Top 12 Landlord Major Missteps that Can Slow or Derail Your Leasing Efforts
Today, David Morris, CCIM runs down the Top 12 Landlord Major Missteps that Can Slow or Derail Your Leasing Efforts. David is a Sales Executive with Xceligent and former president of St. Louis CCIM, SIOR, Missouri Commercial Realtors, and St. Louis Commercial Realtors chapters. Connect with David on LinkedIn: DavidMorrisCCIM
- Signing leases without a strategic plan. A whole-building approach to leasing is critical to achieving the best rates and best tenants.
- Leasing the best space first. This can devalue the rest of the building’s available space, such as leasing half of a floor with a better view, or leaving small spaces vacant.
- Failing to ensure each tenant’s lease terms support the long-term investment objectives for repositioning or disposition.
- Faulty termination clauses that allow tenants easy “outs” can leave you, the landlord, with unamortized costs from tenant improvements (TIs), incentives, and fees.
- Hiring a broker without the right specialization – experience working with properties of a similar type and location.
- Failing to investigate the tenant’s finances, business plan, and revenue stream, and failing to require a substantial security deposit.
- Allocating capital incorrectly; spending money on things that won’t help lease the building, e.g. replacing sconces on the exterior of a building. A better use of funds might be replacing dated light lenses in a vacant space to refresh it. Ask, “Does my improvement help lease the building more quickly or at a higher rate?” before spending.
- Choosing incompatible tenants. Placing a staid law firm next to a bustling sales organization or a come-as-you-are creative firm is bound to create friction.
- Pricing the building incorrectly. Holding out for an extra nickel or dime in pricing may keep the building stuck in vacancy limbo.
- Failing to evaluate the competition. Ruthlessly compare your building’s pros and cons against competitors – aided by your broker – to determine your unique selling points and high-impact improvements.
- Forgetting the small stuff. Prospective tenants can be turned-off by the little things, so keep empty spaces free of debris, lights working, and blinds open. Common areas should be clean, parking lots and signs in good condition, and consider investing in seasonal plants at the entrance points.
- The biggest mistake? Lacking a story. Your building should have a compelling message that differentiates it from the competition.The building’s story should be tailored to a key tenant driver, such as visibility, tech infrastructure, or accessibility. Some landlords develop a theme or foster tenant clustering. The “story” is a creative element of a leasing business plan that many brokers fail to develop. Your broker should collaborate with you to identify and enhance your property’s unique story, then use that story’s powerful potential to drive tours and contracts.