When it comes to leasing commercial or retail property today, the selection of tenant will be fundamental to the quality of the outcome for the landlord. This says that not all tenants will do or be acceptable when it comes to leasing vacant commercial premises.
So the commercial real estate agent has to qualify and understand the tenant that is enquiring on the vacant property before matters proceed. Some questions need to be asked to get the correct match of property.
When fewer properties are selling, the lease activity tends to be higher. Successful businesses still need to operate from quality commercial or retail premises. This is an opportunity for commercial property agents that specialise in commercial leasing.
So let’s go back to commercial property leasing and the elements that should be considered when qualifying tenants. Here are some key factors to consider before you start:
1. Understand the capabilities of the property when it comes to tenant occupancy. Things to know will include services, amenities, and size of tenancy, improvements, fitout design, and availability, term of lease, options, rental requirements and type, and landlord plans for the property. The permitted use or legal use of the property should be understood as part of this process.
2. Get a full brief from the landlord as to the type of lease that they will do for the premises. A lease can be varied and negotiated, but you have to have the landlord’s base requirements before you start. Ask the landlord about rent levels, lease terms, option periods, preferred tenant, renovation and maintenance plans for the property. These facts should be in parity to the comparable properties in the local area that are also on the market to lease at the moment.
To qualify the tenant you can take the following approach:
- Find out where the tenant has come from and if they are moving from another property. It is likely that the timing of the move will have impact on your negotiations and inspections.
- What does the tenant know about rent and properties in the local area? Have they looked at anything else in the area and if so what? It is best to know what you are up against early in the inspection process.
- Has the tenant been looking at other property with other agents and are negotiations underway elsewhere on any ‘short-listed’ property now? This will have an impact on your discussions and inspections with them.
- What levels of rent and lease term does the tenant have in mind? Make sure you find out about the extras of lease occupancy such as outgoings payments, and consumables including electricity, gas, water, and communications.
- Will the tenant require a long lease term and or an option period for a further term? This may not always suit the landlord.
- The numbers of tenant staff and the type of business will have impact on the improvements and fitout in the property. Ask questions about things such as car parking, loading and deliveries, office configurations, hours of operation, security, access, customers to the property, and quality of fitout.
So you can do a lot with a tenant before you take them to a property. Importantly this information is captured into your database. As a general rule do not give out any property information until the tenant has told you everything that you need first.
If a tenant is also or has been dealing with another agent, be very careful to check that they have not seen any of your listed properties with other agents earlier.