Knowing how to attract and retain the most suitable commercial tenant is crucial in keeping the heart of your property investment beating.
Tenants are at the heart of commercial property investment. They are the source of your yields and can set the market value of your asset. That’s why it’s important to understand how to attract quality commercial tenants and know how to keep them in your property.
Whether you own or are buying an industrial, office or retail property, the more you consider what a tenant wants, the more relevant your offering will be.
Look at proximity to amenity and public transport
Closeness to amenity is crucial to consider before purchasing a commercial asset. Business owners know that surrounding amenity will appeal to employees who are reliant on public transport, lunch options and a morning coffee.
Retail tenants want customers drawn to their catchment area. So if other businesses are nearby to please them – like restaurants, cinemas and even competitors – the chance of shoppers coming through their doors increases.
Consider signage and exposure
Retail and office tenants need their branding seen by the public. This can be done by putting up signage at the front of the premises.
Signage should be elevated and have unrestricted viewing from the road. This is what’s referred to as exposure. There may be 40,000 cars passing the property each day, but if you can’t provide well-exposed signage then your tenant will be missing out on opportunities.
Signage and exposure are separate but related factors to consider. Both will be high priority for tenants.
Ensure good accessibility
Before purchasing your property, make sure there is convenient access to the site.
For an office or retail property, look at its location on the street. Is it near traffic lights or a main intersection? Are there arterial roads close by to cater for customers and clients in neighbouring suburbs? Even the road quality is important to inspect. Accessibility is all about making the journey as comfortable and convenient as possible for your tenant’s visitors.
Industrial tenants will judge your property based on other access points. They’ll want proximity to transport links and arterial roads for trucks and transport vehicles to access the property with ease. Most industrial businesses will need room to manoeuvre large trucks. So significant truck circulation and heavy vehicle access is important.
Present the best version of your property
Even something as minor as a well-manicured garden can be the difference between a won or lost opportunity to fill vacant space.
If your property’s verge looks like a jungle, find a first-rate gardener to improve and maintain it. Likewise, a fresh coat of paint might be a worthy investment to keep your property looking up-to-date for commercial tenants.
Provide enough car parking
Retail tenants will look for ample parking space for their customers, with a suitable layout to avoid overflow. Ideally, the property will have covered parking to keep customer’s cars cool in summer and the rain off their heads in winter. Clear directions should aid shoppers walking from car to store door, and they will want ease of access with stairs and lifts.
Industrial tenants will want a decent area for parking too. Cars should be kept a safe distance from heavy machinery and trucks. Meanwhile, businesses occupying office space should at least have enough parking for management staff and visiting clients.
It’s also important that your property has an appropriate parking ratio – that is, the number of parking spaces allocated towards the amount of space leased. Tenants won’t want to pay for unused bays, so ensure you don’t just meet a tenant’s parking needs but that you don’t overshoot it either.
Sustainable workplaces have been proven to boost staff productivity and cut costs for businesses. Indoor air quality, office temperature, lighting and office layout can have a drastic effect on employee satisfaction while they work and can save business owners on electricity overheads. This has led to the creation of a national rating system which measures the environmental performance of Australian buildings. It’s called NABERS (National Australian Built Environment Rating System).
According to Australian sustainability program City Switch, a 5,000 sqm office in a 4.5 Star NABERS-rated building could increase employee retention by 50% and productivity by 11%, while cutting electricity bills in half.
Commercial tenants are becoming more aware of the benefits of a sustainable workplace – and landlords should be too.
Understand the leasing market
You should be aware of the market demand for commercial properties like yours, so that you’re able to negotiate the best deal with your tenant.
For example, if there’s high supply in a particular market, commercial tenants will be spoilt for choice. You might need to offer incentives to attract them to your property. But a shortage in supply gives power to landlords. You’ll be able to negotiate higher rents when tenants are competing amongst themselves for high-quality space to occupy.
Build your network
Attract quality commercial tenants by reaching out to your contacts in the industry. From leasing agents to property valuers, partnering with industry experts can boost your ability to cater to tenants. They can arm you with in-depth market information and even a direct line to businesses with strong tenant profiles.
If you don’t have these sorts of valuable networks, it’s best to start building them. Or partner with someone who already has.
Knowing how to attract a quality commercial tenant is crucial in keeping the heart of an investment property beating. For more information on how to invest in commercial real estate, or to find accommodation for your business, get in touch with Performance Property Advisory today.