When it comes to commercial or retail property performance today, the rent for a property can be made up from a number of factors, all of which should be optimised to the plans of the landlord. A good commercial real estate agent should have the experience and the ideas to help in that way.
So what are some factors that need to be watched in structuring a lease for a new tenant? Here are a few of the big ones:
- Net or gross rent for the start-up of the lease
- An incentive may be useful in attracting the tenant depending on the existing market conditions
- The prevailing market rent conditions will impact the amount of tenant enquiry and the lease negotiations
- The rent reviews that should be applied to the lease to be negotiated.
- Whether or not an option should be allowed in the negotiation of a lease with the tenant
- Outgoings recovery and how that should be done relative to the tenancy type
- Fit out decisions and make good provisions at the end of the lease
- The permitted use for the premises
Making Clear Rental Decisions
A good commercial or retail property agent will know about these things and will have an opinion to apply as part of the process. Landlords will always have a plan and strategy to leasing their property, but rarely will they have formed a solid opinion regards these factors.
When it comes to leasing a property today, the agent and the landlord should have made the decisions on the above factors before the marketing has commenced. That will then make it a lot easier when it comes to tenancy inspection and lease negotiation.
Supply and Demand in Commercial Real Estate
In most towns and cities today, the balance of supply and demand for commercial or retail space has tipped in favour of the tenant. There are many vacancies to choose from. Market rentals are ‘soft’ and have been impacted by incentives and other enticements to lease space. On that basis, every property or premises that is taken to the market for lease should be optimised to attract the maximum enquiry for the premises. Limited enquiry means that we have to do more with less when it comes to tenant enquiry and lease negotiations.
So what do you do with a landlord that refuses to listen to the agent about the prevailing market conditions? Give them a comprehensive report on the prevailing property market and competing properties locally. If they still will not listen to the recommendations that you make regards rent and or price, you have a choice as to whether you should act for them. It’s that simple. Do not waste your time with clients that will not listen; let some other agents waste their time!