Real Estate Leasing Guide

Motivational Triggers for Leasing Commercial Property

Posted on December 11, 2011

When leasing commercial property, every tenant will have their own priorities in the leasing process. Importantly you need to understand what those triggers may be and provide as many solutions as possible to negotiate and close the deal.

In this property market and economy, tenants are a precious commodity. They should be sourced and protected so that the rental for the property is maintained. Aggressive landlords in this market should rethink their rental strategy so it does not push tenants away from the building.

Some of the significant hurdles a tenant faces in relocating can be motivators when they are addresses by the landlord or agent. Here are some for you to consider:

  1. The time of access to the new property
  2. The services and amenities that are provided in the new building
  3. The configuration of the improvements that are located in the new building
  4. Termination and make-good from the lease and the current property they are located in
  5. The available fitout configuration in the new premises
  6. The available lease incentive for the new premises
  7. The level of rental that commences at the start of the lease
  8. The rent review profile and escalation of rent over the term of the lease
  9. The availability of an option to extend the lease for a further term of occupancy
  10. A rent free period to allow the tenant to undertake fit out works
  11. Car parking and storage on site
  12. Naming and signage rights

The only way to fully understand the tenant's priorities and hurdles is to question them through these issues above. In most cases they are the main hurdles that most tenants see in relocating.

It is recommended that you have a checklist similar to that above together with any other special property factors that you can identify. The qualification process as you take the tenant in and around the property is therefore more direct and meaningful. You can provide the real information that motivates the tenants to make a quick and easy decision.

Whilst it should go without saying, every tenant inspection of a commercial property that is available for lease should be followed through by the real estate agent within 24 to 48 hours after the inspection. Within that time the tenant will have created a list of questions or opinions that apply to the inspected property. Following the feedback from the tenant, it pays to communicate with the landlord and provide up to date tenant responses.

Tagged as: , , , ,

Leasing Traps and How to Escape Your Vacancy Problems

Posted on December 5, 2011

In commercial real estate and retail property leasing, an existing vacancy can be a significant drain on the property performance. That is because the tenants and the customers to the property see the vacancy each and every day. The perception is that the property and the landlord have problems that need attention. This is where the real estate agent can provide real value and strategy to the landlord in resolving the vacancy problem. The agent is the property pain relief that landlords and property owners need.

Here are some traps and pitfalls regards property vacancies:

  1. Existing tenants will use the existing vacancy elsewhere in the property as leverage in negotiating the next rent review
  2. An existing vacancy will impact the net cash flow for the landlord
  3. An excessive threat of vacancy will impact of the next loan extension or finance negotiation for the landlord
  4. Existing tenants in the property will use the vacancy factor in the property as leverage to reduce their rental in any extension of lease or exercise of a lease option.
  5. A high vacancy factor will frustrate the payment of outgoings for the landlord from the available gross income for the property

The vacancy in a property should always be avoided through careful lease negotiation with sitting tenants. Should a tenant be indicating that they will move from the property, it is better to start the leasing marketing and negotiation early so that the vacancy downtime is minimised.

To minimize your vacancy factors as the property manager or leasing manager, it pays to monitor the growth and movement of tenants in comparable properties nearby. This enables you to understand the well performing tenants that can be influenced to relocate in your property.

Another aspect to consider in optimising your property occupancy is in the maintenance of the premises and the offering of superior services and amenities to the tenants. Most tenants will relocate elsewhere if they can see a greater level of comfort and operational economy in a building nearby. Protect your tenants otherwise you can loose them.

Keep on top of your tenant movements, the anchor tenants in your building, the anchor tenants in other buildings nearby, and the business trends in the area. All of these will influence future leasing decisions and relocations. Successful investment property is built on the back of a successful business community. You simply need to find the businesses that are performing well and who want to take advantage of the current competitive rentals.

Tagged as: , , , ,

Beware of Tenants That Don’t Tell the Whole Truth

Posted on November 24, 2011

In commercial real estate leasing or property management, you will come across tenants inquiring about vacant space just about every day. Whilst it is nice to have the enquiry, qualification is the key before you move on the matter.

To get the space leased as soon as possible, it is essential to understand the history of the tenant and their relative strength that they can bring to the building. Tenants will not always tell you the whole truth when they first enquire regards the property vacancy.

Here are a couple of issues which are very common in commercial property management and leasing when you take the enquiry from tenants.

Are they looking at other property as well? It is very common for tenants to look at a number of properties in the local area. They sometimes use the negotiation of one property against the other as a point of negotiation on reducing rental. Other agents may also claim the introduction of the tenant to attract commission in a lease deal.

The time that you spend with a tenant may very well be a waste of time if they have a number of other properties on the inspection or negotiation agenda. They can also be working with a few agents.

To deal with this issue, it pays to question the tenant deeply regards their awareness of the local area and what they have been looking at. Here are some key questions:

  • What do they know about the local area regards transport, regional demographics, community infrastructure, services and amenities, and business activity?
  • What properties have they looked at recently?
  • When do they need to move?
  • What is the absolute 'must have' that will impact their leasing decision?
  • Are they working with any other real estate agents locally? If so who?
  • What do they know about rentals in the local area?
  • Are they currently leasing premises elsewhere which will impact their decision on relocation?

Have they got the financial capability? There is no point inspecting a property with a tenant if they do not have the financial capability to pay the rental. The qualification of tenants should occur over the telephone initially and then in a meeting before any property inspections are arranged.

Here are some questions to assist with the tenant qualification process:

  • Are they paying rental on other property and if so what are the details?
  • What is the size of their current premises?
  • What rental guarantee or bond can they contribute to the new lease that they negotiate?
  • What requirements do they have of the new property in fitout design, incentives, and services and amenities?
  • Get details of their previous landlords and seek approval from the tenant to contact and verify the facts from the other landlord the occupancy detail.
  • How long has the tenant been in business in the local area or elsewhere?
  • Get some business history and evidence of business performance from the tenant and their accountants and or financiers. Seek agreement from the tenant to talk to their accountant's regards business performance.

Whilst it is great to have an enquiry for a new lease in your vacant property, always qualify the tenant before you start giving away a property detail and arranging inspections. The landlord that you act for would expect such simple levels of business qualification.

Tagged as: , , , ,
« First2345678Last »

Recent Posts

Archives

Partners

composite doors