Cost of doing business

Cost-squeezeBarry and I have both discussed the topic of tenant improvements within earlier blog posts. But what are the big ticket items that can make or break a deal? Let’s explore the things to look for when scouting out a place for your business.

What are we doing here

The first thing all agents will ask is what do you plan to use the space for. A beginning step is identifying properties where municipal zoning allows your business.

Industrial zoning in the City of Saskatoon, for example, allows almost all uses as they apply to business. But that does not mean a property in this zoning is necessarily suited for your use.

Get up to code

There are several municipal codes that you need to adhere to when setting up shop. There is building code which covers fundamentals of building construction. If you are moving into an existing property, building code should only be a concern if you are doing major renovations to the space.

Fire code is a stickier subject, however. Depending on your use, fire codes will vary by the type of occupancy you plan for the space. Certain assembly uses like dance studios, gyms or congregations of people may require more fire exits than currently exist.

In some cases, sprinklers may be called for. Many properties do not come spinklered as their intended uses do not require it. Sprinklers can be a costly improvement to retrofit into a space.

Fit it up

Here are other items to be aware of when considering spaces for your business. Look at the existing electrical, mechanical and plumbing systems. Often a landlord will provide a space “as-is” and it’s the tenant’s responsibility to re-arrange distribution of these systems to accommodate their use.

If you require 3-phase as opposed to single phase power it would be recommended to investigate early. SaskPower, for example, may bring in 3-phase to buildings without but not without the expense of installing a new electrical panel.

Mechanical systems should be top of mind when assessing a major change to the existing layout of a space. In an open warehouse you may have slung overhead heaters. If you choose to build out a small office space you will need to figure out how you will heat or cool it. Often tenants will opt for separate forced air furnaces to supply the office portion alone.

One of the most devastating and costly discoveries for tenants can be discovering the plumbing system in place is not sufficient for their use. Further to my comment earlier regarding sprinklers, builders will construct a property for uses of a general nature.

If you choose to take a warehouse and make it into a gym, for example, your business requirement for multiple bathrooms or showers may supersede the rough-in plumbing in place. It can be expensive when you start tearing up concrete around existing plumbing and adding more. This is also making the assumption that the building has sufficient main water and sewer lines to support the use.

All is not lost

If you fall in love with a space there is usually a solution that can be solved with a bit more investment on your part. You have to determine, as a tenant, if this is where the optimum use of your capital or if seeking an alternative location is necessary.

The buck stops with the City of Saskatoon and all ICR standard offers include a clause committing our tenants to do their research regarding use and code requirements.

Posted by Kelly Macsymic

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