Leasing commercial space in Toronto is one of the biggest financial commitments a business will ever make — and most business owners walk into it completely unprepared. After 25 years as a trusted commercial real estate broker in the GTA, Allen Mayer has seen the same costly mistakes made over and over again. Here are the 7 most common — and how to avoid every single one.
Before You Read: Ontario’s Commercial Tenancies Act gives tenants very few automatic protections. Every clause in a commercial lease is negotiable — but only if you know what to look for.
Mistake #1: Focusing on Base Rent Instead of Total Cost
The rent number a landlord advertises is almost never what you actually pay. On top of base rent, most Toronto commercial leases add TMI — Taxes, Maintenance, and Insurance — which typically adds $12–$20 per square foot per year.
The fix: Always ask for the fully loaded gross cost. A $25 PSF base rent with $17 PSF TMI is actually a $42 PSF lease. Work with an experienced Toronto commercial real estate broker who will model the true all-in cost before you tour a single space.
Mistake #2: Not Having Independent Representation
The listing broker on every commercial property works for the landlord — not for you. Their job is to get the landlord the best possible deal. When you walk in without your own broker, you are negotiating against a professional.
The fix: Secure independent representation through Allen Mayer. In most cases, the landlord pays the tenant broker’s commission — meaning expert representation costs you nothing out of pocket.
Mistake #3: Ignoring the Permitted Use Clause
Every commercial lease defines exactly what business activities are allowed on the premises. If your actual operations don’t match the ‘permitted use’ written in the contract, the landlord can use that as grounds for eviction — even years into your tenancy.
The fix: Make sure the permitted use clause is written broadly enough to cover your current and anticipated business activities. This is especially critical for retail space in Toronto and industrial tenants whose operations can evolve.
Mistake #4: Skipping the Demolition and Relocation Clauses
In Toronto’s intensifying real estate market, demolition clauses — which allow a landlord to terminate your lease if they plan to redevelop — are increasingly common. So are relocation clauses, which let a landlord move you to a different unit in the building with limited notice.
The fix: Push to have these clauses removed entirely. If the landlord insists, negotiate meaningful advance notice (minimum 12 months) and significant compensation. This is a standard negotiation point for Allen Mayer across all Toronto commercial properties.
Mistake #5: Signing a Personal Guarantee Without Limits
Most Toronto landlords require a personal guarantee — making you personally responsible for rent if your business defaults. Without negotiating this clause, your personal assets (home, savings) are on the line for the full lease term.
The fix: Negotiate a ‘burn-down’ guarantee where your personal liability decreases as you complete years of reliable tenancy. For example, personal liability reduced by 20% per year — fully eliminated by year five. This is achievable in the current GTA commercial real estate market with the right representation.
Mistake #6: Not Negotiating Tenant Improvement Allowances
Landlords — especially in softer markets — will contribute money toward fitting out your space. This is called a Tenant Improvement Allowance (TIA). Many business owners simply don’t ask, leaving thousands of dollars on the table.
The fix: Always negotiate inducements as part of the offer to lease. Depending on the space and term length, you may be able to secure 2–6 months of rent-free occupancy, a cash TIA, or both. Browse current commercial listings to identify spaces where landlords are motivated to offer incentives.
Mistake #7: Having No Exit Strategy
Business circumstances change — startups scale fast, markets shift, companies get acquired. Most business owners sign a 5–7 year lease with no early exit clause and discover — too late — that they are trapped paying rent for a space they can no longer use.
The fix: Before signing any lease, negotiate an early termination option, a clear sublease right, and a lease assignment clause if you sell the business. These three provisions together give your business the flexibility it needs to grow — or pivot. Ask Allen Mayer about availability in Mississauga, Vaughan, and Barrie — where flexible lease terms are increasingly negotiable in 2026.
People Also Ask
| Q: How much does it cost to lease commercial space in Toronto? |
| Downtown Toronto office space runs $35–$55 per sq ft gross. Suburban office (North York, Scarborough) averages $22–$32 PSF. Industrial/warehouse in Mississauga or Brampton ranges from $14–$20 PSF net. Always calculate the total all-in cost including TMI and HST. |
| Q: Do I need a broker to lease commercial space in Toronto? |
| Not legally — but practically yes. The landlord’s broker represents the landlord. Having your own broker (like Allen Mayer) costs you nothing in most cases, since the landlord pays the commission, and gives you professional negotiation on your side. |
| Q: What is TMI in a commercial lease in Ontario? |
| TMI stands for Taxes, Maintenance, and Insurance — the additional operating costs tenants pay on top of base rent in a Net lease. Toronto commercial TMI typically runs $12–$20 per sq ft per year. |
| Q: How long is a typical commercial lease in Toronto? |
| Most landlords require a minimum of 3–5 years. Office leases commonly run 5–10 years. Longer terms usually unlock better incentives like rent-free periods and tenant improvement allowances. |
Ready to Lease Commercial Space in Toronto the Right Way?
These 7 mistakes are entirely avoidable — with the right broker at your side from day one. Allen Mayer represents tenants across the GTA with 25+ years of experience, zero cost to the tenant, and a track record of protecting businesses at the negotiating table.
| Don’t Sign Alone — Get Expert Representation Allen Mayer has protected GTA businesses for 25+ years. Book Your Free Consultation → (416) 918-7979 |
Explore: Office Leasing Toronto · Toronto Commercial Properties · Commercial Listings · About Allen Mayer