Last year when her boss retired, Tricia Tait bought the catering business where she had worked as an administrator for eight years. The company, The Lunch Mom, provides 3,500 hot lunches a week to eight midtown Toronto schools.
But the former owner's kitchen had been poorly laid out, and Ms. Tait wanted a facility closer to her home.
"I looked at kitchens that you can rent by the hour where people do canning, but we have too much stuff to leave behind and it was super expensive," Ms. Tait says. She also looked at leasing kitchens at some restaurants that were closing but that solution didn't seem ideal, either.
For Ms. Tait, the answer was to buy her own commercial condo.
Her husband, who works in construction, noticed new condos for sale in a nearby business park, and Ms. Tait purchased a 1,000-square-foot unit. She and her three full-time chefs and full-time dishwasher moved in just before school started in September. The unit has high ceilings, and her husband was able to build a 400-square-foot mezzanine, providing more space.
"I have a background in banking, and I'm a proponent of owning. I'm not a huge believer in renting," says Ms. Tait. "The caterer I bought my business from had rented space for 20 years, and if you're going to do it for that long, you can pay off a mortgage and own the space. So far, it's been great."
For decades, most Toronto-area commercial condominiums were in the suburbs of Markham or Richmond Hill, built in the 1970s and 1980s and mainly industrial in use. But office condominiums are making a resurgence. Toronto also is strongly encouraging the development of office space on rapid transit lines, as well as the preservation of employment areas.
When Stephen Li, owner of Markham-based Landpower Real Estate Brokerage, decided to buy a preconstruction 8,100-square-foot office condo, his friends questioned his judgment.
"Even my broker friends asked me why I wanted to commit myself to buying," Mr. Li says. "When I see those people now, they say, 'You had the vision, Stephen.'"
Mr. Li, who works with both residential and commercial clients, wanted to plan strategically. And he wanted his money going toward paying off a mortgage, rather than to a landlord.
"A lot of small business owners hesitate on the future and aren't comfortable to commit and tie up a lot of cash, and they worry about what will happen," says Mr. Li. "I was very comfortable in picturing my business moving forward and seeing potential growth in front of me."
Mr. Li was the first purchaser in the 280,000-square-foot Liberty Square complex in Markham. Today the building is fully occupied, and he estimates his unit has increased by 150 per cent in value.
Ms. Tait is confident her midtown business condo will appreciate, especially when a new transit line opens nearby in eight to 10 years. The area is also undergoing a revitalization.
Units at the Wicksteed Business Park, where Ms. Tait bought her unit, sell for $340 a square foot, and when you factor in taxes at $9 a square foot and a maintenance fee of $1.80 a square foot per year, the cost is comparable to renting, says John Robb, a sales representative for the development. About 70 per cent of the 51 units, ranging from 1,000 to 4,000 square feet in size, have sold, he says.
Many buyers are seeking a better quality of life and reduced commute times. "Chances are that most purchasers live within 10 minutes," Mr. Robb says.
Ms. Tait is among those buyers. Her business is just eight minutes from her home and within 10 minutes of many of the schools she serves.
Mr. Li often advises small business owners looking to buy office condos, and he says the down payment is the biggest hurdle. He says they must be prepared to put down 35 to 40 per cent to buy, and interest rates will be slightly higher than for residential mortgages.
While he acknowledges that some small business owners are wary of tying up cash to buy commercial space or worried that they may need to relocate in the future, he says there are many advantages.
"You don't have to worry about being kicked out by the landlord, and when you have your own premises, there is a pride of ownership," he says. "Employees realize you are financially strong, and if it's your place, you're more likely to spend money on renovations and want to dress it up. You spend eight to 10 hours a day there and you might as well enjoy your surroundings.
"In 18 to 25 years, you will own your own place. It's been 10 years since we moved into our office condo, and when I look at the mortgage now, it becomes so insignificant."