How to attract great commercial property tenants
The success of your commercial property investment will always come down to the quality of your tenants.
A great commercial tenant will be reliable, respectful, and someone you can build a strong relationship with. Especially as we enter the post-pandemic period, chances are you don’t have the financial capacity to mess around and deal with difficult tenants who cost you time, effort and money. Instead, you need to set yourself up to thrive and profit.
So, set off on the right foot from the start, and dedicate your resources to finding the perfect tenant for your space.
How to attract top tenants
Before you kick off your search, you need to understand the local demand, your prospective tenant base, your location and the market. What are tenants in your area looking for? Do you have a lot of competing properties in the area? If so, what are they offering and how does your property differ from theirs? The more you can answer these questions, the better you can shape your marketing strategy to suit the market trends and improve your property to ensure it stands out to tenants.
This extensive research will also help you set a good, realistic rental rate. Your rent alone can make a huge impact on potential tenants. If it’s too high people will be discouraged, but if it’s too low tenants may question the condition of your property.
Find the positives
Every tenant wants to know first-hand the great characteristics your property provides for them. These positives should stand out in all your listings and advertisements.
Key features you should be highlighting include:
· Accessibility (such as car park space and access from a main road)
· Local foot traffic
· Recent upgrades
· Flexibility for expansion and improvements
· Physical appearance of the property
· Condition of the property and equipment
However, you also need to be transparent and state any major negatives to avoid backlash in the future – your tenants have a right to know exactly what they’re getting into.
Market your property
Now that you have the perfect vision, go out and market it! Invest in quality advertising on reputable platforms, such as major online property portals, commercial databases, lease boards and office rental lists. This also includes maintaining a strong online presence and providing an eye-catching online profile.
When providing details of your property, be clear on your measurement practices and the type of space you're providing. You may also want to consider using an expert photographer to attract further attention and promote the message that you’re a true professional who means business.
Don’t be afraid to sweeten the deal and approach prospective tenants with incentives.
Many landlords will offer lease incentives such as a rent-free period, rent reduction or contributing to the fit-out costs. However, there’s no limit to what incentive you provide, so you can be creative and appeal to the needs of your tenant. It could be as simple as assisting in the funding of a business event, or allocating a budget towards improvements and upgrades.
Look after your property
People will often pay more for a property that is clean and in top shape. So, tend to all repairs and minor maintenance tasks, and ensure your property is well presented. Showing tenants that you take the time to keep your property well maintained particularly boosts your reputation and builds trust.
Seek out tenants
Don’t just wait for the tenants to come to you. Keep an eye out for businesses searching for a premise, or hire a local agent who may have a network of potential tenants. You may even find there are current tenants nearby that may be looking to move.
How to select the right commercial property tenant
Use a thorough screening process
The screening process is highly important in finding out whether your potential tenant is reliable and responsible, or hard-to-reach, difficult and full of red flags.
When vetting your candidates, you should be looking at their professional references, and their rental and credit history. Financially, you want a tenant who will make their payments on time each month and aren’t likely to fall into liquidation or financial strife. Their rental history will also reveal whether they’ll be respectful of your property, or if you’re at risk of finding a trashed, unmaintained premise.
Determine the compatibility between your property and the tenant
You may find a great selection of prospective tenants, but ideally you want a business that is actually compatible and best suited to your space. No matter how reliable a tenant may be, if they aren’t the best fit for your space, you may hit roadblocks in the future or risk vacancy (and lost profits) if they decide to move on.
Don’t jump at the first tenant that comes your way for the sake of filling your empty space. The money you lose in the process of finding the perfect tenant will be nothing compared to the costs and stress you’ll face in the long-term with an unsuitable tenant who leads you back into vacancy.
You also have the right to say no to unsuitable offers or tenants. Remember you have no obligation to satisfy a prospective tenant if they’re not the right fit or are insistent on an agreement that doesn’t suit your investment plan and goals.
Lay everything on the table
The final step is to be transparent and clear on what exactly your agreement with the tenant looks like. This includes rent, maintenance responsibilities, lease length, taxes, insurance, clauses and opportunities to sub-let. This way, there are no surprises for either party, and you can build a great, secure relationship over many years.
Team up with a property adviser
Finding a great commercial tenant can be tedious, long and tiresome – especially if this is your first time. So, don’t go at it alone and secure an experienced adviser who can handle the whole process for you.
Contact us to discuss your needs. No obligations.
Managing Director, Broadway Property
Director, Broadway Property