How to Make Your Commercial Property Rent Work for You

foyer of retail shopping centre

When you as a landlord own commercial investment property, the rent paid by your tenants is one of the main factors to underpin the property value.  For this reason and in every lease deal with a new tenant, care should be exercised in just how that rent will perform over the term of the lease.

When the market gets softer and less tenants are around, the incentives that you give to the tenant to influence them towards your property are generally significant.  Tenants know this and will ask for incentives of certain types such as:

  • Rent free
  • Fitout payments
  • New fitout
  • Cash
  • Reduced rent over an extended term
retail shopping mall

There is an old saying in the property game and it goes a bit like this:  ‘It doesn’t matter where you start with your rent, but it does matter where you finish’.

A lease is for a period of time.  You can grow the rent with creative rent review provisions during the lease term, and your property managers should help you with advice to achieve that. 

Within reason, the start rent for a new lease should be attractive enough together with an incentive, so that the premises are leased in the shortest time possible to a good tenant.  A good tenant will underpin property performance; it’s that simple.

brisbane city buildings

How to Choose the Best Rent for Investment Properties

city high rise buildings

When you own commercial property, the decision of rental type will arise from time to time, when you do a new lease with fresh tenants.  Prepare for the situations of a new lease so that you can find the right tenant and transact the lease effectively and directly at the right time.

It is a competitive property market today, and tenants are sometimes hard to find and difficult to negotiate with. Ensure that you have the total tenant and lease negotiation control from the very start through a proactive rental strategy of lease marketing.

office property foyer
Every vacancy needs a comprehensive leasing strategy.

What type of tenant do you want in your property?  Not all tenants are equal.  Not all tenants can pay the same rent regardless of the property and its location.  Don’t focus just on leasing the vacancy; focus on the best tenant that will support the asset and the investment plans that you have.

Take the property and the vacancy to the market with a defined lease strategy considering other competing properties in the location. Review all the other lease properties in the location so that you can position your vacancy for the best enquiry and the best opportunity.

The rental question will be between a net type rent or a gross type rent in the leasing process.  The decision you make should be driven by:

1.         The rental standards set in the local property market for a property of that type
2.         The requirements of the tenants in taking a lease
3.         The age of the building and the expenditure trends based on recoverable outgoings
4.         The expectations of the landlord in cash flow management

These 4 simple facts will help you with the choices to be made on the lease rental.  If you need other help, an experienced local commercial property agent or property manager will have some answers. Given that you must live with the rent amount, lease type and the tenant for a long period of time, it pays to fully consider the rent choice and make the best decision before you proceed.  Property investments are a product of choice and strategy developed over time.

brisbane city buildings