There are some office markets, particularly in the west end of the GTA, that have vacancy rates approaching 25%; despite this, tenants still aren’t being offered incentives to move (reasons for this are discussed in a previous post).

Over the past 5 years, landlords with significant vacancy (over 15%) have been trying to fill their space through the following incentives:



Landlord Broker Incentives

Sounds pretty good, right? So why hasn’t it worked?

If you take a careful look at those incentives, you’ll notice they all have one thing in common – they are designed to incentivize BROKERS, not TENANTS.

At M Commercial, we look for the landlords offering the best incentives to our CLIENTS, not our brokers. As an example of how this approach can benefit your business, take ABC Company*, an actual client that absolutely did not want to move despite the business advantages in relocating.

ABC was facing some big changes in their industry and business; accommodating these changes would require a significant capital investment in new equipment. Additionally, ABC’s current space lacked parking, inhibiting growth. However, moving a business is expensive and disruptive, and ABC decided that relocating just wasn’t worth the hassle.

Despite ABC’s reluctance to move, M Commercial set out to find a space that would accommodate the company’s growth and a landlord that would make moving an attractive proposition.

By negotiating terms that involved ZERO incentives for M Commercial, we were able to find a landlord that offered ABC such an enticing deal, they absolutely could not say no. The final deal even incorporated a substantial Tenant Improvement Allowance, which meant ABC didn’t have to invest its own capital in new equipment. ABC can use that capital to fund its growth, now that it has the space to accommodate it.

If the landlord had redirected any of the incentives towards the broker, the deal wouldn’t have been attractive enough for ABC to consider moving. ABC would still be in a space that didn’t accommodate its growth objectives and the landlord would still have vacant space. Lose/Lose.

Broker incentives DON’T WORK, yet many brokers are unwilling to give up these hefty perks: this is one reason why vacancy rates in the GTA remain high. If your business could benefit from a new space that better suits your needs, contact M Commercial Realty and make sure you get the deal that is best for your business.

*Name changed to protect privacy of client

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