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Tenant Management Tips for Commercial Property

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When you lease and manage commercial property today, you really do need to monitor the activities of tenants within the tenancy mix and be ready to respond to occupancy issues.  Be aware of the changes within the building and the activities of tenants in each of the separate premises.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

Why worry about this?

It is better to be ahead of the tenancy problems before they become overly large or pressured, thereby impacting the landlord and the asset.  It is better to negotiate with the tenant through their trading or occupancy issue at the earliest stages.

  • Protect the tenant mix, lower the vacancy factors in your asset, and keep your good tenants for the long term.

Most buildings today with multiple tenants in occupation will have some form of tenant retention plan to consolidate occupancy and cash flow over the foreseeable future.  Within that document will be the necessary lease strategies, rental indicators, and tenant profiles.

So what is it?

It is a landlord based investment planner to help with occupancy planning.   Shopping centres and large office towers would have such tenant planning processes in place, and then they adjust the plan every year based on what can be observed and predicted in tenant occupation and known vacancies.

Tenant retention planning?

So the retention plan is a document that allows you to prepare at the earliest stages for the worst and best possible leasing scenarios, and control the best outcomes.  In other words, you can stay well ahead of the leasing and tenant mix problems before they get out of hand.  Isn’t that what the leasing strategies should be in any investment property?

 

  • Look for the indicators and the pressure points of occupancy.  Given the pressures of the economy and business today, tenants can sometimes suffer with pressures of cash flow emanating from variations of staff structure, seasonal sales, production, and intellectual property.

 

So what can you do here?

On a regular basis look at how the tenant and their business appears to be tracking, and wherever possible identify any weaknesses that could impact occupancy.  In simple terms, you stay close to the tenant in every way possible through a series of telephone calls, meetings, and email exchanges.  You take plenty of notes, and you negotiate through any issues as early as possible.

Here are some ideas to help you with that lease management strategy:

  • Inspect the property and the tenancy frequently so that you can see when changes are underway.  Where necessary, take photographs and plenty of notes to support your observations.  You can see variations with staffing, management structures, production, on-site storage, and business activities.  Look for the indicators and asked plenty of questions.
  • Stay in contact with the decision makers of the business so that you can identify when they are under any particular pressure of occupancy.  In any corporate structure there will be different levels of management to interact with.  Take notes and make observations when it comes to any meetings with tenants and management personnel.  A simple thing evolving from a meeting today can be a major issue in the future.  Understand the impact of a shift in rental or tenant occupancy within the asset.
  • Watch for any shift or change relating to staffing and management within the tenant business.  Are they still employing the same number of people? Has the management structure changed within the business?  When you see changes, ask questions.
  • The lease document will be important when it comes to enforcing lease conditions and rental cash flow.  Review the lease regularly for the necessary critical dates and methods of response that apply to the occupancy process.

Given all of these things, the landlord needs to be fully briefed on any lease issues and recent tenant meetings.  Those facts can be merged into the end of month reporting for the property leasing and tenant management updates.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

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Commercial Real Estate Leasing Vacancy Solutions and Strategies

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Vacancies in office property can be resolved through strategy.

In commercial property management and leasing, you have to closely watch the tenant mix and the leases for any upcoming vacancy risk and or tenant in distress. The property market changes all the time, and each city will have unique pressures that can set the momentum to move tenants around and impact business performance.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

Local Issues?

So what is happening locally for you in your location? Do you have clients and properties under vacancy pressure? It’s an opportunity to resolve. You really do need to know why vacancies are happening and then work on a strategy to resolve them.

Before I go too far into this concept, I will say that the leasing market is lucrative from a commission perspective, if you focus on one or all of the following:

  • Quality properties – some properties are better than others. Look for the differences in local properties and buildings in your location. Choose the better properties from a leasing perspective.
  • Larger tenancies – the size of the tenancy will dictate more rental and therefore more fees per transaction.
  • Corporate tenants – the companies and corporations in any town or city tend to need property help in relocating and expanding or contracting. You can have an appointment to locate their next property lease.
  • Particular property types – when you look at the rents per unit of area per property type, you will soon see the property types that create better interest from tenants and better rents. That is where you should focus your leasing efforts.

Given these 4 facts, you now know what types of leasing factors should feature in your prospecting model. Take deliberate care to stay within your set leasing criteria. You will then find the tenants and the better properties.

What value do you bring?

So why are vacancies happening in any building or location, and how can you help? To get to the answers, you really do need to look into the following factors and do the appropriate assessments:

  1. Rental pressures and shifts – rents that are consistently climbing will reach a plateau where business owners will resist leasing. In a city where rents are escalating, understand the realities of a business paying higher occupancy costs. What are the limits?
  2. Competing properties – other properties locally are likely to be competing for your tenants so watch the problem and intervene where necessary.
  3. Occupancy costs – rent and outgoings all add to the cost of occupancy; a tenant has to be able to afford the total occupancy package.
  4. Tenant mix problems – some tenants have issues with being close to others and other business types; look for those problems.
  5. Permitted use or exclusivity – in a larger building where you have multiple tenants, ensure the balance of tenant mix, and avoid giving away exclusivity (retail properties in particular).
  6. New properties being developed – any new property will shift the balance of supply and demand, thereby pushing businesses out into the leasing market.
  7. Landlord issues – some landlords are very difficult to work with, and will give tenants a good degree of frustration as part of lease negotiation and occupancy.
  8. Quality of services, amenities and improvements – buildings age as do the services and improvements.

From these things, you will find the properties and the businesses needing leasing assistance. At that point you have some advantages to work with.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

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4 Proven Strategies in Commercial Real Estate Brokerage Leasing

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Understand the complete commercial property leasing requirement.  Specialize in all the facts and the property details.

When you lease a commercial or retail property today, it pays to set some rules to the process so you can correctly match the tenant to the property for the fullest of available advantages.

Investment property leasing is where all the important decisions are made to find the best tenants for the investment performance. Each tenant is different, each landlord can be quite special, and between both of those stakeholders you have a property and its occupancy opportunities.

Establish Your Commercial Property Leasing System

Are you ready to specialize in leasing and investment property performance?

What are the rules you can set for leasing buildings and premises?  Try some of these for starters:

  1. Know who you are talking to and always get their contact details first – When an inquiry comes in from a tenant, ensure that you are talking to the right person who you believe is in control of the business. Before you disclose too much about the property, write down the important contact details of the person and the role that they play in property selections and choices.  Don’t be too eager to talk about the property without the fullest of contact details from the person you are engaged with in conversation.
  2. What do they really want in leasing new premises? – There will be a main motivator(s) behind a tenant in changing properties. Questions will always get you to a few important points to understand.  Of the few factors of importance in finding new premises to lease, a couple of factors will be high on the tenant’s agenda.  Get to those facts fast and directly.  Delve into location issues, and then improvement requirements in any property to be leased.
  3. What can they afford? – Is it a tenant’s market or a landlord’s market in your location currently? There are differences to watch for, and those differences will impact your negotiations with rents and lease terms.  Some tenants have little understanding of the current property market conditions, and the same can be said for the landlords that you serve.  Be prepared to quote real market evidence from recent lease deals to occupancy arrangements, lease negotiations and market rentals.  Tell the tenants and landlords that you work for how they are positioned in the current property market and how realistic their expectations may be in changing property today.
  4. What property improvements do they need? – Every business will have challenges of placement when it comes to fitting into a new property. Your job is to bring ends to meet together across the void of a leasing negotiation.  Your client is the priority above everything else.  What are the targets of your client in the lease negotiation?
  5. Factors of supply and demand will impact your negotiation – Always track the vacancy factors in your location. Those vacancy factors will be impacted by supply and demand for the location and the property type.  Higher vacancy factors push up lease incentives.  A volatile leasing market will drive greater elements of risk for landlords, and that is where a tenant retention plan will help you with the overall income stability for your clients.  Become a specialist in tenant retention, lease negotiation, tenant sourcing, and lease marketing.  There are plenty of leasing advantages to be had from an active property market with tenants and landlords.

So you can do some good things here with your tenant and landlord interactions.  As the leasing specialist get to fully appreciate market trends and changes and pull those factors into your leasing arrangements.  Position yourself for helping your clients in the best way with all your leasing deals.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

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Commercial Real Estate Snapshot Podcast 225 – A Focus on Commercial Real Estate Leasing

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Commercial real estate training MP3

In this podcast I thought I should spend some time focusing on Commercial Real Estate Leasing.  That is for a number of reasons, the most important of which is that property leasing introduces you to the landlords and property owners who will eventually need more help in the future with things like sales and property management.  In other words a simple lease transaction can lead to other things.

I have split the audio program up into a number of  segments.  The summaries of the program are below:

  1. Why you should not let your tenants get out of control – in any property containing a group of tenants, the communication and control process is very important.  Tenants talk to other tenants and that can be a problem if issues exist in the building.  So this is all about those buildings with multiple occupants and how to connect with them.
  2. How you can be a commercial real estate leasing expert – you can do so much with your leasing knowledge.  You can establish tenant advocacy services, landlord leasing services, tenant mix advice, and basis brokerage leasing.  What sections of the leasing market can you see reasonable leverage and commission activity evolving from?  This part of the audio program will help you with ideas.
  3. How to work with franchise tenants and why that is a good idea – the franchise section of the commercial property market today is forever evolving and growing.  If you connect regularly with local franchise groups you can help them with property selection choices and any required relocation’s.   Get to know a few franchise tenants locally and come to understand what they need by way of property and when that is likely to occur.
  4. Some simple ideas for qualifying industrial property tenants – the industrial part of the property market is generally the first to respond in an upturn and also a downturn.  That being said it is a reasonably uncomplicated part of the industry.  Get to know a number of industrial tenants and businesses locally; see if you can help them with current and future property needs.

These are parts of the audio podcast by John Highman.  You can listen to the audio below.

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The Perfect Leasing Strategy for Commercial Real Estate Agents Today

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Leasing in Commercial Real Estate Agency today requires real specialists.

In today’s commercial and retail property market, you really do need to develop a leasing strategy for each and every quality property that contains vacancies.  The abundance of vacancies available means that the limited pool tenants available has a lot of properties to choose from.  Attracting enquiry from tenants and then converting the enquiry is a real ‘art form’ in this market.  Here are some more tips from our Newsletter for Agents.

It should be said that the marketing of any lease or vacancy should be on an exclusive basis.  You should be appointed as the agent of choice to market the property for a period of time.  Controlled listings are the only way to attract enquiry in this market today.

Given that the landlord requires leasing results in their property, the controlled listing is the only way to achieve the necessary commitment on the part of the agent and the necessary market penetration into the tenancy base.

It should be said that the client’s commitment to an exclusive agency should also be reflected in the agent’s commitment to market and service the listing.  There is no point in taking on an exclusive listing of a vacant tenancy unless you truly believe that you can market it comprehensively and intensely for the period of the agency.  The real estate world is full of disgruntled clients who have been tied to an exclusive agency and a poorly performing agent for a long period of time.

To provide an excellent leasing service for your clients today, here are some tips and ideas to merge into your leasing strategies and solutions.

  1. When you act exclusively for a particular landlord, the property portfolio that they own should be subjected to a tenant retention plan and business strategy.  In that planning process you can set the key criteria that should apply to ongoing leasing activity and tenant mix changes.  When the landlord can clearly see the leasing road ahead when it comes to rentals and vacancies, they are more likely to stick with you as the leasing expert that they require.
  2. The market rental in your local area will change from time to time given the supply and demand for rentable space.  New property developments will place pressure on market rentals through the introduction of lease incentives and enticements.  Keep your client up to date with some form of market rental update on a monthly or quarterly basis.
  3. The expenditure or outgoings costs for a given property asset will be based on both controlled and uncontrolled cost factors.  The uncontrolled cost factors are those that relate to property rates and taxes.  Like it or not they will have significant impact on property usage and will need to be paid.  It is the controllable outgoings that have some ability to be shaped relative to occupancy and building usage.  As a leasing strategist and specialist, you can keep the client appraised regards current levels of expenditure and outgoings that apply to the particular property type.  The trends of outgoings costs will to a large degree influence your rental decisions regards amount and rental type.

To be a top leasing agent today, you simply need to bring relevant leasing skills and local property knowledge to the client.  Provide the best leasing service possible to your clients, and keep in touch with the local business community for the tenancy needs that arise.

You can get some more tips on leasing strategies from our online Newsletter for Agents.