Commercial Property and Investment: Preparing Your Space for Lease

July 6, 2011

By: Robert Phillips

Over the course of my 30 plus year career in commercial property management and brokerage, I have worked for several different employers and numerous clients. Each of these individuals approached their business of commercial real estate from a slightly different angle. Some were very aggressive, others more passive, some were in the business for the money, others for the shear enjoyment of what they viewed as a game.  

From each of these individuals I have gained pieces of wisdom that has helped to form an approach to Commercial Leasing that I apply to each of my leasing assignments. None is more important than the other, but when combined, are a formula that will help you gain an edge over your competition. This formula applies and can be used whether you are an Owner, Property Manager or Leasing Specialist. This article covers the first part of the formula – space assessment and preparation.

 

Space Assessment and Preparation 

Your first step in the formula is to assess the space and gather information regarding your product. Remember, lease space is a commodity and the market will want to know what you have to offer. 

Next, you will want to determine what the space needs in order to be competitive in the market place. I generally start this process with a physical inspection of the space; for me this begins at the street, that’s right I said the street. You’ve heard the term “Curb Appeal.” Don’t under estimate the power of curb appeal. Make sure your property is clean, neat and well groomed. Take care of any deferred maintenance that may exist. The potential tenant will start their process of space evaluation as they approach the property and their scrutiny will intensify as they get closer and closer to the entrance of your space.

One of my former employers taught me the lesson and importance of curb appeal; they focused on detail and things that might seem obvious to some, but that few actually implement. For instance, the entrance to each space should be spotless, flowers planted when possible, doors and thresholds free of dirt, debris, cob webs and junk mail. Make sure the key works easily, the door swings properly and does not hang up or slam when let go. Seems obvious, right? Not so much, you would be surprised at how many times I have previewed a space and found these basics missed. 

Once you’re on the inside of the space, the same scrutiny should be given to the inside that you gave to the entrance. What is the condition of the floor, walls, ceiling, lights and HVAC vents? If the flooring is in less than good condition, it should be removed. Whether you replace it or not depends on a number of things; including the condition of the floor beneath the flooring, the size of the space and whether or not a tenant would expect to select the flooring for the space you have for lease.

The walls should be free of holes, have a consistent texture and generally receive a fresh coat of off-white paint. If you have a drop ceiling, the tiles should be uniform throughout each room and the entire space if feasible. There should be no evidence of roof leaks or missing tiles. If there are stains from current or past roof leaks you should not only repair / replace the stained tiles, you should make any needed repairs to the roof or HVAC system if that is the source of the leak.

If there are interior restrooms, the same applies to the floor, walls and ceiling. All of the fixtures should be clean and in proper working order. Don’t forget to have the power on and make sure all the lights work. Replace non-working, humming ballasts and replace yellowed light diffusers. Proper and functional lighting is essential to a good showing.

 

Extended periods of Vacancy

If your space will be vacant for an extended period of time, make sure you visit the space at the very least once per month and touch up the work you have already done. Over time, spiders will do their thing, mail carriers and solicitors will do their thing and landscapers will do their thing with the leaf blowers. Your vacancies need regular maintenance and care, things happen, pipes break and roofs leak even when they’re not occupied. The last thing you want to happen is to have all the time, energy and money you spent to prepare the space properly in the first place erased by time and the lack of proper maintenance. 

Your next step is to implement an effective marketing plan; this includes pricing, concessions, incentives and identifying the target of your marketing. Most of the successful people I work with and for in commercial real estate have tried leasing in-house or by themselves at one point or another and for a variety of reasons have ended up hiring this service out. 

I highly recommend that you hire a leasing specialist in your area to handle the marketing and leasing of your vacancies. A qualified and experienced leasing specialist should work specifically in the area and product type that you have for lease. Don’t make the mistake of hiring a friend, relative or someone you have used successfully in another market.. If you are not a leasing specialist, don’t try to lease the space yourself. You will most likely find yourself at a distinct disadvantage to those in the market that have professional representative. Negotiating skills, forms, market knowledge, including lease rates, concessions, incentives and availability of like kind space are just some of the information a leasing specialist will be able to provide you.

The above suggestions if implemented properly will most definitely enhance the first impression prospective tenants have of your space and give you a leg up on your competitors. Note, another aspect of preparing your space for lease would be configuration of second generation space, but that’s a topic for another article. 

From 1994 to the present Robert Phillips has served as 1460 Capital’s, President and CEO. He attained the designation of CPM (Certified Property Manager) in 1985 and his broker’s License in 1987. Robert’s experience spans over 30 years in the professional management and brokerage of all types of commercial properties. For more information, visit http://www.pacificcoastcommercial.com