When you own commercial property or retail property in Brisbane
or Queensland, the leases that reflect the tenancy mix are the foundation of
the cash flow. In many respects it is
the cash flow that attracts other investors to the property when a sale is forecast.
Then when it comes to selling that property it is the leases
and the cash flow that will drive buyer interest and ultimately assist in
getting a better price for the property.
So, the best idea is to negotiate your leases carefully with due regard
to the future of the property and your investment targets. Ask plenty of questions.
What About the Tenants?
Another thing to remember here is that not all tenants are
good tenants. You must look at a tenant
comprehensively before the lease transaction is accepted. The things to review with a tenant occupancy
Where they are coming from
Lease history from other locations
Landlord comment from other locations
The tenant’s ability to pay the rent for the
The existing cash flow from the property
The incentive that the tenant is looking for
A property with a good lease profile will create property
investor interest; it’s that simple. It
then stands to reason that the lease negotiations that occur in your property
should be carefully planned and optimised.
You never know when you want to sell or refinance your property. The leases that you have in existence will be
the attraction to support your marketing processes and investment needs.
Look at the Leases and the Overall Tenant Mix
So, what can you do here as a property investor? Look at all your leases and the broader
tenant mix. Set some rules and standards
about these things below and then see a good solicitor to help you with the
Rent review timings and standards
Make good provisions
Lease terms and conditions
Ideal tenant type and operations
When you make every lease count, the property starts to take
on a whole new level of performance in its asset class.
When your property becomes vacant it can be a real worry. It is the same for any landlord in Brisbane and in greater Queensland. As the online pressures shift and change, the way companies transact business today has a direct impact on property occupancy, be that in leasing or ownership.
Why is that? Companies
today are more ‘mobile’ and the sales force can spend most of their time out of
the office. Everything that they need to
create new business, or place and order is typically in the ‘cloud’. The size of average office premises for a given
today is smaller than what it would have been five years ago.
So, that then presents some problems. In precincts and property locations it can take some time to find a new and willing tenant that has the integrity and business stability to occupy a property. That leasing process means loss of rent, loss of outgoings recovery, incentive costs, legal documentation costs, commissions in leasing, and the list goes on.
Market Coverage is Important
A good commercial real estate leasing agent that has a solid coverage of the local property market can be of great value to a landlord today.
So, what can you do as a landlord with your investment properties? You must stay ahead of the vacancy problem and have a good strategy in place to minimise the vacancy downtime.
Even in tough markets, vacant tenancies do lease, it’s just that it takes more time and effort on the part of the agent and or the landlord to promote and target the property to the right prospective tenants.
A ‘tenant retention plan’ is a good solution for most
investment properties. In a ‘retention
plan’, specific strategies are created such as:
Closer connections with existing tenants to
ensure full awareness of leasing pressures and business changes.
Creative lease transactions that are designed to
match the overall mix of the property whilst avoiding mass or multiple expiry
problems with several tenants or premises at the same time.
Targeted tenant profiles of local businesses to
simplify the leasing process when a vacancy is known to be happening or
Direct marketing of vacant space early, so that
enquiry is optimized for vacancies at the right time.
Incentive packages that are structured to
encourage existing tenants to stay in a property. There are different incentives available, and
a package or alternative packages can be created to suit investment targets in
A forward matrix assessment of all tenants in an
investment property to allow lease expiry awareness and early negotiation. That matrix is typically a forward-looking
assessment of occupancy looking out to 18 months from current time.
Leases that are matched to the investment
targets of the landlord and the valuation requirements of the property
As a landlord, and if you have premises to lease, do not
make your choice of leasing agent based on discounted commissions, lower fees,
low marketing costs, open listing, or friendship. None of these things will really help you
lease your vacant tenancy any faster.
The result is an expensive and protracted vacant tenancy that is ‘eating
its head off’ financially in vacancy downtime and costs. Your losses will far exceed any gains you
think you may get from savings on commissions or fees.
What are the Property Strategies?
When you need an experienced real estate agent to help you
lease a retail or commercial property, or any property for that matter, ask
them to give you their strategy on:
Advertising to a target market that is relevant
to the vacant property
Internet listing initiatives to attract more
Track record leasing similar local property
Lease terms and conditions that attract tenant
Database email circulation of your vacant
property for lease
Cold calling the business community to attract
enquiry from the right business owners
Street by street canvassing of businesses for
greater information about your vacant tenancy
Signage initiatives that show the vacancy to its
Target marketing the property locally
Inspection strategies designed for your property
Such a short list and some yet critical points that are so
important when you are leasing property or seeking to resolve vacancies. You can do so much with these things from a
leasing perspective providing your commercial real estate agent supports the
process and provides the depth of experience to get the job done.
One final comment and going back to one key point above;
open type listings in a tough market are also a waste of time for the average
landlord. The numerous agents that have
your property listed as part of an ‘open listing’ are not really marketing your
property intensely. It is what is called
a ‘list and hope’ process when it comes to open listings.
Proven Agent Performance
If you want to lease your property in the shortest possible
time, find an agent that has real proven experience in the local area using the
8 points above. Ask questions about what
the agent will do for you. Get them to show
you how they will attract the market to your property. Make them win your business. Good real estate agents will do this and give
you the confidence you expect as a property investor.
I go back to the point that leasing a commercial or retail
property is not about getting discounts from the chosen agent. It is all about market coverage and strategic
approaches to the right local businesses.
A timely lease agreement is more important than any ‘discount’.