There is not much that ruins the day of a commercial property owner more than the recurring thought of a vacant property remaining vacant. The good news is that in most markets on Australia’s east coast at the moment this is the exception, not the rule. Vacancy rates are low, incentives don’t need to be as generous as they have historically been to attract a new tenant and the rents are relatively stable or have seen steady growth in recent years.
So, you have got a great tenant, the question is how do you keep them? For those seasoned commercial property owners out there, the feeling of loosing a tenant to another property is one that they would care to repeat as infrequently as possible. Given most commercial leases are registered and as a result the lease expiry and tenant contact information is only a few clicks away, astute property owners need to assume that there is an army of secret tenant stealing ninjas out there plotting and scheming to woo your otherwise happy sitting tenant away from you and your property.
The solution here may be a simple one, these nasty tenant thieves are nothing if they are not predictable. They will likely have diarised a date just before the date of your sitting tenants’ option to renew period commences and they will be doing all they can to temp the tenant across to a property that they have which is vacant. They will likely be throwing everything including the kitchen sink at the deal to try and make it happen, extensive rent-free periods, fit out contributions, rental abatements, promotional funds and the list goes on on this guide to commercial leases from realcommercial.com.au.
Like in most relationships be they commercial or personal, the relationship is only under any real threat if either party does not feel that they are appreciated, valued and or understood by the other.
The first step in increasing your defenses against tenant theft is to keep the level of communication with the tenant high right throughout the term of the tenancy, not just when you are trying to convince them to re-sign or extend their lease. Simple things like checking in to see if there are any maintenance or operational issues at the property that need addressing, asking the tenant how their business is going and whether they will plan to expand or contract in the coming years, telling them that the owner is very happy with them and wants to thank them for being a great tenant. This is where a great commercial property manager is worth their weight in platinum, frequent follow up and an intimate knowledge of what is going on with each tenant and property is one of the hallmarks of property management excellence.
The by-product of this high level communication is that the renewal of the lease or the option to extend is likely to have been discussed between the tenant and property manager long before the official window opens for the tenant to sign back on. Add to this that the tenant feels as if their needs are being met as all the repairs and maintenance are attended to in a timely and efficient manner and when the property manager has taken the time to understand their business they feel completely supported. This way when the Ninjas come knocking with their bag of tricks it will be a simple and resounding response of, “Thanks but no thanks, we love the one we are with!”
Even if the tenant still requires some financial incentive to re-sign the lease, the size of the incentive required is likely to be significantly smaller than if the tenant felt entirely neglected.
The threat is always there and always will be, the message is an uncomplicated one: be proactive, be attentive and above all, always be prepared.
Other articles you might be interested in…
- Commercial Real Estate Management and Market Growth Opportunities in North Sydney
- Commercial Lease Incentives
- Introduction to Commercial Property Finance
- Is Commercial Real Estate a Better Investment than Residential Real Estate?
- Why should I use an agent for commercial property management?
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