For many business owners across Vancouver Island and other secondary markets in British Columbia, the commercial real estate they occupy is often one of their most valuable assets. Whether you operate out of an industrial, office, or retail property, preparing that property properly before a sale can add significant value and help you achieve a better return when it’s time to sell. The process doesn’t have to be complicated, but it does require discipline, planning, and attention to detail.
Here are six critical steps every owner-operator should consider at least 6 to 12 months leading up to a sale.
1. Start Preparing Early: At least 6–12 Months Out
Maximizing sale value is not something you can achieve in a few weeks. Ideally, you begin preparing at least 6 to 12 months before listing. This allows time to adjust rents, finalize lease agreements, clean up financials, and address any property issues.
Industry research has shown that well-prepared properties sell faster and with fewer concessions than those rushed to market. Buyers in secondary markets are particularly cautious—they want to see stability and predictability before committing capital. By giving yourself enough lead time, you can resolve potential red flags before they ever reach the negotiation table.
2. Charge Market Rent to Your Operating Company
One of the most overlooked strategies for owner-operators is ensuring that the business occupying the property pays market rent to the holding company that owns the real estate. Even though the rent is ultimately an internal transfer between related entities, it matters because commercial property values are largely determined by the income they generate.
If your business is paying below-market rent, the appraised value of your property will reflect that lower income. Conversely, charging market rent shows prospective buyers and lenders what the property could command if leased to an unrelated tenant. This can translate into tens or even hundreds of thousands of dollars in additional value at sale.
The key is to research comparable leases in your market—whether industrial space in Nanaimo, office space in Victoria, or retail storefronts in Campbell River—and document that your lease rates are consistent with market norms. This adjustment should ideally be made 6–12 months in advance so it shows up in your financial records.
3. Formalize Lease Agreements with Escalations and Renewals
Whether you are leasing to yourself or to third parties, it is critical to have formal written leases in place. A handshake agreement or informal arrangement might work in day-to-day operations, but buyers and lenders discount properties without standardized contracts.
Your leases should:
- Clearly outline tenant and landlord obligations
- Include annual rent escalation clauses (e.g. 2–3% per year or CPI-based adjustments)
- Provide for renewal options that extend stability for the incoming owner
Even if you remain the tenant through a sale-leaseback, professional lease documentation builds confidence in the income stream and demonstrates that the property has been managed to industry standards. This structure can directly influence both valuation and buyer interest.
4. Organize Financial and Property Documentation
An organized seller provides confidence to buyers and their lenders. They will expect a comprehensive due diligence package. Having these documents assembled and ready to present can greatly streamline the process and increase confidence in your property. At minimum, you should prepare:
- Two to three years of income and expense statements
- Copies of all current lease agreements
- Property tax assessments and utility bills
- Maintenance records, service contracts, and warranties
- Environmental or building compliance reports (if available).
If your property or business has any form of industrial operation it is recommended to engage with an environmental consultant to conduct a Phase 1 Environmental Report on the property. Most lenders will require a clean Phase 1 as a condition of financing. Having this can reduce closing timelines significantly if the right buyer comes along.
A property that comes with a “clean binder” of documentation signals professional management. It reduces perceived risk for the buyer, which in turn helps preserve your asking price.
5. Address Deferred Maintenance and Repairs
Unresolved maintenance issues are one of the fastest ways to reduce a property’s value. A leaking roof, outdated HVAC, or visible deterioration gives buyers immediate negotiating leverage. Every dollar they anticipate spending after closing can be deducted two-for-one from your sale price.
Instead, take a proactive approach. Conduct a property inspection and complete any deferred repairs well before listing. Even small fixes—fresh paint, repaired flooring, updated lighting—can make a big difference in buyer perception. The goal is to hand over a building that is operationally sound and visually well-maintained, leaving no reason for a buyer to discount their offer.
6. Secure a Stable Tenancy Strategy
Finally, think carefully about occupancy at the time of sale. An empty building may appeal to an owner-occupier, but it carries risk for investors, who prefer predictable income. Properties with tenants in place, especially on long-term leases, generally command higher valuations.
If you plan to move out of the space, consider strategies such as:
- Sale-leaseback: where you remain as a tenant for a period after sale, providing immediate cash flow to the new owner.
- Pre-leasing: securing a new tenant before listing the property.
- Rent guarantees: offering short-term income stability while the buyer arranges new occupancy.
The more stable and predictable the income stream appears, the more attractive your property will be to the widest pool of buyers.
For many business owners, the sale of their commercial property is a once-in-a-career transaction—one that can significantly impact retirement planning, succession strategies, or the ability to reinvest in new ventures. By charging market rent, formalizing leases, starting preparations early, organizing documentation, addressing maintenance, and ensuring stable tenancy, you position your property to achieve maximum value.
Selling commercial real estate is as much about preparation as it is about timing. By treating the process with the same discipline you apply to running your business, you can unlock hidden value and secure the strongest possible outcome when it’s time to sell.
For more information on how to prepare or maximize the return on the sale of your commercial property, please complete the Contact Form here.