Ryan McKenzie – CCIM, SIOR Associate, VP @ Kidder Mathews, 50-year family tradition in CRE/IRE.
When facing the economic headwinds of commercial real estate, landlords often grapple with striking the right balance between achieving their financial goals and ensuring their properties are tenant-ready. With myriad considerations, from repairs to legalities, the leasing process can be overwhelming. To make this journey smoother, here are eight expert tips designed specifically for commercial landlords to ensure they can not only lease their building but maximize its potential to the fullest.
1. Ready, Set, Showcase: Interior Preparations
Before showcasing your property, it’s essential to make it move-in ready. Paint, install new lighting, lay down flooring and consider a new drop ceiling. Remember, prospective tenants want tangible evidence of the property’s appeal. They often lean toward a “show me first” attitude, seeking reassurance that the premises will be up to their standards.
2. The First Impression: External Repairs
External components such as roofs, HVAC systems, parking lots and loading docks can be deal-breakers or deal-makers. Conduct a thorough physical inspection, address any necessary repairs and strengthen your negotiating position. After all, a well-maintained property exterior can save money in the long run.
3. Exact Measures: Know Your Space
Discrepancies in property measurements can lead to substantial complications later in the leasing process. Ensure your building is professionally measured and provide an accurate floor plan. Any discrepancy, even if it’s just a 10% variation from the listed square footage, can cause conflicts, especially where rent calculations are concerned.
4. The Legal Blueprint: Preparing Your Lease
Work closely with a real estate attorney to draft your lease or an addendum to a standard lease. This not only streamlines negotiations but also provides clarity on lease structures, ensuring that both you and the tenant are on the same page.
5. The Numbers Game: Document Your Expenses
Regardless of whether you’re offering a gross or net lease, documenting your expenses is crucial. Detailed records of operating costs and insurance premiums should play a significant role, both for transparency with potential tenants and if you consider selling the property in the future.
6. Risk Management: Collaborate With Your Insurance Agent
It’s crucial to understand how potential tenants’ operations might impact insurance premiums. Activities that significantly hike up insurance costs can eat into your profits. Open communication with your insurance agent can help you anticipate and navigate such challenges.
7. Visionary Approach: Define Your Leasing Strategy
Establish clear goals for your property. Are you aiming for stable, long-term tenancy, or are you focusing on rent growth? Perhaps you’re considering selling your property as a leased investment in the near future. Your objectives can significantly influence your contract terms and leasing practices.
8. Your Ultimate Ally: Partner with a Specialized Broker
Aligning yourself with a seasoned broker who specializes in your property type is invaluable. A dedicated broker often offers professional marketing materials, which can enhance your property’s perceived value, and can also provide access to premium platforms, broadening your property’s visibility. (Full disclosure: My company offers commercial real estate brokerage services.)
In conclusion, as you embark on the leasing journey, these eight tips can serve as a roadmap to ensure your property stands out, attracts ideal tenants and fulfills your financial aspirations. With meticulous planning and strategic collaborations, commercial landlords can truly “master the lease” and see their investments flourish, even in challenging economic times.
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