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Minimizing Vacancies in Commercial Real Estate: A Guide

By
Real Estate Broker/Owner with Tolj Commercial Real Estate DRE01373646

As a commercial real estate veteran with over 18 years of experience, I know firsthand the heavy impact of high vacancy rates. Lost rental income and ongoing operating expenses for unleased spaces can quickly erode property profitability and value.

The good news is that with a focused, meticulous strategy encompassing multiple facets of property management, it is possible to steadily chip away at pesky vacancy rates. In this post, I will share a comprehensive 10-step playbook to effectively minimize vacancies in commercial buildings based on proven asset management principles.

Key Takeaways

  • Investing in curb appeal and property upgrades entices new tenants and retains existing ones
  • Building relationships through engagement and prompt issue resolution increases occupancy rates
  • Promotions should highlight property features and leverage connections for referrals

Cutting Commercial Property Vacancy Rates:  A 10-Step Playbook Know Your Local Commercial Real Estate Market

As they say, you can only manage what you measure. Start by thoroughly analyzing granular supply/demand dynamics in your specific locale and commercial real estate subtype (office, retail, industrial). Track rental movements for comparable properties and monitor listings by competitors to identify prevailing market rents in your area. This will provide a benchmark to price and position your property.

Pro tip:  Connect with local real estate brokers to understand off-market deal activity as well.

Set Competitive Yet Appealing Asking Rents
Armed with market intelligence, set asking rents aligned with comparable spaces nearby. However, leaving some room for negotiation and offering introductory discounts for the initial lease term could incentivize prospective tenants to choose your space over a competitor’s. The goal should be to get appealing deals signed quickly. You can stabilize rents as the building reaches higher occupancy.

Invest in Excellent First Impressions with Curb Appeal
As potential tenants arrive to tour available spaces, stellar first impressions are critical. Is the exterior surrounding well-lit and landscaped with tidy signage visible from the ingress? What about the lobby, hallways, and common areas – are they clean, neat, and visually enticing? Spending on upgrades like paved parking lots, green spaces, and renovated building systems generates a consistent pipeline of tenant prospects.

Maintain the Property Proactively
While seeking new commercial occupants, existing tenants also need attention. Businesses will renew leases much more willingly in spaces that are proactively and diligently maintained through prompt repairs, handy safety features, and periodic overhauls. Consider forward-looking upgrades as well – modern HVAC installations reduce energy bills over time, as do eco-friendly rooftop solar panels.

Build Strong Tenant Relationships
Even as the property itself is continually upgraded, put equal emphasis on building personal connections with occupants through:

  • Regular touchpoints and open channels of communication
    Swiftly addressing concerns or issues
  • Community engagement events to connect all tenants
  • Taking this relationship-centric approach increases tenant satisfaction, loyalty, and retention when lease renewal discussions emerge.

Structure Agreements With Inbuilt Flexibility
To attract or retain tenants in specific situations, consider tweaking lease terms to incorporate flexible options:

  • Short-term 6 or 12-month leases
  • Rent deferrals for a few months
  • Subletting allowance with landlord consent
  • Easy space expansion or move options

To explore more about this article post, please visit our website at https://toljcommercial.com/minimizing-vacancies-in-commercial-real-estate/

 


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Wayne Martin
Wayne M Martin - Oswego, IL
Real Estate Broker - Retired

Good morning Mike. Excellent post with great tips. Also use an experienced agent with a book of business. It counts big time. Enjoy your day.

Jun 25, 2024 05:25 AM
Mike Tolj

Thank you for the kind words. I completely agree – having an experienced agent with a solid book of business can make a huge difference. Appreciate your input! Have a great day.

Jun 25, 2024 11:54 AM
Bo Zivak
Zivak Realty Group - Nashville, TN
Nashville Real Estate Broker

Minimizing vacancies in commercial real estate involves strategic marketing, maintaining property conditions, offering competitive lease terms, and fostering strong tenant relationships

Jun 25, 2024 06:25 AM
Mike Tolj

Absolutely Bo, it takes two to tango! Both parties need to be on the same page to minimize vacancies in commercial real estate through strategic marketing, proper maintenance, competitive lease terms, and strong tenant relationships.  Thanks for sharing.

Jun 25, 2024 11:57 AM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

It’s a great post. Thank you for sharing!

 

Have a super fantastic week!

Joe Jackson, Realtor-KWCP

Jun 25, 2024 11:04 AM
Mike Tolj

Thanks, Joe! You do the same—have a fantastic week!

Jun 25, 2024 11:57 AM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

It’s a great post. Thank you for sharing!

 

Have a super fantastic week!

Joe Jackson, Realtor-KWCP

Jun 26, 2024 10:58 AM
Mike Tolj

Thanks once more! 😉

Jun 26, 2024 11:11 AM