Finding and keeping tenants is the paramount goal of any commercial real estate company or property manager. Knowing what to look for and how to keep tenants engaged and satisfied depends on several different factors.
Choosing the Right Tenants for your Property
Tenants tend to put massive effort into selecting the right property, looking at things that are offered like amenities, security, maintenance plans. Owners and landlords should also have an idea of whom they want to occupy certain spaces.
Researchers for a CRE should look at the market their property can hold. The market can vary depending on size, economy, and availability. Brokers and CRE advisors can help immensely in this aspect.
The type of tenant a company attracts can also be based on what amenities they’re prepared to offer. If a large number of tenants are looking for something the property doesn’t currently have, it can affect the cost associated with a new potential tenant. If an upgrade to an amenity is required for a specific tenant type, looking at a different tenant type might be more cost-effective.
Commercial real estate companies must also consider the property manager and tenant relationship. Maintaining healthy relationships through the chain can affect getting new tenants through referrals and word of mouth. If the current tenant’s needs don’t appear to be met, this could send the wrong message to potential customers, so an effective property manager is essential to happy rental arrangements.
Screening Potential Tenants
Here are some specific things brokers should consider in the screening process of potential tenants:
- Risk Assessment – Consider each potential based on the information you can gather on them such as background checks, references, credit reports, other business prospects, past reliability, etc. The higher the risk, the lower the return.
- Potential Tenant’s Lease Terms – Consider the lease terms your client is requesting. Often landlords prefer longer lease terms, but if a potential client asks for a shorter-term there may be a reason behind it. This reason could help you decide if they are a good fit or not, such as start-ups looking to scale rapidly and only need space for a short time, or the short span may also be an indication of financial instability.
- Financial Support – When researching potential tenants it’s important to assess their financial support system. Credit checks are run for any new or renewing lease, so be prepared to get the necessary information to gather the report. If the tenant is a one-man show with little support, any future downfalls could fall on the landlord. Having multiple backers assists in cases of market change or economic collapse help lower the risks of taking such clients. That’s not to say landlords should shy away from self-guarantors, they could have qualifications that may not show up in initial research.
- CRE tools – There are some tools that can assist in the screening process of potential tenants. Tools can range from standalone software to internet websites which can help with the research process. Being able to run a credit report, background checks, past rental history, even risk assessment reports can all help make a decision clearer.