A Summary of Different Lease Categories.

The following is an explanation from RECO textbook The Commercial Real Estate Transaction:


Buildings are classified as either Class A, Class B or class C,. Some expand this three-part system into further subsets, such as triple A (AAA) or double A (AA). However, caution is advised as no definitive or universal criteria exists to precisely classify buildings and subjective interpretation is a well-acknowledged reality.


  • Class A .  A Class A building is identified by its prestige location, premium office space, high tech systems and high quality finishes. Class A buildings are readily identifiable by their premier appearance and are typically occupied by Canada's corporate leaders, including banks, international corporations and large, prestigious legal firms. Class A buildings are generally concentrated in key downtown locations or other top locations (e.g. main transportation crossroads) within the city.


  • Class B. A Class B building is identified by a good location, average building materials and construction, and adequate internal systems. Generally, Class B buildings are older structures (typically, less than 20 yeas old), lack the latest technologies and may suffer from limited functional obsolescence, but are generally  well-managed and well-maintained.


  • Class C. A Class C building is typically located in a less desirable area, 20 years old or more, and lacking up-to-date technology.  Class C buildings typically require extensive renovations, but low rents can be an attractive draw for commercial  tenants not requiring or unable to afford higher classes of buildings". Source: The Commercial Real Estate Transaction. Page 4-5. Real Estate Council of Ontario, Toronto. 2015.


Michael Kostiuk


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Commercial Real Estate Services


With my background in International Trade, Business and Geography I can help you locate Business, Commercial and Industrial locations in Ontario.


Many Commercial Real Estate transaction involve leases. The following is a summary  of the most common types of lease agreements from Canada Business Ontario:


Choosing a lease

Commercial rents are generally measured by the cost per square foot of the space. Many landlords charge tenants separately for heat and electricity. There are at least five common ways to calculate rent, including:

    Gross leases
Gross leases are the most common standard for office space, and require you to pay a flat monthly amount. The landlord is responsible for all the expenses of operating the building, including taxes, insurance and repairs.
    
    Net leases
A net lease requires that you pay for some (or all) of the real estate taxes on the property, in addition to the base rent for the property. Building operating costs are the responsibility of the landlord.
    
    Net-net leases
With a net-net lease, you are responsible for paying the base rent and taxes, as well as the insurance for the space you occupy.
    
    Net-net-net or "triple net" leases
Triple leases pass on all the costs of operating the building, including repairs and maintenance to you as the renter. These types of leases are usually used for industrial properties.

    Percentage leases
In a percentage lease, you pay a fixed rate plus a percentage of your gross income. Percentage leases are a special type of rental arrangement for retailers in multi-tenant locations such as malls or shopping centres.

(Source: http://www.cbo-eco.ca/en/index.cfm/starting/choosing-a-location/understanding-your-business-lease/)