BDC Lists 7 Commercial Real Estate Cost Surprises

The Business Development Bank of Canada (BDC) has published guidance identifying seven common unexpected costs that businesses should prepare for when acquiring or leasing commercial real estate.

Many entrepreneurs, even experienced ones, may underestimate the significant expenses associated with securing new premises. BDC advises that it is crucial to allocate an additional 5% to 10% of the total project budget for unforeseen expenditures.

Key points on the list include renovation cost overruns, potentially due to regulatory requirements or sub-leasing needs. Downtime during the moving process, as well as potential building defects or environmental issues, are also highlighted as significant risks. Furthermore, poor layout design, zoning challenges, higher-than-expected operating costs, and miscellaneous expenses such as signage or taxes can present surprises.

BDC recommends thorough planning and the engagement of experts, such as construction professionals and property consultants. Businesses considering a purchase should conduct a building condition assessment and an environmental assessment before finalizing agreements. Optimizing the layout for operational efficiency and investigating zoning regulations in advance are also advised. Careful planning for the transition is essential to avoid business disruption.

Overall, BDC's advice aims to help businesses avoid costly surprises and ensure a smooth relocation process to new facilities.