When it comes to leasing commercial property you really do need to know what is going on in the local property market. In only this way can you match your marketing activities to the levels of enquiry that currently exist.
Three tips to help you with the leasing process centre on market evidence and market activity. Here they are:
1) Assess the levels of net and gross rent for comparable properties nearby before you start your leasing process. Your property will need to have asking rentals that are similar to the other properties because the tenants that you attract through marketing will already know what the rental levels are in the market today. The differences between net and gross rent will also be of interest to tenants and centre on the levels of outgoings that apply to the asset. Most tenants will be concerned regards any extra rental payments that need to be made beyond the base rent. This is where the levels of outgoings can frustrate the leasing process. Make sure that your outgoings are in parity to properties of a similar type nearby. If they are an extra payment to be made by the tenants, ensure that the outgoings are realistically structured and charged.
2) Choose a lease format that covers all the activities and uses of the property. The use of generic leases today is far too common. In most cases generic leases are only relevant on the most basic of property (such as an industrial shed). It is interesting to note that many landlords take the generic lease process because it is way cheaper than a specific lease; when things go wrong with the property or tenant they then have troubles in solving issues given that the lease is just too basic. The message here is for the lease to be drawn up by a good commercial property experienced solicitor.
3) Get a good rental guarantee to boost your landlord’s position and protection in the case of lease default. Tenant default is a common problem today, and the traditional ‘Directors Guarantee’ is not much value in the scheme of things. The landlord must be able to get easily their hands on ‘real money’ if the tenant defaults; that will normally be only through a bank guarantee or cash bond. As to the amount of what should be asked for and held as part of this process, the answer is usually ‘the most you can get’. That should be between 3 and 6 months rental (all types of rent including outgoings and any taxes paid) depending on just how difficult the property could be in the reletting process.
There is no doubt that the leasing process and activity is high in many locations today. When sales opportunity slows, the leasing activity tends to lift. Good agents can handle leasing as well as sales and they adjust their activities depending on what the property market requires.
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