Where is Commercial Real Estate Today?
We can all agree that the Commercial Real Estate (CRE) sector has been one of the sectors affected the most in this Pandemic. From the hotels, malls, multi-family buildings, offices, retail and such. However, let us step back a bit before the pandemic. Some of these sectors were already struggling. Each sector had different challenges however, this was a sign to look at different approaches to achieve a different result. As Albert Einstein was quoted saying, “Insanity is doing the same thing over and over again and expecting different results.”
It is time to change your Blueprint. The quicker you adapt and change the better chance you have at surviving. Gone are the days that you offer the basic sq. ft. space “as is” accept the first tenant that expresses interest, sign a lease, and demand rent monthly.
Let’s consider our new Blueprint.
- Think outside the box. What can your space work for other than what it has been used for in the past? For example, Mall space, could this not be used as learning centers? What about Car Parks? Various canteen food courts or unique play areas and outside gyms? Hotels? Offer options for short-, mid and long-term rentals. Restaurants? lease out your areas for conference meetings for persons who need a professional place to meet and offer catering. Offices? offer flexible terms with an outfitted space that could be rented on certain days. You get the idea.
- Credit Check. Do not accept the first tenant that comes your way. Meet with them, ascertain if they are the right fit and they will be able to facilitate their obligations. Offer your advice. Whilst they will be your tenant it is essentially a team effort - they do well, you do well. Implement a tenant approval form.
- The Space. Landlords have your space clean, tidy, and bright for viewings, which can also be done virtually. The more attractive your place looks the higher the probability you will get it rented. This includes the common areas and the outside landscaping of the building.
- The Rent. 0 from 0 = 0. I am not a math Wizz, however, I can say with certainty that “no rent in = no income.” I would strongly recommend you review your CAM (Common Area Maintenance) costs to ascertain your base running costs and seek the RIGHT tenants to fill your spaces at the best possible rates to cover at least your base running costs plus. Offer a lease that allows discounts in the first year or two with incremental increases. Offer additional amenities such as assistance in build-out, longer fit-out periods, and maybe some utilities included.
- MARKETING. This is often overlooked by landlords and is considered a tenant’s responsibility. However, we need to think differently. The more persons that visit the space due to marketing for your tenants and of course their ability to market for themselves - from great signage, word of mouth, or media/social advertising the more opportunity you will engage with persons that may also wish to rent your beautiful and vibrant place. Remember the movie, Field of Dreams with Kevin Costner, “build it and they will come”. You will then start to establish a brand of business that people will wish to rent.
I encourage you to take this time to rethink your space, do what it takes to encourage the tenants, get them in the door and keep them happy. This is the season to reflect and re-build. Use your time wisely.
As always, our team at Terra is here willing to assist. We are all evolving, strategizing, and looking for ways to survive and thrive.