We understand that leasing a commercial property can not only have its highs but it can have its lows, especially if the investment is vacant. Having an empty space is like having no clients for your business, which can cause major financial stress. In this resource, we have provided our recommended tips to help you find your ideal tenant and reduce your vacancy period.
While this information is of added importance during such uncertain times as the COVID-19 pandemic, these are useful tips that can and should be used in any market condition in order to stay ahead of the competition and improve your chances of securing a tenant.
Please note that the below leasing tips are of a broad nature, noting that some will not be applicable in all situations, so if these tips work for your property and circumstances, great. If they don’t work ideally for your property and circumstances, consider if there is any lesson that can be taken and reframed to grab that edge in leasing your property sooner.
This seems obvious enough, but make sure you put some effort into presenting the property in its best light and AVOID giving the potential tenant an easy reason to say ‘no’. Sometimes this will be fairly simple, such as making sure each area is free of rubbish and clean, grounds are maintained, every detail is shown, light is added, and so on. These simple recommendations can help improve the tenant’s first impression of the property.
However, keep in mind that more complex situations may need a lot more TLC, and therefore, can be costly and time-consuming. Which is why we urge you to seek an expert before you spend unnecessary money.
If you can afford the investment for professional photography, we strongly recommend this. Professional property photography helps in selling the dream to possible future tenants.
Having the right equipment, software, training, and experience makes a huge difference in the resulting photos. Given this is generally the first thing potential tenants will see of your property, it’s a great opportunity to highlight your properties best features to further improve your chances of that prospective tenant enquiring on your property.
3. Target Market
Consider what your likely tenant(s) will look like (i.e. their industry type, new business or established business, retail or office user, etc). In some cases, the property will be so specific it will basically pre-determine the type of tenant you will be attracting (think surgical suite), which makes this analysis very simple.
In most instances, however, the property may be more versatile, so you may have a few ‘profiles’ for your likely tenant. Once you have determined these profiles, consider what their needs will be from a commercial property and if your property suits their individual needs.
If it does not, are there any practical steps you can take to meet some common needs of the prospective tenant profiles you’ve identified? While we don’t recommend investing a lot of money into industry-specific property improvements, there may be overarching requirements for many industries, broadly, that are worth catering for, such as disability access, air conditioning, NBN connection, parking.
4. Disability Access
We briefly touched on this in the ‘Target Market’ point above, but wanted to make sure this point was identified very clearly, as it is of increasing importance. While we are now in a time where equal opportunity is an ever-mindful topic and should be ubiquitous, many properties were built in a different time. That different time had different requirements that simply don’t hold up to today’s needs.
More and more, we are dealing with businesses who need to have disability access to their premises, either for staff or for clientele. If your property doesn’t tick this box, it may be off the shopping list from the outset. In addition to disability access, disability compliant toilet facilities are also worth considering. If you have the ability to retro-fit your property and provide facilities offering disability access, you will have a much broader pool of potential tenants.
5. Longer-Term Upgrades
If you have a long term investment strategy, its best to consider more substantial upgrades to your property. These upgrades or improvements may include items already noted, such as installing or upgrading a lift (disability access), to modernising the façade of the property (re-painting or new cladding – so long as non-flammable), upgrading to LED lighting in the tenancy and in common areas, fresh line marking for car parking, and modernising common facilities, such as kitchens and toilets. These upgrades will better position you to find tenants sooner, but may also provide an uplift in the rental value of your property, offering you a tangible return on your investment.
6. Marketing Upgrade
This is more aimed at a situation where your property may have already been ‘on the market’ and advertised for a considerable period. The listings portals used for marketing a commercial property will put the most recent listings at the top of their list by default, pushing the older listings further and further down the list of search results. The further the property is down that list, the fewer times it is seen by prospective tenants and therefore it will generate fewer enquiries.
To get back to the top of the list, you can pay for an upgrade. The different portals offer different upgrade options, generally starting with something more affordable and increasing to quite lofty investments. The good news, even by upgrading to their base option, this will still put your listing back on top of the other basic listings, where an upgrade has not been purchased. This will not suit all clients circumstances, but it can be an effective means of generating additional enquiry and shortening that vacancy period!
7. Flexible Terms
Consider if you are in a position to provide some flexible leasing options for a prospective tenant. For example, if your likely tenant is a new business, consider whether you can offer them any flexible terms, such as a break clause. This may remove a piece of uncertainty or apprehension for the tenant, giving them the comfort to proceed with leasing your property. We do recommend careful consideration is given to any such arrangements, of course, but this can be a useful tool.
Our best tip in this respect is to understand what your prospective tenant really needs, then identify if there is a way to reasonably meet their needs, as this will hopefully lead to fulfilling your needs by leasing your vacant property. In these unprecedented business conditions, flexibility and lateral thinking in negotiations have never been more important.
We won’t belabour the point here, as the thinking is fairly intuitive. The primary thing here is to make sure your asking rent/price is ‘in the market’. I.e. Be market aware (do your own research, or speak with specialised agents) and understand how your property will compete with other properties ‘in the market’. Put yourself in the shoes of the prospective tenant and try to be objective in determining how the value of your property compares with other properties the same tenant would be reviewing. We are not advocating to undercut the market, as you should not need to do so if you follow our above tips, but not pricing yourself above the market is important!
Different segments of the market will attract different levels of incentives. Quality tenants offering long term leases will typically have an expectation that an incentive is given in exchange for their quality and length of tenure. Each negotiation is different in this respect, so we will not leave you with any hard rules to follow, other than to be open to offering incentives. We are happy to offer advice and guidance on this and all of these tips.