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Below is an article that I've written on a blog that I run with a lawyer partner of mine. We have employed some of these tactics with a few people we have worked with. We would love to hear some thoughts from others and, in particular, those with experience renting out commerical properties.
Strategies for Attracting Commercial Tenants and Charging Premium Rents
Although commercial real estate offers numerous benefits there is one major difficulty that commercial landlords often have to contend with: finding tenants. When commercial properties become vacant, they often remain vacant for significant periods of time. Such vacancy periods drain financial resources while the property remains empty and idle. There are, however, several novel and highly effective yet seldom used ways in which tenants can easily be attracted.
In order to attract tenants it is first necessary to establish a good understanding of the nature of the business of a potential commercial tenant. This understanding, in turn, will enable a landlord to delineate the needs of a potential tenant and strategically calibrate his or her marketing efforts to cater to such needs. From our experience some landlords do engage in this type of analysis but only on a very superficial level.
What types of needs are we talking about? The best way in which to illustrate what we are talking about is by providing a specific example. Let us assume that the space to be leased out is office space which would most likely be occupied by various types of professionals. There are several questions that a landlord should ask himself or herself. What benefits does the neighbouring area offer to potential professionals? In order to answer this question comprehensively it is necessary to understand how different professions operate.
The most effective way in which to attract professionals as tenants is by providing them with the means to attract clients to their own business. A substantial part of many professionals` business consists of clients that are referred by other professionals. Therefore, it is extremely attractive for people from different but complimentary professions to be located within proximity of one another.
To know which professionals are complimentary to one another let us think about a transaction which necessitates the use of several professionals. Let us use the purchase of residential real estate as an example. When someone is looking to purchase real estate he or she usually starts out by contacting a real estate agent. Once that person finds a property and makes a successful offer on the property then the client requires a mortgage. This will require that either a mortgage broker or specialist enter into the picture. Once a mortgage is secured the client will need to find a lawyer to carry out the legal component of the transaction. Next the client will need to obtain insurance on the property prior to the closing of the transaction. This necessitates bringing an insurance broker into the picture.
Within the scenario that we have laid out there are numerous possibilities for the passing of referrals between professionals. The real estate agent is in a position to refer his or her client to a mortgage broker who is then himself in a position to refer that same client to a lawyer. This lawyer is often in a position to refer that client to an insurance broker.
A key thing to notice with respect to the scenario that we have presented is that there is a definite order in which referrals are made; it would be nonsensical, for example, for our client to go to a lawyer before having entered into a binding agreement of purchase and sale. It is essential to understand this fact because it can be cleverly utilized in order to market to potential professional tenants.
Within the context of a real estate transaction real estate agents are the ones who originate the referral chain. Because they are in such a position their presence is highly attractive for the other professionals. Mortgage brokers and lawyers, for example, would find it highly desirable to be within the vicinity of real estate agents. As a consequence, if the property you are seeking to rent out is located close to a real estate agency then target your marketing efforts specifically towards mortgage brokers, real estate lawyers, and insurance agents and let them know explicitly that these other professionals are located close by. You can advertise to such professionals very inexpensively through newsletters received by them or on websites catering to professionals. You can also call a few lawyers, mortgage brokers, and insurance agents to tell them you are renting out a space that is located beside a real estate brokerage. You will almost certainly quickly find tenants for the space.
What if there is no real estate brokerage within the vicinity of your property? There are ways of getting around this if you choose to focus your efforts on the professionals that are involved in a real estate transaction. Let us say that the space you are seeking to rent out can accommodate twenty five people. This would be a large enough space to house a small real estate brokerage with a number of agents and a few mortgage brokers and lawyers. You can advertise your space heavily to real estate agents and let them know that you will be charging them a significant discount on market rents in order to attract them more easily. If you are successful in attracting a small real estate agency by offering them a significant discount, you can then easily attract mortgage brokers and lawyers to the space because they will love the prospect of being located in the same office as a real estate agency that will give them business.
As the landlord you can also charge the mortgage brokers and lawyers a premium above-market rent. The mortgage brokers and lawyers will happily pay the premium because the additional business from the real estate brokerage will more than make up for the above-market rent. This, in turn, allows the landlord to cover the lower rent he is charging to the real estate brokerage.
There are numerous possibilities for mitigating the likelihood and duration of vacancies. By gaining an understanding of the types of businesses that you market to, you can strategically attune your marketing pitch to their needs. Doing so is a great way to securely grow a highly profitable commercial real estate business.
For further info you can contact the authors, Michael Antonik and Shabir Amlani, at [email protected]. Michael and Shabir are lawyers and the founders of http://www.uniivaa.com. They have also taught extensively and consulted with numerous professionals, investors, and landlords. Additional articles can be found at http://uniivaa.com/blog.
Strategies for Attracting Commercial Tenants and Charging Premium Rents
Although commercial real estate offers numerous benefits there is one major difficulty that commercial landlords often have to contend with: finding tenants. When commercial properties become vacant, they often remain vacant for significant periods of time. Such vacancy periods drain financial resources while the property remains empty and idle. There are, however, several novel and highly effective yet seldom used ways in which tenants can easily be attracted.
In order to attract tenants it is first necessary to establish a good understanding of the nature of the business of a potential commercial tenant. This understanding, in turn, will enable a landlord to delineate the needs of a potential tenant and strategically calibrate his or her marketing efforts to cater to such needs. From our experience some landlords do engage in this type of analysis but only on a very superficial level.
What types of needs are we talking about? The best way in which to illustrate what we are talking about is by providing a specific example. Let us assume that the space to be leased out is office space which would most likely be occupied by various types of professionals. There are several questions that a landlord should ask himself or herself. What benefits does the neighbouring area offer to potential professionals? In order to answer this question comprehensively it is necessary to understand how different professions operate.
The most effective way in which to attract professionals as tenants is by providing them with the means to attract clients to their own business. A substantial part of many professionals` business consists of clients that are referred by other professionals. Therefore, it is extremely attractive for people from different but complimentary professions to be located within proximity of one another.
To know which professionals are complimentary to one another let us think about a transaction which necessitates the use of several professionals. Let us use the purchase of residential real estate as an example. When someone is looking to purchase real estate he or she usually starts out by contacting a real estate agent. Once that person finds a property and makes a successful offer on the property then the client requires a mortgage. This will require that either a mortgage broker or specialist enter into the picture. Once a mortgage is secured the client will need to find a lawyer to carry out the legal component of the transaction. Next the client will need to obtain insurance on the property prior to the closing of the transaction. This necessitates bringing an insurance broker into the picture.
Within the scenario that we have laid out there are numerous possibilities for the passing of referrals between professionals. The real estate agent is in a position to refer his or her client to a mortgage broker who is then himself in a position to refer that same client to a lawyer. This lawyer is often in a position to refer that client to an insurance broker.
A key thing to notice with respect to the scenario that we have presented is that there is a definite order in which referrals are made; it would be nonsensical, for example, for our client to go to a lawyer before having entered into a binding agreement of purchase and sale. It is essential to understand this fact because it can be cleverly utilized in order to market to potential professional tenants.
Within the context of a real estate transaction real estate agents are the ones who originate the referral chain. Because they are in such a position their presence is highly attractive for the other professionals. Mortgage brokers and lawyers, for example, would find it highly desirable to be within the vicinity of real estate agents. As a consequence, if the property you are seeking to rent out is located close to a real estate agency then target your marketing efforts specifically towards mortgage brokers, real estate lawyers, and insurance agents and let them know explicitly that these other professionals are located close by. You can advertise to such professionals very inexpensively through newsletters received by them or on websites catering to professionals. You can also call a few lawyers, mortgage brokers, and insurance agents to tell them you are renting out a space that is located beside a real estate brokerage. You will almost certainly quickly find tenants for the space.
What if there is no real estate brokerage within the vicinity of your property? There are ways of getting around this if you choose to focus your efforts on the professionals that are involved in a real estate transaction. Let us say that the space you are seeking to rent out can accommodate twenty five people. This would be a large enough space to house a small real estate brokerage with a number of agents and a few mortgage brokers and lawyers. You can advertise your space heavily to real estate agents and let them know that you will be charging them a significant discount on market rents in order to attract them more easily. If you are successful in attracting a small real estate agency by offering them a significant discount, you can then easily attract mortgage brokers and lawyers to the space because they will love the prospect of being located in the same office as a real estate agency that will give them business.
As the landlord you can also charge the mortgage brokers and lawyers a premium above-market rent. The mortgage brokers and lawyers will happily pay the premium because the additional business from the real estate brokerage will more than make up for the above-market rent. This, in turn, allows the landlord to cover the lower rent he is charging to the real estate brokerage.
There are numerous possibilities for mitigating the likelihood and duration of vacancies. By gaining an understanding of the types of businesses that you market to, you can strategically attune your marketing pitch to their needs. Doing so is a great way to securely grow a highly profitable commercial real estate business.
For further info you can contact the authors, Michael Antonik and Shabir Amlani, at [email protected]. Michael and Shabir are lawyers and the founders of http://www.uniivaa.com. They have also taught extensively and consulted with numerous professionals, investors, and landlords. Additional articles can be found at http://uniivaa.com/blog.