid demand, but also view vacancy rates in terms of their portfolio. For example, while a building in West Mississauga has a vacancy rate of 10%, the overall portfolio may show a vacancy rate of 3%; therefore, the urgency to fill the West Mississauga building is certainly less than if that building was a standalone holding.

The bottom line is this: even times of abundant supply in the market, these landlords may write a ‘good’ deal, but not a great one.

What can you do to leverage your position against these landlords?

Simple. Get a great agent.

A great agent understands the market, the business needs and goals of the tenant, and, most importantly, how institutional landlords think.

Leveraging the knowledge and experience of a great agent, you can find the best landlord(s) and building(s) for your needs and ensure you negotiate the best deal possible.

With over 20 years experience in leasing and selling commercial real estate in the GTA and a client-focused business strategy, M Commercial can help you find the perfect space to grow your business – and ensure you get the best deal.

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