The leasing opportunities in commercial real estate are always there for the astute property agent to work with, and that can mean more personal commissions and marketing fees.
During an average year in investment property, a large number of local businesses are looking to move and relocate for all types of reasons. Those businesses need to be found and the enquiry or the need to relocate then captured and directed for opportunity.
Seasonal pressures apply in any business with locating. Look for the indicators such as:
- End of lease
- Occupancy cost pressures
- Market rent adjustments
- Business expansion or contraction
- Changing customer purchasing patterns
- The internet and its impact on purchasing patterns
- Shifts in sources of raw materials
- Changes to product supply
- Deliveries and access to ports or end user markets
- Transport efficiency
- Supply Chain Costs
So the message here is that you should look for a company or corporation considering a change of premises. Understand their relocation timing pressures and the impact that can happen with customer sales and the associated cash flow peaks and troughs. When you understand the local business cycles, the leasing process with new tenants gets a lot easier.
Asking the Right Questions of Tenants in Leasing
Here are some of the main categories to explore when working with business owners as tenants, and their relocation needs:
- Location – Understand where they want to be located from a business perspective. Some parts of the city or town will be better than others and the client that you are working with should be able to tell you why that is the case.
- Customer Access – It pays to understand where a business gets its customers from. Customers impact issues such as transport, convenience, property configuration, plus many more.
- Staff – The number of staff in a business and the associated parking requirements can sometimes be significant. You can add to that equation the hours that people will be required to access the building.
- Communications Systems – Many businesses require complex and advanced telephone and internet connections so that they may communicate to their clients and their end user market. Internet capabilities can vary by location so take the time to understand what communications capabilities a building can provide.
- Security – This will be the level of security required around the property, in the premises and electronically within the building communication systems. Many businesses today are sensitive to theft, safety, and data loss or hackers.
- Car parking – The size and accessibility of the car park will be of interest to most tenants. Given that on street parking can be such a frustration for many businesses with their staff, convenient car parking on site will generally be a priority.
- Area and Floor plates – The size of the tenancy is an important factor for most tenants as it will impact the rental levels and outgoings recoveries. The floor plates are also important in that they restrict or enhance the way departments and staff within a business interact. Small floor plates make tenancy use difficult. Multiple floors within a building can also be an issue with people moving around via lifts and stairs.
- Energy Rating – Many office type tenants today prefer to occupy buildings with energy efficiency and energy classifications. Generally only the modern and recently constructed buildings will satisfy that requirement.
- Ability to Expand – Some tenants require the capability to expand occupancy into the future within the same building. That capability can only occur if the building is large enough and the floor configurations allow it. Upcoming lease expiry dates will also have a bearing on the issue of moving tenants around.
- Improvements – The improvements in the property should be of sufficient modern service and appearance to set the right image about the property and the way it is maintained.
- Services and Amenities – A property with modern services and amenities will generally support a reasonable rental charge. The same can be said when it comes to attracting new tenants. Presentation is everything in property leasing today, well before you start to negotiate on a lease.
- Fitout configurations – How will the tenant configure their tenancy space? Will there be a need for individual offices, and how much open plan space will be required? The tenant will likely require a fitout plan and some engineering input into the way in which the property can be configured for the tenants business.
- Lease Terms – The lease terms will be covering important issues such as rent reviews, options, make good provisions, renovation requirements, and insurances. Many landlords will have standard requirements across those issues, but the tenant will also have requirements to consider.
- Rental Budget – This will be the combined costs of rent and occupancy as applied to the tenant. Outgoings recovery and the associated charges to the tenants will have something to do with that overall total. Some tenants require a rental incentive as part of taking on a lease of new premises. The incentive is a cost to the property and the landlord so set the rules about incentives before you start working towards finding tenants to fill any vacancy.
- Duration of occupancy – How long will a tenant want to occupy the premises? The length of occupancy will have an impact on rental types and rental levels. Some properties are suited to longer leases, whereas other properties are not so well placed. A lot depends on the investment plans for the building and the overall tenant mix.