Having a business in the heart of the ByWard Market has had its pros and cons, according to Josh Savoie. The owner of Teastore at 53 York St. said he benefits from the foot traffic in the Market, especially during busy tourist seasons. However, his store, which is housed in the same building as the […]
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Having a business in the heart of the ByWard Market has had its pros and cons, according to Josh Savoie.
The owner of Teastore at 53 York St. said he benefits from the foot traffic in the Market, especially during busy tourist seasons. However, his store, which is housed in the same building as the 70 Clarence St. parking garage, has also been operating under a cloud of uncertainty.
Teastore is one of several businesses in the ByWard Market that leases its space from the City of Ottawa.
“For probably close to the last 20 years, the City of Ottawa is constantly putting things out saying that this building might be demolished. They do it about every five years. Every five years, the city will come out and say, ‘Hey, we’re revitalizing the ByWard Market. This building has to come down.’ They refer to the building that I’m in as the parking garage at 70 Clarence. They never refer to any of the businesses that are in this building,” Savoie told OBJ.
In March, city council approved a plan to “reimagine” the ByWard Market, which would include changes to the ByWard Market Building at 55 ByWard Market Sq., as well as to the building at 70 Clarence St. and the York Street Plaza, all in an effort to revitalize the area.
While the documents reviewed by council in March say current lease agreements would be upheld, they also suggest that current tenants could be displaced under a new “tenanting model.” The documents discuss “relocation advisory support” for affected tenants, including “providing information on, and possible access to, other City-area commercial districts and available spaces” and “exploring the option of working with a local commercial real estate broker to identify suitable relocation opportunities for displaced tenants.”
The documents go on to say that businesses would be grouped into three “impact profiles” and note that “opportunities for return to City-owned facilities will be limited by the future space program.”
The three profiles include businesses that remain in their current premises but experience access, visibility or operational impacts due to adjacent construction; businesses relocated during internal renovations or public realm works, with limited potential to return based on future space capacity and the tenanting model; and businesses that will not have a space within the redeveloped assets and will need to permanently relocate or cease operations as a result of redevelopment or construction impacts.
The documents state that “return opportunities are anticipated to be few, and many existing tenants will fall under the permanent relocation profile.”
At Teastore, Savoie said he recently received a notice saying the building at 70 Clarence St. may be demolished. He asked the city for more information and while officials got back to him, Savoie said the response did not provide sufficient information on next steps.
“When I sent a message (to the city), they said, ‘We’ll give you adequate notice.’ But what is adequate notice? Because for me adequate notice is five years. I need time,” he said.
Further consultations with businesses will be part of ongoing work on the ByWard Market plan, Mayor Mark Sutcliffe said in a recent email to Barry Padolsky, an Ottawa architect who has been working with businesses in the Market that have raised concerns about the city’s plans.
“I recognize the critical role that businesses play in the character and vitality of the ByWard Market, and I'm a strong supporter of local business,” Sutcliffe wrote in his email. “This redevelopment plan is a great opportunity to draw more customers to the ByWard Market and our intention is to minimize disruption as much as possible. This is why the redevelopment program includes a Business and Tenant Support Strategy. This will guide ongoing engagement, with a focus on clear communication, minimizing disruptions, and supporting business continuity. Council has not approved a final design or future occupancy strategy for the buildings, and no decisions have been made regarding potential tenant relocations.
“Existing lease agreements remain in effect, and no impacts to tenants of 55 ByWard are expected until after 2030. We will continue to consult regularly with stakeholders, including tenants and business owners, throughout the process,” he added, saying that council is “open to having another look at the proposed plan before it comes back to council in 2027.”
How demolition clauses work
Darren Fleming, CEO of Real Strategy Advisors, said landlords will typically add demolition or renovation clauses in commercial lease agreements. While these clauses are “industry standard,” he’s only seen them used twice in his 26-year career in real estate.
“It’s a termination in favour of the landlord that is triggered by a notice letter from the landlord to the tenant … (The letter) says, referencing the clause in the lease, ‘I am about to do the following and you have so much notice that you have to be out by a certain date,’” Fleming explained.
In the case of the ByWard Market businesses that lease their spaces from the municipality, Fleming said some of the leases “may not have originally had options to terminate or demolish or substantially renovate in at the time the tenants signed.” However, when a tenant renews their lease, that lease is subject to complete replacements or minor alterations, which may include demolition and/or renovation clauses.
“Landlords have to be proactive to get those clauses into their leases so that they have the right to do it,” Fleming said.
If a business receives notice that a demolition or renovation clause has been triggered, it will be given notice to vacate, typically six to 12 months, Fleming said. “This is where the confusion happens. The notice is not, ‘Hey, we’re thinking about it.’ The notice is, ‘On this date, you’re out,’” he explained.
The risks involved
Despite having no clear indication of what the future holds for his business, Savoie said he isn’t overly concerned. “I want to stay in this location. I love this location. I love the ByWard Market. I’ve worked in the Market, even when I didn’t work at this shop, for the last 25 years. I want to stay here, but I know that, if I have to move somewhere else, the business would be fine because of our online presence.”
Still, Savoie said he would appreciate having a clearer idea of next steps, so he can plan to move or decide to put money in to renovate his space. “It’s just about the little things. Like, I’d like to be able to redo the floors in here. But I can’t justify spending $15,000 to redo my floors if I’m going to be kicked out in two years.”
Investing in improvements only to find out that they’re being asked to vacate is a risk for tenants, Fleming said.
“This is what happened to a client of mine,” he explained. “They signed a 10-year lease. They did a major fit-up. Most of it was financed by the landlord, mind you. Then 11 months later they got a notice that the building was coming down and they had to find alternative premises. So it’s really about protecting your investment in leasehold improvements.”
For landlords, Fleming said the risk is having a future development delayed if they don’t have such a clause in a lease agreement. “Many times, a landlord has to wait until the stars align,” he said.
Keeping good relations
Last month, an application was filed with the city calling for two new highrises at Breezehill Avenue North and Laurel Street. The one-and-a-half-acre property is currently home to a two-storey commercial building with tenants that include Happy Goat Coffee and Capital Self Storage.
Henry Assad, CEO of Happy Goat Coffee Co., told OBJ that the lease agreement for his Laurel Street location holds no demolition clause.
“(The landlord) tried to include a clause like that in our agreement, but we resisted and agreed not to put it in. Although we have three years on our lease and we do have an option to renew. I believe (with) that option, both parties have to agree,” he explained.
The nearly 10,000-square-foot unit on Laurel holds the brand’s first café, its roastery and corporate offices, Assad said. He added that he’s cultivated a good relationship with the property manager for the location and has known about the demolition plans for about a year, though he hasn’t received an eviction notice yet.
Fleming said tenant businesses may have some leverage in amending these clauses while negotiating lease agreements.
“A tenant’s leverage is always determined by how much space they are going to take and how eager the landlord is to win that tenancy. A 500-foot ByWard Market food stall vendor? Probably not. Someone who’s going to take multiple floors in a commercial office building, commit to several million dollars in construction to fit up their space and sign a 10-year lease with one of two options to renew? Probably,” he said.
He added that keeping an open discourse with the landlord is a good way for businesses to get notice further in advance of the typical six-to-12-month period.
Still, Assad said the plan has created uncertainty for his business. He said the café would do well if it moved locations, but his main concern is for the roastery.
“As soon as we heard (about the demolition plans), we were already thinking, ‘Okay, what do we do because three years is not such a long time.’ We’re more concerned about how we’re going to move all these machines. How do we get another central location? Our employees don’t drive to work. Many walk, ride their bicycle or take public transit. So where do we find a warehouse that is suitable for our purposes in the core and rent as affordable as we have here?”
The proposal for the new development includes 4,500 square feet of retail space and Assad said he plans to negotiate a return to the location, if the proposal gets approved.
“Our plan is to negotiate a comeback for us once the development is done. Of course, that’s long-term,” he said.
Overall, Fleming said these clauses in commercial lease agreements don’t change if the landlord is a private- or public-sector entity, although each entity may see a situation differently.
“The NCC is the one who is often the landlord to many government-owned buildings in and around the ByWard Market. They’re not-for-profit. Their mandate is to have a great capital (city) and safeguard not just the value but the use of those buildings to make sure they support activities in the capital,” he said.
“So if they’re trying to redo the ByWard Market to make it more accessible to tourists, more inviting, more dynamic, the rents they collect from the existing tenant base may not be as much of a factor as a private-sector landlord who’s looking at, ‘What is the highest and best use of my building?’” Fleming explained.
The language in commercial lease agreements can be confusing, Fleming said, so business owners should make sure they understand what they’re agreeing to.
“I think it’s really important that tenants read this stuff and get advice. The challenge, when they’re dealing with lawyers who are not leasing specialists, is (that) these are standard clauses, so it’s not unusual for these clauses to be present. It’s not always obvious or even something that is discussed with the tenant when they’re signing the lease because it is standard.”
If a business agrees to a demolition or renovation clause and the landlord exercises it, the business owner could negotiate for something in return, such as free rent or compensation for relocation costs.
“(It’s about) understanding what’s reasonable to push for. It can be hard when you’ve been in a place for a long time and you don’t do this every day,” he said.
