Few things are more stressful for commercial property owners than having an unoccupied building or unit going to waste. That empty space represents potential rent lost for every day or month it remains vacant. Finding the right tenant, especially in a pinch, can be a frustrating affair. You want to fill up your untenanted property with someone who will treat it with respect and reliably pay their rent, but finding such lessees on a moment’s notice is easier said than done.
Realistically, there is no universal strategy for locating the right tenants; rather it is critical that you take a personalized methodology to find the right kinds of tenants. Plenty of fantastic business units remain unoccupied, not due to their condition, but because the property manager’s inability to market the location to the right audience. So, how do you find tenants for your commercial property?
Find out what tenants are looking for here.
What are Customers Looking For?
When a business is looking to lease a commercial space, they will do so either on their own or will hire someone to help them. Since many cities have a plethora of spaces available for rent, prospective tenants can and typically will be discretionary about the process until they find a spot that meets a majority of their parameters. By understanding their needs, you can narrow down your list of suitable occupants. Topics to consider include:
- Customer fit – Is the spot located in a place that will draw in their archetypal customer? Does it have foot traffic? Is it in a nice location? What is the surrounding area like? A potential restaurant is going to care far more about being a walkable distance from other popular locations than a CPA office. Even a casual restaurant bar will likely want to be situated in a less affluent area than would a fine dining, Michelin Star restaurant.
Ask yourself, “What type of business your location would be suited for?” It is pointless to court businesses that rely on factors that your location cannot provide. To maximize success and efficiency, try and ascertain the type of business that would best utilize your space.
- Property type and zoning – Zoning plays a critical role in dictating the types of businesses that can function out of a commercial building. Types of commercial zoning differ for:
- Real estate
- Office space
Because of this, only certain types of businesses may be allowed to operate out of your space legally. Therefore, if you do not already know your property’s zoning restrictions, it is critical that you understand those before attempting to fill the location.
- Size – A mom and pop shop is going to have different office space square footage requirements than a major company. For each vacant piece of property you own, you should have a solid idea of what size of business could ideally thrive with those square footage constraints.
- Accessibility – Does it have plenty of parking? Does it have street parking? A parking lot, or one nearby? Can the building be accessed from the street? Questions such as these are of critical importance to restaurants and retail stores. If it is a hassle for their customers to reach the store, they will have a tough time succeeding. So, if your property does have great access and parking, make sure to highlight that fact and target viable businesses.
- Budget – While you want to make money, every day that passes with the property remaining empty is money lost. When you set your rent prices, it is important that you are pricing them out according to the market set by comparable spaces. Even if your space is in an incredible location and has great accessibility, you could be driving away potential customers by overestimating what people are willing to pay. If you have to drop the price somewhat below the optimal figure, that may be more cost effective than having to eat a month’s worth of rent.
By rigorously examining your spaces and figuring out what type of business would be best suited for that specific location, you can optimize your search and avoid wasting your time on businesses who are, in all likelihood, going to pass on the site in favor of one that better suits their needs.
Ways to Find Tenants
Once you have determined who your space is perfect for, it is time to start reaching out.
Everyone likes to feel like they are getting a deal even if they know that the savings are minimal. It is why Black Friday sales are so popular and why coupons are still commonly used. Many people are willing to pull the trigger on purchasing an item if it means that they are paying a little bit less or if it comes with a bundle of other things.
Consider throwing in incentives, upgrades, or deal sweeteners in order to entice the potential tenant to sign the lease. Possible promotions include:
- No security deposit
- A security deposit discount
- Free Wi-Fi for the first year
- First month’s rent is free
- Upgraded appliances
- No application fee
- Gift card to a restaurant or furniture store
- A gift basket
If you have the resources, even small gestures could go a long way in encouraging a potential renter to become an actual renter.
One of the easiest and most effective ways to fill out a space is to use your already existing clients and tenants for recommendations. If you have established a healthy working relationship with your tenants, they would likely already be willing to help connect you with a friend or collegial business without any reward. By incentivizing this referral, you motivate them to generate solid leads and actively work with you to fill that space. You could promise:
- A free month’s rent
- A lump sum of cash
- A substantial gift certificate
If you treat current tenants well and develop a strong rapport, a tremendous byproduct of this is that they will want to vouch for you and will be happy to reach out to close connections that are in need of a new space. Word of mouth is hugely important to most people. Think about how many times you have shared your favorite restaurant, movie, song, or whatever with someone close and then they acted upon your recommendation. Consider how many times you have responded to a friend’s endorsement.
Commercial Parcel Lockers
In a day and age where Amazon reigns king, most every business receives a variety of mail, packages, and delivery shipments. One possible incentive that you can use to entice businesses into renting your location is providing them with smart package lockers such as those offered by Parcel Pending. Smart-lockers help to eliminate package problems, prevent theft, ensure that packages have been delivered safely, and create efficiencies for the mail services team.
Parcel Pending offers lockers that are:
- Advanced – Owners can manage deliveries with the mobile app.
- Convenient – Multi-sized lockers can hold packages of varying sizes.
- Cool – Refrigerated lockers to keep temperature sensitive items at their ideal temp.
- Courier Agnostic – Accept deliveries from any and all courier services
- Customizable – A wide range of colors or custom wraps available.
- Fast – Barcode scanner, allows for rapid package delivery
- Secure – 24/7 cloud-based video surveillance capabilities.
- Smart – Have infrared scanners meant to identify packages in each locker.
Not only do tenants reference these types of amenities when evaluating a rental property, but as the property manager you also save money since implementing such a process will help to reduce overall operating costs.
As mentioned previously, parking can be a deciding factor in a business’ final verdict. In metro areas especially, parking is often considered to be of larger import than the location itself. They cannot sell anything if customers can’t get in their doors. If your property has inadequate parking, they may decide to go with a worse space, but one that has guaranteed parking spots.
If you have an empty property you are having difficulty renting, it may be worth it to try and enhance the space. If there is a possibility that you could open up parking spaces, repave, or improve the parking lot’s max capacity and flow, the ROI of hiring a paving company to make this additional space could be substantial over the property’s lifetime. Especially when you consider the impact parking can have on both customer and employee satisfaction.
If you have no space to make more room for parking, another option would be to partner with a nearby parking lot or garage to see if you can negotiate discounted rates for tenants. You could also reach out to neighboring businesses that might have extra space to see if you can work out a deal.
Secure your Property
Similar to the smart lockers, businesses care whether or not a location is safe not only for their employees but their customers as well. Providing on-site security could be a fantastic motivation to pick your place over another one that is similarly ranked. This could include:
- An on-site security staff at certain hours
- Round the clock security services
- Cameras installed on the property
- A Ring security front door system
While potential steps are not limited to those above, what matters is making potential tenants feel that their property, customers, and employees would be safe and secure in your location.
Offer a Short-Term Lease
Companies that are new to the commercial market may require limited space to start but could grow into something much larger as time passes. For smaller vacant spaces that are suitable for a small business, it may be worth considering offering the option of a short-term lease. New businesses that have yet to generate any income may feel uncomfortable making a long-term commitment to leasing space, especially when they don’t know if they’ll be able to keep the lights on six months later.
By offering a discounted short-term lease with the ability to extend after the end of the initial contract, you not only help a fledgling business out but also generate revenue on that space that might otherwise remain unoccupied. While you might be making less money in the immediate future, over the long haul as the business grows, you can increase rates or even help them transition into one of your larger locations.
Even if they do not end up growing substantially, businesses rely on familiarity, foot-traffic, and word of mouth to succeed; they do not have the flexibility to pick up shop and just relocate. If the business manages to survive the first year, there is an excellent chance that they remain a tenant for many years after.
Work with a Commercial Broker
If you cannot seem to fill the space on your own, it may be worth reaching out to a commercial broker and listing your property through them. While this may cost you some money up front, a broker can help locate tenants who are perfect matches for the location. Brokers have access to databases and large customer pools who are actively looking for the right space for their business. They can take your space’s specifications and pair them with a location hunter with similar desires when it comes to budget, size, zoning, access, and location.
If you have a vacant commercial property you are trying to rent out, there are various steps you can take to improve your odds of finding a great tenant. Remember to consider the space and what type of business it is best suited for. Once you have determined that, consider offering any of the following incentives:
- Move-in specials
- Referral rewards
- Smart and secure parcel reception and storage
- Maximized parking
- Improved security
- Short-term leases
If all else fails, consider working with a commercial broker. By taking steps to improve the space and developing positive and lasting relationships with existing customers, you give yourself the best chance to succeed. The goods news is that the perfect tenant is out there, they’re just waiting to learn about your space.