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We all would love to rent commercial loft space, converted warehouse and brick and beam space for an office space use. It has such character. There are usually great stories associated with the buildings, such as how cheap they were to buy or what the original use was – such as manufacturing cars in an urban centre, or an army of sewing machines and no air conditioning.
When the buildings are converted to commercial loft space they have the old school charm with some modern elements, such as brand new windows and newly varnished floors. It is also amazing what a sand blast to the bricks will do to liven up the building.
And on top of all of that, they tend to trade at a discount to the A and B class buildings in a city’s downtown core.
So why wouldn’t everyone want to rent such space for their business?
Unless you are on the top floor, there is a constant buzz of people above you walking and providing you with a steady stream of creeking sounds all day long when you are in a commercial loft space.
While it is not annoying at first, after you have spent a 5 year lease with fast walkers, heavy walkers, high heels and rolling chairs twelve feet above your head all day long, you may like the acoustic barrier modern concrete buildings offer.
What’s more is that a conventional office building offers a dropped, T-bar ceiling, which offers better sound attenuation. Such sound baffling tiles are typically not to be found in loft style buildings.
While HVAC units can be replaced, brick and beam buildings are simply a little too hot in the summer and too cold in the winter. Conventional buildings have their challenges as well, but old, commercial loft spaces are simply worse. Some have outdated HVAC systems, but the building itself is at a disadvantage to modern buildings simply because of the building envelope.
There is a relationship between the age of the building and the number of floors.
Older buildings were built smaller when there was not as much office space demand. There was also more land available, and most of the buildings were built for an industrial use. So they tend to be lower to the ground, and many of them have a “Manhattan view” – another building is immediately adjacent. Traditional towers that rise high into the sky tend to have more unobstructed views and better set backs.
There is also a relationship between the age of a building and the square feet per floor. The older the building, the smaller the floor. As a company grows they tend to out grow these kinds of buildings. So commercial loft space tends to be better suited for small tenants.
So even if you are able to negotiate flexible expansion rights, there may not be enough space to expand into.
The smaller and older the building, the more likely that a smaller landlord owns it.
Small landlords are just to small to own the big towers. While some small landlords are great, there are plenty of independent landlords who are stubborn, ungrateful and difficult to deal with. Often these landlords will employ family members for property management – people who do not fear for their jobs – and if that is the case, you will not receive outstanding customer service.
There is also a relationship between the size of a landlord and the odds of retaining a tenant inducement allowance - the larger the landlord, the greater the odds of achieving some cash to build out the space.
The size and sophistication of leases for smaller landlords is also different than larger landlords. While leases tend to be shorter, the issue with smaller landlords is that they tend to not cover certain clauses or do not cover them in the same depth as larger landlords.
Both of which can be a problem for tenants - we would recommend a commercial lease review before entering into a lease with any loft space landlord to uncover what is missing or should be modified.
When touring office space, many tenants forget to view the washrooms. They might be renovated, but as a general rule they will certainly be much smaller than modern office buildings.
As a general rule loft style office buildings are not very wheel chair accessible. In fact, some do not even have an elevator, especially if the building is small and the economics of installing an elevator do not make sense. Most loft buildings are "grandfathered" so don't expect this problem to go away any time soon.
This is a double whammy. The elevators tend to be much smaller than modern buildings and the loading area is usually tight or non-existent. Tenants in brick and beam buildings are often limited to the kind of furniture they can move into the building.
We all love loft / brick and beam buildings. But while you may fall in love with these spaces during your office space tour, there are considerations to keep in mind - the tour lasts 20 minutes...your commercial lease is for many years.
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