How to Attract & Retain Commercial Tenants

How to Attract and Retain Commercial Tenants
If you’re a landlord for a commercial building, part of your role is making sure your tenants have the right setting to conduct their businesses.

Research is key. While there are some broad trends in the labor market, some needs differ by region. Understand your local market and what your competition is offering (or not offering). Paying attention to general workplace and labor trends is equally important. More and more people are working on contract agreements or looking for work-from-home arrangements. You need to show your tenants that having a physical workspace matters, and that your space is the best place for them.

Ensure the property is attractive, safe, and functional. Invest in landscaping and consider incorporating greenery in the interior as well. Provide on-site security guards and good lighting. Maintain reliable air conditioning and heating systems. High-quality Wi-Fi is a necessity; consider installing charging stations for devices throughout the building. Offer suitable parking and consider your proximity to public transit.

Turn vacant spaces into amenities that can meet employees’ needs. Consider establishing coffeeshops or restaurants on-site. Gyms can help workers maintain their physical and mental well-being; childcare facilities can be useful.

Use concerns about environmental sustainability to create business sustainability. Invest in making the property energy efficient. Offer recycling and, if possible, consider compost programs. Consider building rooftop gardens or perhaps community gardens.

Foster community with your tenants. Know each lease’s individual details. Give rewards for loyalty, and conduct satisfaction surveys. This will tell you what’s working and what needs improvement.

Cause Marketing: The Intersection of Business and Philanthropy

As millennials increase their influence and purchasing power, businesses large and small are looking for effective ways to attract their interest, their dollars, and their advocacy. One of the best ways to cultivate loyalty among younger consumers is with cause marketing.

Cause marketing refers to a business’s support of an initiative, a nonprofit organization, or a cause so that people associate the business’s brand with the cause.

Traditionally, cause marketing relied on corporate giving, but for many companies today, purpose lies at the heart of their business model, and the cause is baked in.

In the past, some brands made the mistake of randomly picking a cause just for the exposure it brought them.

But authenticity is a key differentiator in cause marketing, and there is a fundamental difference between supporting a cause and standing for a purpose.

Millennials want authentic messages, authentic products, and authentic experiences, and they are not taken in by those brands that use social responsibility as a ploy.

It’s a winning strategy, but only if there is real alignment with and a genuine commitment to the identified cause.

The success of companies like TOMS Shoes, Warby Parker, Patagonia, Burt’s Bees, The Honest Company, and Whole Foods attests to that.

While millennials are driving the demand for more purpose-driven brands, more and more consumers are putting their money where their hearts are and are willing to pay extra for brands that use business as a force for good.

Plug the Leaks and Improve Your Bottom Line

Does it sometimes feel as though your cash flow is simply dribbling away? As a small-business owner, you need to be on the lookout for fiscal leaks and plug them up as soon as possible. Here are some places to look.

Recurring service charges: You may be paying for services or subscriptions you no longer need. If you’re not vigilant, it’s all too easy to let these charges become unaudited background noise.

Process inefficiencies: These can take the form of redundant workflow procedures, suboptimal scheduling, physical distractions in the work area, or poor ergonomic planning. Whatever the causes, these are leaks that need to be plugged.

Obsolete or outdated technology: Investing in new technology can be pricey, but up-to-date systems ultimately pay for themselves. Whether it’s new equipment that speeds production or higher-speed internet that helps you connect with your customers, investing in technology is essential for business growth today.

Employee turnover: Recruiting, hiring, onboarding, and training new employees is costly. It costs money to hire a headhunter or employment service, and it requires a significant expenditure of time and effort to do it in-house. Plus, turnover is often accompanied by lost productivity and damaged relationships. Minimize this leakage by paying industry-standard wages and keeping a finger on the pulse of workplace morale.

Performance issues: This leak often springs from not dealing promptly with employee behaviors such as malingering, abusing sick leave, spending too much time on social media, long email exchanges, and other time wasters.

Why Invest in Commercial Real Estate?
There are many good reasons to invest in commercial real estate, the primary one being income potential. Depending on the area, the type of structure, and the condition of the property, commercial rentals can generate an annual return of 6 to 12 percent of the purchase price, according to publishing giant Nolo. This is considerably higher than the expectation for most residential properties, and it is generally a fairly reliable income stream.

Traditionally, commercial real estate appreciates faster than other investments. Moreover, you can borrow against the property and use that money to make additional investments. Plus, real estate is one of the few investments that offers tax benefits. Both the mortgage interest deduction and the depreciation deduction can help lower an owner’s tax liability.

Consider too that commercial property lessees are usually business owners who take pride in their businesses and want them to thrive. This means they have a vested interest in maintaining their premises. In this regard, the tenants’ and owners’ interests are aligned, which makes it easier to maintain the appearance and improve the quality of the property.

Another advantage of commercial rentals is that businesses normally have set operating hours. Barring emergency break-ins or fire alarms, there are no midnight calls about plumbing repairs or lost keys. In fact, most commercial properties these days have alarm-monitoring services so that if problems arise at night, the alarm company can handle the situation.

In addition, it’s fairly easy to determine lease rates for commercial properties. Rental rates can be based on the previous owner’s income statement and prevailing pricing in the neighborhood.

Moreover, there is greater flexibility in security deposit limits, termination rules, and other contractual terms because consumer protection laws governing commercial leases are less stringent.

There are even certain situations in which a lessee will agree to pay all of the property expenses, including real estate taxes. With these triple net leases, the property owner is responsible only for the mortgage. Companies typically sign these types of leases when they want to maintain the premises in keeping with their brand.

While there are many positive reasons to invest in commercial real estate, there are some limitations and risks to consider as well. Acquiring a commercial property typically requires a greater up-front capital investment than does acquiring residential property. Additional expenses related to tenants may include fit-out costs or building-code upgrade requirements for certain types of businesses. And then there are the ongoing expenses of taxes, insurance, repairs, and maintenance.

Lastly, there is the risk potential to consider. An economic downturn could affect the viability of tenants as well as the marketability and the value of the property itself. The fundamentals of the area could eventually deteriorate due to zoning changes, infrastructure projects, and new-builds in the vicinity, which can sometimes create an oversupply in the market and lead to competition for commercial tenants.

Nevertheless, given both the pros and the cons, commercial properties typically have the potential to generate great financial returns. Contact me to learn more about investment opportunities that might suit your interests.

SA Realty Watch Group
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Trying to target everyone is the same as targeting no one. For a business to thrive, it must focus on the right customers. This means creating marketing campaigns that are directed at your target market. But what should your target look like, and how big should it be? Use the following links to find your market and focus your advertising dollars appropriately.

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This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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