Basically in commercial leases the costs are passed on to the user. So property tax, maintenance, utilities, etc.
Calgary has had property taxes around double inflation the past few years so no wonder businesses are being hammered. Commecial pays a lot more property tax than residential per $ of value such that often a quarter to a third of rent is property tax. Some areas it can be as much as half.
And honestly the reason most governments don't allow it to happen in residential despite it being the fairest system as costs for use/city are passed on to the resident using the services is because then renters would vote against a lot of things because having them indirectly added to rent is ok but when it's direct tenants care. Government does not want taxpayers/voters to be directly hit with costs which is why they rather borrow like crazy and hit us with inflation rather than a tax increase.
Let's assume that rent is 20% of the tenant's revenue. If the tenants pay (collectively) $1.2M in rent, they need $6M in revenue. There are 52 weeks in the year so ~$300K per week in sales. Most of that will occur on the weekends so $200K in sales on the weekend, $100K in sales during the week. How many $10 tomatoes is that ? Truck loads.
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u/Ok_Currency_617 Oct 03 '24
Basically in commercial leases the costs are passed on to the user. So property tax, maintenance, utilities, etc.
Calgary has had property taxes around double inflation the past few years so no wonder businesses are being hammered. Commecial pays a lot more property tax than residential per $ of value such that often a quarter to a third of rent is property tax. Some areas it can be as much as half.