Commercial Rent is an Overlooked Issue in the Toronto Mayoral Race
The upcoming Toronto Mayoral Election has everyone talking about housing affordability, public transit funding, and public safety. There’s another crucial issue flying under the radar that affects nearly every neighbourhood: commercial rent.
What’s commercial rent? It’s lease agreements that businesses sign for physical spaces. As opposed to residential rent, which is a lease agreement between residents (individuals, families) or industrial rent, which is for manufacturing- or industrial-type spaces. We launched commercialrent.ca because we’ve heard from countless Toronto & Ontario businesses that dread the words ‘lease renewal’.
Maybe you don’t own a business and think it doesn’t affect you. But we know otherwise! If you do own a brick and mortar business, you’re probably shuddering right now.
There are no guidelines or legislation governing landlords’ actions when it comes to business tenants, unlike the protections provided for residents. This absence of accountability creates challenges for renters. Whereas residents have guidelines around lease increases, and a dispute board to get some accountability when dealing with a bad landlord, none of that exists for your favourite small businesses.
Here are top 3 reasons why Toronto mayoral candidates should be talking about commercial rent.
1. No rent regulations means less chance to “shop local”
What happens when a business owner gets a bill from their landlord for $10,000s for “adjustments” or “damages” (or anything at all)? Or is notified that their monthly rent bill will go up by 30% per month starting two months from now, and they’re just trying to pay off their pandemic-related loans?
Local businesses have three options when the rent goes up: pay, move, or close.
Moving means packing up their entire premises and taking a gamble on another landlord – provided they can find a new location that’s affordable and has just as much customer traffic. Moving means more fees, too.
Closing means another small business going under, for reasons totally unrelated to how good their product, service, or business model is.
Both options mean less small independent businesses in our neighbourhoods!
Many of us try to support independent businesses in our cities by shopping at local stores rather than big-box chains or Amazon. We get that shopping at corporate chains means our money props up shareholders and CEOs somewhere that most likely isn’t Toronto. We like to think of ourselves as part of the fabric of the city, supporting the great little shops that we wouldn’t get anywhere else.
Unpredictable and unaffordable rent fees mean small businesses get swapped for Shoppers Drug Marts, LCBOs and Dollaramas. Or they sit vacant for years as landlords wait to make a profit off a sale to condo developers. And if you live in Toronto, you know a lot of these sales are to developers, which is a whole other conversation….
2. Fewer small businesses means fewer good-quality jobs
When small businesses shut down because of high commercial rent, local workers lose out because there are fewer good-quality jobs in the community.
Remember when Queen Street West between University Avenue and Spadina used to be lined with vibrant independent shops? Now, big brands like Zara, Aritzia, and Starbucks dominate the landscape. they often fail to prioritize worker benefits, fair wages, or career growth opportunities. On the other hand, the small businesses that succumbed to high commercial rent costs were more likely to value their employees, offering better pay, benefits, and a positive company culture because they know it’s what keeps their best workers around.
Ontario is a wild west when it comes to commercial rent. It’s already led people in our communities miss out on decent jobs that pay well and provide stability. Making commercial rent a priority in the election means we can create government support to boost the local job market and make our neighbourhood economies stronger.
Toronto Mayoral candidates are approaching this from different angles – from better transit to incentives. We hope that reducing the red tape between commercial landlords and tenants makes an appearance. It’s one of the best ways to ensure businesses can afford to pay the wages to retain great talent.
3. Eerily vacant main streets increase the risk of crime and reduces residential property value – and no one likes them!
Empty main streets can be downright spooky and have some serious consequences for the community.
Picture this: eerie silence, boarded-up windows, and deserted storefronts. Not only does it make you feel like you’re in a ghost town, but it also increases the risk of crime. When there’s no bustling activity, these areas become prime targets for mischief-makers. That affects everyone’s safety.
Vacant main streets also bring down the value of residential properties nearby. No one wants to live in a neighbourhood that’s empty and, let’s be honest, pretty unappealing. It’s a turn-off for potential buyers which in turn can drag down the prices of houses.
Speculative landholders can sit on main street properties for decades and still come with massive profits when they eventually sell to a condo developer. All while that street and neighbourhood decays. Pretty uncool if you ask us. The better solution is to ensure that local businesses can afford the rent to locate in every neighbourhoods while reducing this type of speculative land buying.
Toronto Mayoral candidates are calling for various solutions to empty streets – making sure these spaces are filled with vibrant local businesses is a proven technique to revitalize & keep communities safe.
What can the Mayor’s office actually do about commercial rent?
This is important to understand – especially when you’re speaking to a candidate or City Councillor and they push back because it’s not under their jurisdiction. While the Toronto Mayoral Election is highlighting many valuable issues – this one has flown under the radar as ‘the cost of doing business’ for too long.
Commercial rent regulations are indeed set by the Provincial government. (And you know we’re in their ears about this already!)
But Mayors coming together and telling the Provincial government that the commercial rent legislation needs an update to keep jobs in the economy can be very effective.
All political parties want to boost job creation and make sure working-age Canadians are employed. If jobs are put at risk because of an old piece of regulation that can be fairly easily updated, the government might seriously consider acting.
(By the way, so many businesses are renters rather than owners because the federally-set requirements for a very high down payment on commercial properties make buying out-of-reach for many business owners.)
Asking your candidate to support commercial rent improvements in the Mayor’s office can create pressure on the Provincial government to create standards and mechanisms that prevent these situations. And it’s a way to feel good about shaping the city you live in!
In the 2023 Toronto Mayoral Race, we’re calling on ALL candidates to prioritize Toronto’s economic recovery with a local focus on business.
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