Sioux Falls currently has approximately a 6.5 year supply of office space vacant and on the market for lease as we start 2012. If you are a tenant this is great news. If you are an owner of a multi tenant office building you, this could be a value killing environment.
Perhaps you have several more vacant suites/spaces than usual. If you are lucky enough to be fully occupied, you have more than likely had a tenant or two try to renegotiate their lease ahead of a pending expiration date. Most commercial property owners have a mortgage and bankers demand payment in spite of one’s cash flow situation. Regardless of your situation, it is a tough time to own a multi tenant office building.
However here are some survival tips in order to minimize your vacancy and maintain your property’s value even in the toughest of times:
Have a good relationship with your tenant.
This increases your chances of keeping a good tenant or at least having an open dialogue about their long term plans. Little things go a long way. Responding immediately to maintenance and management issues, knowing the names of their kids and what is happening in their lives. Never underestimate the power of a relationship. If a tenant likes you and is happy with the property they are more likely to stay.
Maintain your property.
It is time consuming and expensive to maintain an office building. The
exterior and interior will need periodic updates to keep the property competitive and attractive. You might get away with that 80’s era landscaping and 15 year old common area carpet in a landlord’s market, but when times get tough, tenants have options and will leave a dated building in a heart beat for a better maintained building upon lease expiration.
Take a commercial real estate agent out to lunch for some advice.
Self serving? (Hint: I prefer Minerva’s or Jimmy John’s for a quick business lunch.) I have been involved in so many situations over the last 8 years where an office building owner didn’t get professional advice and it cost them big money. I’m talking up to a million dollars in losses simply because they didn’t have a professional opinion that they could have gotten for the cost of a cup of coffee or a sandwich. (I cost a lot more than that for a completed transaction!)
It’s a competitive world out there right now. Your building has competition. Be sure to position your asset in the best possible light.
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