13 COMMON MISTAKES BY LANDLORDS THAT SLOW THEIR LEASING EFFORTS
1. Signing leases without a strategic plan:
A whole-building approach to leasing is critical to achieve the best rates and best tenants.
2. Leasing the best space first:
This can devalue the rest of the building’s available space — such as leasing half of a floor with a better view or leaving small spaces vacant.
3. Failing to align the lease terms with financial objectives:
You want to ensure each tenant’s lease terms support the long-term investment objectives for repositioning or disposition.
4. Faulty termination clauses that allow tenants easy “outs”:
These can leave you, the landlord, with unamortized costs from tenant improvements (TIs), incentives, and fees.
5. Hiring a real estate agent without the right specialization:
Look for someone with experience working with properties of a similar type and location, such as Target Realty’s commercial real estate agents and Landlords’ Reps.
6. Failing to check on the tenant’s finances:
You should also look at the tenant’s business plan and revenue stream. Make sure to ask for a substantial security deposit.
7. Allocating capital incorrectly:
You don’t want to spend money on things that won’t help lease the building, such as replacing sconces on the exterior of a building. A better use of funds might be replacing dated lights in a vacant space to refresh it. Ask yourself before spending: “Does my improvement help lease the building quicker or at a higher rate?”
8. Choosing incompatible tenants:
Placing a staid law firm next to a bustling sales organization is bound to create friction.
9. Pricing the building incorrectly:
Holding out for an extra nickel or dime in pricing may keep the building stuck in vacancy limbo. Getting an Opinion of Lease Rate from one of our commercial real estate agent is recommended.
10. Failing to check the competition:
Compare your building’s pros and cons against competitors.
Seek the aid of your commercial real estate agent to determine the selling points and high-impact improvements.
11. Forgetting the small stuff:
Prospective tenants can be turned off by the little things. So, keep empty spaces free of debris, lights working, and blinds open. Common areas should be clean, parking and signs in good condition, and consider investing in seasonal plants at entrance points.
12. Alienating tenant rep agents:
In any major market, most tenants retain a leasing specialist to represent their interests. Direct deals with tenants are the exception and not the rule. Reluctantly paying leasing commissions, paying late, and failing to develop solid business relationships with the tenants’ representative will only hinder your leasing effort.
13. Lacking a story:
Your building should have a compelling message that differentiates it from the competition. The building’s story tailored to a key tenant driver — such as visibility, tech infrastructure, or accessibility. Some landlords develop a theme or foster tenant clustering. Your agent should collaborate with you to identify and enhance your property’s unique story.
From the tenant representative’s perspective, the ideal situation is when a client’s building choice is an obvious one. It is only a matter of working out acceptable lease terms and a reasonable lease contract with a high-quality landlord.
Source: Colliers International in Houston