Keeping vacancies under control in commercial property and retail property is critical to the property performance for the landlord. Vacancy management and tenant retention are essential parts of the daily duties of a property manager.
The landlord requires tenant stability to achieve rental control. When the property market becomes challenging, or the economy becomes difficult, the frequency and size of lease incentives to attract new tenants will impact the leasing market. That also becomes a considered component of the vacancy control process.
So the vacancies in a commercial property will be impacted by:
- The asking rent the commencement of lease
- The levels and types of incentives offered by the landlord to new tenants
- The available lease term for both sitting and new tenants
- The available lease option beyond the initial term
- The available rent review profiles and the frequency of rent review
- The anchor tenants in a property that attract customers
- The tenant mix in a property
- The outgoings occupancy costs that impact the tenant and how they are recovered
- The levels of maintenance in a property
- The services and amenities that serve the tenants and the customers to the property
- The changes in local business and community demographics
Vacancy and tenancy management means staying ahead of the trends and changes that the existing tenant mix can give you. Lease expire dates and lease options should be managed and handled early by the property manager so that any re-letting strategy can occur if a tenant is to leave a property.
To keep vacancies under control, it is essential to maintain close contact with your existing tenants. You should expect that other landlords and real estate agents in the local area will also be speaking to your tenants an attempt to attract them to their property.
When times get tough, or the economy becomes difficult, it is the tenant profile within the building that has to be maintained because it will be attacked from many directions. It is not only the landlord that experiences difficulty in cash flow, but also the tenants. In such circumstances, it is better to maintain a tenant on a reduced rental than create another vacancy in an already distressed market place.
Try to manage your way through rental arrears problems rather than create excessive vacancy in a property. An empty property is like a cancer on the cash flow for the landlord. New tenants want to be part of a community of tenants and not the sole savior of the property.