Five Ways For Landlords To Lower Vacancy Rates
One of the most terrifying words for landlords and property managers everywhere is – vacancy. When the vacancy rates of your properties are up, it can significantly affect your business, creating a dramatic void in your profit streams, generating unexpected costs, and even negatively affecting your current customer satisfaction. As each week of vacancy continues, the pressure gets amplified, and the impact gets bigger.
Commercial real estate vacancy rates hit a record high in 2020. As office spaces, retail stores, and hotels were closing, commercial properties stayed empty and continued to suffer from reduced occupancy into 2021. If you are struggling to find new tenants and secure lease renewals, here are some tips and strategies to consider.
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Maintain and Upkeep All Your Properties
The future of commercial real estate is still uncertain, but one thing is for sure – tenants increasingly prioritize hybrid, updated, and modern spaces. As an office becomes more of a privilege than a necessity, the properties that will be most sought after will be those with the best technological infrastructure, sleekest design, and customizable structure.
In a post-pandemic era, updating the different features of your commercial properties is crucial to keep your space competitive in a market where there is more supply than demand for office space. Incorporating new design elements, installing new lighting, investing in sustainable solutions, and maintaining a cutting-edge digital infrastructure is key to beating your competitors in an increasingly competitive market.
Retain Your Best Tenants
Fostering a strong relationship with your tenants is not easy, but it can often be the most crucial factor that sustains your business in times of change and instability. The happier your tenants are, the longer they will stay. This not only reduces your vacancy rates but also gives you the time and energy you need to maintain your other, less stable properties. Furthermore, happy tenants give ‘five star’ recommendations, which can be worth a lot of money at a time when there are more landlords than tenants in the commercial market.
So how do you maintain your current tenant relationships?
Respond to requests for maintenance in a timely manner, make sure you keep your tenants updated on any changes in their terms and conditions, and reach out to your tenants regularly to make sure they are content and comfortable. The better your relationship is with your renters, the stronger your business will be.
Screen and Vet Your Tenants
One of the most common mistakes landlords and property managers can make is not investing enough resources in finding the best tenants or properly vetting them. In a tougher market where demand is low, it’s even easier to make that mistake and compromise on tenants that are less than a perfect fit for the property.
While spending more money and investing more time in screening and vetting your tenants might seem counterintuitive, it usually pays dividends in the long run. Problems such as missed rent payments, property damage, and even breaching of the lease can often be much harder and more costly to deal with further down the road. Therefore, implementing proper vetting procedures for your potential tenants is one of the most important things you can do to protect yourself from high vacancy.
Set Market-Appropriate Rents
Like any other industry, a sustainable business is one that is attuned to the shifts and changes in the market and can adapt properly. In a low-demand market, it is important to be resilient enough to be able to adjust rents and stay competitive.
To ensure you’re setting competitive and realistic rents, invest in thorough and consistent market research and use your network of colleagues and competitors to keep tabs on how prices are changing.
For existing tenants, if the current rents become unaffordable because of the market, being able to provide some flexibility can go a long way when it comes to retaining your tenants. Rent discounts, some benefits, and even assistance in relocating to one of your other properties, can help you preserve your tenants even when times are harder.
And in periods of prosperity and stability in the market, it is wise to prepare your business for a rainy day with optimized financial management and constant investment in your tenant relations.
Use Tech to Find Your Perfect Tenants
Finding the right tenants for your property – low-maintenance tenants that stay for more extended periods – is the smartest strategy for keeping your vacancy rates low. So what is a “right tenant”? A good tenant does not only mean a reliable tenant who pays the rent on time; it is also a tenant who makes the best use of the space – so the space is best serving them.
However, when it comes to commercial spaces, it is often hard for prospective tenants to envision the potential of the space for their own specific needs. This uncertainty can lead to longer deal cycles, as tenants use external services of architects and designers before even signing the lease to understand if the space will work for their business. In the worst case, this can lead to tenants leasing properties that are not compatible with their needs and leaving earlier than expected.
qbiq’s commercial real estate software can help your tenants envision your commercial property in the earliest stages of the deal.
With qbiq’s automatic planning engines, you can save money and time for both you and your prospective tenants. With instant, automatic architectural planning, you can generate customized layout planning for each of your prospective tenants at the beginning stages of the marketing process – for a fraction of the alternative cost. With the ability to envision how the space will work for each customer’s needs, you can provide your brokers with competitive, advanced tools to market your properties and ensure the tenant is the right one for your space.
Want to hear more about what qbiq can do for your business? Request a demo