In the market, tenants generally fall into two categories: good and bad. While great tenants provide a positive experience with minimal concerns, problematic tenants can cause issues with payment, maintenance, demands, and more. Therefore, finding the right tenants can feel like treasure hunting. The process can be time-consuming, draining, and complex, especially if you are new to the experience. However, with patience and the right strategies, the outcome can be rewarding.
To help you in this endeavor, here are the three best ways to find good tenants for your commercial real estate (CRE) property.
1. Study the Market
If you’re in the early stages of vacancy and preparing your property’s financial statements (proforma), it’s crucial to study the market. This is especially helpful for first-time property owners or those new to the leasing business. By understanding standard rates, provisions, and amenities, you can evaluate your property’s quality and adjust your lease rate accordingly. Aligning your rate with current market trends can give you a competitive advantage.
2. Present a Well-Groomed Property
As a CRE property owner, never underestimate the power of a first impression. A well-maintained property can significantly influence potential tenants to choose your location for their business. Improving your property’s appearance and functionality makes it more attractive and convenient for your target market. This includes keeping up with maintenance, considering the design to align with potential businesses, securing useful amenities, and promoting your location as a hub for consumer traffic.
In addition to aesthetics, ensure that all utilities are in top condition. This standard protocol in marketing your property can elevate your chances of attracting more potential tenants. When your property is well-prepared, you may find yourself being pursued by tenants rather than having to seek them out.
3. Employ a Commercial Real Estate Broker
Once you’ve settled your proforma, decided on your lease rate, and prepared all necessary documents, the next step is to hire a commercial leasing broker. These professionals serve as intermediaries between CRE owners and potential tenants. Hiring a broker is one of the easiest ways to find good tenants for your property when the need arises.
Advertising:
Your broker will handle the advertising, starting with posting your property online. While free-listing sites are available, a good leasing broker will use premium paid sites to market your property. These sites attract targeted tenants, though they also come with competition. Social media can also be a powerful tool for advertising, allowing brokers to target specific audiences.
Brokers don’t just rely on online listings; they also make cold calls, canvas existing tenants within a 5-mile radius, and book property tours. These efforts help manage transactions and negotiations with potential tenants. Keep in mind that advertising your property online requires patience. The availability of nearby spaces and the average market duration for space will influence how long it takes to find the right tenant.
Matching Clients to Your Preferences:
Working with a professional broker allows you to specify your tenant preferences. While the goal is to gather as many interested applicants as possible, communicating your preferences to your broker ensures they can efficiently target the right tenants. This saves time and helps match you with tenants who fit your criteria.
Brokers have connections with numerous potential tenants and work hard to find suitable properties for them. This simplifies the process, allowing your broker to promptly match you with a potential lessee that meets your preferences.
More Efficient Negotiations:
If you’re also working with a commercial lawyer, they can collaborate with your broker to ensure a seamless and convenient process. This includes negotiating payment and commission terms. Having two professionals on your side gives you a significant advantage.
Ultimately, while you can rely on professional help, the final decision on your lessee will depend on your judgment. As a CRE property owner, you want a long-term, committed tenant with a positive leasing history who negotiates fairly. When you find such a tenant, you’ll know you’ve secured a good one.
Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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Meet The LeveragedCRE Investment Team
Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.
The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.
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