The commercial property market is in for a tough 2017 as our South African GDP is only expected to rise with 1.3%. This low economic growth leads to fewer offices being rented, fewer business loans being approved and inevitably muting the market if not slowly declining it. This however doesn’t just mean doom and gloom, instead we simply have to become more creative in making our commercial properties more attractive. A declining market is sadly where the true entrepreneur is separated from the rest. We have 5 suggestion of how to make your commercial property more attractive.
1.Change your leasing period
Consider offering a longer leasing period than the standard year to year. Longer leases will give tenants the confidence to consider your rental property above others, simply because they are assured of their space. They feel free to make the investment of remodeling the space to their specific needs and desires, without the immediate fear of next year.
There are significant advantages to you as landlord, simply by minimizing your possible vacancies. Consider changing your leasing period to a 3-5 year period. Giving security to you and your tenants. A win-win for tenant and landlord.
2. Change your interest rates
A key aspect to changing your leasing period will also be to stipulate your escalation percentage. This way your tenant will know exactly what they will have to pay during their long-term leasing period (year on year).
Future budget planning is essential for any serious commercial tenant. Make it easy for them:)
Consider keeping this escalation between 8-9% as this is the norm at current. This percentage you can connect to future inflation rates if you feel you need more control over predicted future figures.
3. Change your amenities policy
Consider including the amenities into the leasing amount or a section of it. With large corporations this of course become impossible, but not with smaller business ventures. Including the lights and water is just another incentive to lease from you and not another.
You will however have to be very careful with this lease change, as many tenants can take advantage of this. Consider a fix amount, a number that will make it realistic for a small business to reach if they themselves use the amenities sparsely.
Small business owners need to consider all the expense, especially when it influences their cash flow.
4. Consider small Renovations
Many landlords would say that any renovation is costly, and in a difficult economical market this may be the worst idea ever. This thinking is well deserved, but if you have a property and you don’t want to sell, but keep on playing the long term property leasing game, well then you need to find new ways to fill your vacancies.
Having an open mind to small renovations that a long term tenants might need or want might not be the worst idea. Consider the cost, consider the improvement it makes to your property and consider the options if this would result in losing a potential tenant.
5. Be open to negotiations
The time has passed where landlords can have their fix rent amount and simply wait until they find a tenants willing to pay. The time has come for commercial landlords to be open to negotiations. Keeping a minimum in mind and negotiating until you and your potential tenant are happy. Don’t go lower than your minimum, simply because of the financial actual lost you will be running. If this is needed then you need to consider better business opportunities, as the future doesn’t seem to be changing soon.
But keeping a negotiated mind, in mind, is essential to the commercial rental property market.
Consider our 5 suggestion of how to make your commercial property more attractive, one or all of our suggestions might just put your commercial property above another.
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