Having an amazing commercial space that just won’t lease is a problem even the most successful landlords run into.
The answer to the question, “Why can’t I find tenants for my commercial building?” when the building itself is not the problem, is not a simple one. In fact, there are several factors beyond the building itself that determine how long it will take to lease vacant commercial space. Many of these are beyond landlords’ control such as current economic conditions or basic supply and demand economics.
Don’t get discouraged! There are several factors landlords can influence that can go a long way towards leasing that top-notch vacant space.
Top influential factors that can increase the demand for your vacant space include landlord and building reputation, marketing and listing strategy, and where your incentives are focused.
It takes many good deeds to build a good reputation and only one bad one to lose it.– Benjamin Franklin
In life or in real estate, Mr. Franklin wasn’t wrong. Do you know what your building’s reputation is amongst potential tenants? Do you know what your reputation as a landlord is? Most landlords don’t, nor do they even consider finding out, but reputation can make or break a commercial real estate deal.
From a tenant’s perspective, perhaps your building isn’t as desirable as one might think. We consulted with one landlord who was livid that she couldn’t find tenants for her commercial office space after spending tens of thousands of dollars upgrading the space with the latest modern decor and finishings. Turns out, that money would have been better spent upgrading the parking lot. This was a large office building with existing tenants and hundreds upon hundreds of parking spaces. Past and current tenants complained that there were too many potholes and lack of adequate lighting made the far corners of the parking lot very unsafe at night. Unbeknownst to the landlord, the building’s parking lot had developed quite the reputation amongst potential tenants; as a result, no one was looking at the state-of-the-art office finishings, all tenants could see was a poorly maintained parking lot with a plethora of safety hazards.
Marketing & Listing Strategy
As a commercial real estate agent with decades of experience, it still surprises me how many people—landlords and tenants—believe that “marketing” commercial real estate begins and ends with a listing on MLS. There is so much more to it than that, especially when it comes to attracting the best tenants. A comprehensive marketing strategy, or lack thereof, can literally make or break a listing. Those listings with the best marketing will attract more interest and be sought after by the best tenants. A neglected property—even if it’s exceptional—can remain vacant for years.
Before signing on the dotted line with a commercial real estate agent, make sure that he or she takes you through the marketing and listing strategy they have planned for your property. If they don’t have a strategy? Run.
Incentives are the crown jewels in a landlord’s arsenal of means to attract tenants. Incentives can be anything from deals on rent, such as offering the first month free, to improvements to the space, such as a custom lunchroom. The best part about incentives is that their cost is typically covered by the tenants (see our blog post on the ABCs of Office Leasing Rates for more info on how incentives are funded).
However, there is such a thing as a bad incentive. For an incentive to entice prospective tenants, it must be something of value to the tenant. For instance, one landlord we consulted had come to us after firing his previous commercial real estate agent because a large sales organization refused to lease his building—a building he thought had been a perfect fit. We asked him what type of incentives he offered and he told us he had offered three parking spaces per 100 square feet as opposed to the traditional one spot. Knowing a little about the sales organization in question, we could immediately see why this incentive wouldn’t have appealed to that particular tenant. While the organization boasted almost 800 employees, 75% of those were traveling salespeople who visited head office maybe once per week. The gratuitous parking spaces would have meant nothing to that particular tenant and instead, they leased a space where the incentives were enticing.
Are You Attracting the Best Tenants?
Do you know your building’s, or your, reputation amongst eligible tenants? Is your building simply being listed instead of marketed? Do you have an effective marketing strategy that’s helping your building stand out from the crowd? Are you getting enough (qualified) prospects through your building? Are enough prospects converting to paying customers?
If you answered ‘no’ to any of the above, reach out today and let’s get the conversation started on how to properly market your commercial office building and incentivize the best tenants.