An Ottawa office condo lists at $450 a foot. The fee doesn't.

What's actually listed as a commercial condo in Ottawa right now

Last Saturday I wrote about the $1,000,000 federal ceiling on buying a whole small-bay building. Most owner-occupiers shopping in Ottawa this month are not buying a whole building. They are buying a unit inside one, a strata-titled office or industrial condo, and for that purchase the ceiling was never the number that mattered.

Pulled straight off MLS this week: an office unit at 5350 Canotek Road asking $459,500 for 1,710 square feet, $269 a foot. Two units in a Kanata building at 150 Katimavik Road together at $284,900 for 848 feet, $336 a foot. A 5,200 foot unit on George Street downtown at $598,900, $115 a foot. And three separate units inside one building at 2500 St. Laurent Boulevard, all 1,000 square feet, asking $450,000, $500,000 and $525,000. On the industrial side, a Sheffield Road flex unit at $639,000 for 2,480 feet, $258 a foot, and a Thurston Drive unit at $389,000 for 2,600 feet, $150 a foot. Real listings, current this week, MLS numbers on file.

The ceiling is not what stops you here

Take the middle unit at 2500 St. Laurent, $450,000 for 1,000 feet. Financed entirely through the CSBFP at its maximum floating rate, prime plus 3%, 7.45% today, over the program's 15-year maximum coverage, that is $4,158.78 a month. Nowhere near the $1,000,000 ceiling. You could buy two of these units and still have room. The federal number that dominated last week's post is irrelevant to almost every strata purchase in this city. A different set of numbers decides this one.

The tax bill has your name on it now

That same St. Laurent unit carries annual property tax of $6,936.18, or $6.94 a foot, according to its own listing. As a tenant, that line hides inside additional rent, roughly half the cheque and billed to you as one number. As an owner, it is a tax bill with your name on it, assessed at Ottawa's 2.39 office ratio against a value struck on January 1, 2016. Ownership does not make that number go away. It just moves it from a landlord's reconciliation letter to your own mail.

The number no listing publishes

Here is what none of the six office listings above disclose: a condo fee. Ontario's Condominium Act, 1998 applies to a commercial condominium corporation the same way it applies to a residential one, and the corporation charges common expenses to cover the roof, the parking lot, the shared HVAC and its own reserve fund. That fee is real, it is not optional, and it is not a field on the MLS sheet for any of the six listings I checked this week.

The Act gives you a way to find it before you waive conditions. Anyone can request a status certificate from the corporation, capped at $100, delivered within 10 days, and it discloses the current common expense fee, whether the seller is in arrears, and the state of the reserve fund. That last part matters more the older the building is. Canotek Industrial Park went up starting in 1987. A nearly 40 year old roof and parking lot is exactly what a reserve fund study is supposed to have already priced in, and exactly where an underfunded reserve turns into a special assessment the month after you close.

What it actually costs against a lease

Run the honest total on that St. Laurent unit. Mortgage payment $4,158.78 a month plus tax of $578.01 a month is $4,736.79, before a condo fee, before your own contents and liability insurance, before the 2% registration fee and the 1.25% annual administration fee CSBFP charges on the balance. Leasing 1,000 feet at Colliers' citywide average gross rent of $35.22 a foot runs $2,935 a month. Ownership is already about $1,800 a month more expensive than leasing the identical footprint, and the condo fee has not been added yet.

Strip out principal, the way I did with last week's building math, since it is not a cost. Interest alone in year one is $2,746.16 a month. Add the tax and real carry is $3,324.17 a month, still $389 more than the lease, before any condo fee. Compare that to last week's small-bay math, where owning came within $475 a month of renting the same space. The gap here is wider because you are paying $450 a foot for a finished strata unit instead of $200 to $300 for raw industrial shell. Fit and finish cost you the carry advantage.

What I would actually do

None of this makes ownership a bad idea. It makes the CSBFP's maximum rate the wrong tool for a $450,000 strata purchase, and it makes the condo fee a condition you negotiate, not an assumption you make. Ask your lender for their actual rate before assuming the program ceiling, most CSBFP loans do not price at the floating maximum. Ask the corporation for the status certificate before you waive financing or inspection, not after. And price the fee into your offer the same way you would price a repair.

If you are looking at a commercial condo unit and want the real numbers run before you write an offer, bring me the listing and the status certificate once you have it. 613-262-6545 or fil@613realtor.ca. Or start with what is on the market now.