We originally leased the 1376 sq ft of ground floor retail space at 1170 Queen Street East to Field Gate Homes to be used as a sales centre for one of their developments in Leslieville. That lease for was for a term of 2 years with multiple options to renew for a year at a time, and at a lease rate of $35 per sq ft net with a bump up to $38 per sq ft net in years 2, 3 and 4. We considered those rents to be a bit low at the time, but we did that deal because they were going to invest approximately $400,000 into the space to build out their showroom. This space was in very poor shape when we bought the building and we decided that Fieldgate's investment would position the space very nicely for the next tenancy.
The Fieldgate Lease finally expired on February 28, 2022. In early February, and within a week of listing the space for lease, we leased it a boutique chain of kitchenware shops called "Cookery" (www.cookery-store.ca). They currently have 4 other locations (3 in Toronto and 1 in Montreal) and are expanding fairly quickly. Unbeknownst to us, they had identified this block as the ideal location for them in Leslieville about 4 years ago and have been waiting for Fieldgate to move out ever since. We believe Cookery will be a great addition to this diverse block that has a little bit of everything, including: an organic butcher shop, an organic grocery store, a medical clinic, a pharmacy, an animal hospital, a pet store and groomer, and a variety of great restaurants. In addition to its core retail business, Cookery has multiple income streams from services it offers including cooking classes and knife sharpening.
The Lease is for a term of 5 years at $45 per sq ft net in Years 1 and 2, $47.50 in year 3, and $49 in years 4 and 5. The tenant has an option to renew for an additional 5 years and the rent for the extension term shall be the greater of: (i) the market rent for like space at that time; or (ii) the increase in the Consumer Price Index over the first 5 years of the term. This positions our income at this property to be indexed to inflation for the next 5 years with an opportunity to participate in greater upside if market rents exceed inflation as the neighbourhood continues to develop and gentrify.
We are impressed by the story behind Cookery and its founder Alison Fletcher, which you can read more about here:
and here:
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