Commercial Property Leasing - How Real Estate Agents Can Serve More Tenants Professionally
In commercial property it is common for businesses to consider expansion or change on a frequent basis. This is where the leasing specialist and local real estate agent can offer unique services to tenants and landlords. The leasing specialist knows the local area and what is happening. They know what opportunities are coming up and the factors of supply and demand for new or alternative occupancy.
Every business location and every property will have a synergy requiring balance.
So the real estate agent is in the box seat when it comes to helping tenants locally to find new premises. Here are some guidelines which will allow you to specialize in servicing your local tenants and businesses with leasing services.
You can become the tenants advocate in the leasing process. It is not unusual for large tenants to instruct real estate agents to work on their behalf. On that basis they pay your commission. Understandably, the larger the tenant that you work for, the greater commission. For this reason highly successful real estate agents will mainly serve the larger businesses with regard to leasing premises in the locality.
You know the local rental market and the levels of rental that are paid for particular types of property. Rental can be either gross or net and the recovery of outgoings from the tenant will be directly impacted. These variables the tenant will know little about. This is where the real estate agent provided high value.
Lease documentation should be prepared by a property expert and normally that will be a solicitor acting on behalf of the landlord. Rarely will a generic lease document well serve the landlord given the uniqueness of the property. Most experienced real estate agents and leasing specialists will choose to negotiate the lease transaction and then pass the final documentation requirements over to the landlord's solicitor to complete. Considering that the landlord will own the property for a number of years, the high value of a quality lease document should not be overlooked. It becomes quite important at the time of sale when the buyer considers the strength and stability of the lease that is coming with the property.
You should know about the levels of outgoings that apply in your local area for each particular property type. That knowledge can be fed into the lease negotiation so that the landlord and the tenant can make clear predictions on the outgoings that they will pay or recover during the term of the lease.
In providing leasing services locally, you will also have a solid understanding regards the changes to the local demographic. When population changes or the community is rezoned or redesigned, it will have impact on the local businesses in the way in which they transact business. Properly rentals and prices will be impacted. For this reason, it is wise to maintain close contact with the local planning and development officers at the local council.
Local transport corridors and access to ports and distribution channels will have impact on local business. Any changes to the transport arrangements will impact the business and the ability to lease the premises. Changes to roadway access can also impact how tenants and their customers can get to the property.
The levels of lease incentive and the way in which they are implemented are best controlled by an experienced real estate agent. When the leasing market becomes more difficult, the levels of incentive escalate to maintain property occupancy. Importantly it is the level of incentive and the way it is implemented that becomes quite significant. Understand that the lease incentive should not be free and should be recovered back to the landlord over the term of the lease. It is not good practice to give extensive rent free periods at the commencement of lease given that the tenant can default soon after rental payment is required leaving the landlord out of pocket. When incentive of any type is provided, it is best to obtain a significant and strong rental or bank guarantee from the tenants to protect the landlord.
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