How to Lease Commercial Property the Right Way

How to Lease Commercial Property the Right WayThe leasing of commercial property is done with one main target in mind. That is to produce a net return for the landlord that is stable and market relative. A number of factors come together to achieve this including:

Rent value that is comparable to other properties of similar type Quality of property improvements to serve the tenants Supply and demand of vacant space Available incentives to lease property Services and amenities to support occupancy A rental type (gross or net) that recovers outgoings for the landlord for the occupied space Rental escalation that will underpin and strengthen the value of the property over time Quality lease documentation that attracts buyers when the property is sold in the future Marketing of the vacant space so that it achieves timely occupancy and a minimum amount of vacancy downtime.

So this taken in context means you must be prepared and proactive if you want to lease your vacant areas quickly and have a reasonably stable ongoing cash flow from the property. The only motive to have excessive vacant space is when you want to change property usage or redevelop the property.

A landlord can undertake the leasing of their own property or they may choose to appoint a real estate agent to help them. The reality is that most real estate agents working with commercial property would have a sizeable database of businesses and tenants that may require lettable space locally. A landlord does not have that resource. A landlord will therefore be well served to choose a specialised real estate agent to help them with the leasing of a property.

A leasing agent and property manager when working in unison on a commercial property can create significant operational advantage for the landlord of a property. Not only can the property be managed on a daily process to optimise performance but the future leasing cash flow from the rental can be staged to grow and strengthen the property value.

This all takes planning and at the centre of the plan is the lease strategy for the property. This is where the real estate agent should track the property opportunity and the comparable properties in the local market. The agent can then talk about the ideal rent growth, lease term, option terms, base rent structure, rent review structures, and outgoings recovery. These factors when carefully planned create good leases. A better investment performance is the potential outcome.

A property or tenancy should never be randomly leased. Decisions should be made regards the lease and the future occupancy before a tenant is found. A real estate agent that is experienced with commercial property will help a landlord make those decisions.

On a final note, a property investor or landlord should only work with the real estate agents that are proven performers in the local market with commercial property. To do otherwise can create an investment disaster.