In these difficult economic times you need a perfect leasing strategy to keep the rental income for the commercial or retail property strong and stable. What you do not want today is the threat of higher property vacancies and pressures from competing properties.
The gross income for your property should be optimised and the expenditure should be well controlled within averages relative to the location and the property type. So how do you create this perfect leasing system or strategy? Here are some ideas to help you:
- Establish a lead time of 9 to 12 months where it is possible to replace tenants that are leaving the property. The existing leases will have critical dates that relate to the end of lease or the exercising of an option for a further term. If you stay close to your tenants you will soon know the ones that want to move and those that want to stay. Negotiate early with and tenants that are staying in the property.
- Split your tenants into high quality and low quality groups. Over time you should replace the low quality tenants with those of better quality. As to what constitutes a good tenant to you is subjective and may have a lot to do with the landlord, the property and the tenant mix. Set your rules regards tenant selection and work to the rules. That strategy can be part of your annual business plan for the property.
- Create a system of contact where all the local businesses that could be suitable for your property are contacted frequently to see what their needs are in property occupancy. If you believe they could be a good tenant for your asset, then time and patience may allow the situation of tenant movement to occur. The point here is that you must be in contact frequently to create the trust and relationship that will allow a lease to be negotiated and established.
- Create a tenant retention plan for your property that strengthens the relationships with the good quality tenants that you have now. Other agents will be chasing your tenants so make sure that you have solid leases, attractive rents, and a well maintained property. Do not give your good tenants any reason to move (unless you don’t want them anymore).
- Stay close to your anchor tenants as they are critical to the function of your property. Fortunately most anchor tenants are locked into long leases with clauses that give you some reasonable lead time to replace them.
- Understand the clusters of tenants and how they function within each other in your property. Clusters of tenants can improve your customer offering and market rental. When it comes to retail property and shopping centres, this fact is really important. You may have 4 or 5 clusters of tenants that are really important to your property.
- Look for the tenants that will add quality to the property. To do this effectively, make sure that you are watching all competing properties locally and find out when the leases within each property are up for renewal or expiry. Over time you can provide competitive lease offers to the key tenants in other properties in an effort to attract them to your property.
A perfect lease strategy is not hard, it is just common sense and working to a set of rules that can guide you and your tenant choices forward.
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