“Tips For Managing A Commercial Building For Lease”
A commercial building for lease is a profitable business. But you need to manage it properly to get the best out of it.
If you’re not managing your property properly, it’s more likely that its value in the market will decrease.
Once this happens, your property won’t generate enough profit to support its maintenance and recurring payments for utilities.
With that said, today’s blog post will be about managing a commercial building for lease.
I know that poor management can end your rental property business. That’s why I compiled these useful tips that will help you get more profits from your commercial building for lease.
How to Manage a Commercial Building for Lease
Managing a commercial building for lease requires specific education and certification. In many cases, it also presupposes a degree of prior experience.
That’s because managing a building of this type can be more sensitive than managing a residential property for lease in some ways.
Commercial tenants are business owners looking to for a place to run their operations profitably.
If these business owners get the slightest whiff of something that could have a negative effect on their businesses, they can get very antsy.
So managing a commercial building for lease isn’t easy. Nonetheless, here are some tips that can help you manage your commercial building for lease.
You should screen tenants before allowing them to use the commercial building for lease.
The tenants of the commercial property should have businesses that are profitable and well established.
The tenant’s business will improve the profitability and value of the property management business.
A successful business is a key component. Sometimes, it’s the most important criterion to look for in a commercial tenant.
Finding successful tenants should be the goal of your tenant screening process. However, the tenant’s business is not enough to consider them a good tenant.
When choosing tenants for a commercial building for lease, it’s advisable to set a standard. Choose tenants based on their financial capacity, valuable traits, credentials, and willingness to negotiate long-term leases.
Conduct background and credit checks on tenants to check if they are able to regularly pay rent. Look or ask for bank records and other types of documents that prove their financial capabilities and verify their income source.
Take note that you should check both personal and business credit scores for best results.
Look into the credit report of the business owner to see the shape of his finances. Then, check the actual business’s credit report.
You can get personal credit reports from Equifax, Experian, and TransUnion. You can get business credit reports from Equifax and Experian again, as well as D&B (Dun & Bradstreet).
Prospective tenants with both good personal credit reports and good business credit reports are preferable, obviously.
The healthy state of their finances signifies their capability to pay rent in full and on time.
Make sure too that the commercial tenant is willing to pay insurance and any other additional costs required by State and local commercial rental codes.
Valuable Traits and Credentials
The tenant should have a good record of leasing commercial properties. They should have referrals from past property managers.
Ask the tenant’s previous landlord or property manager about how the tenant behaved in the commercial building for lease the tenant previously occupied.
In addition to that, ask them if they would rent to the tenant again in the future.
Don’t stop checking the tenant’s background after getting referrals from the tenant’s previous property manager. You still need to check the tenant’s business credentials.
Checking the tenant’s business credentials allows you to see if their business complies with industry standards and legal requirements.
You can also check the BBB (Better Business Bureau) to see if the company is in good standing or if any business problems have been identified.
Fulfill Your Obligations to Your Rental Business
Commercial property management is more than just keeping the commercial building for lease in good condition.
It involves being able to provide a quick response to tenant needs and understanding how to improve the property for their uses.
Keep in mind that managing a commercial property is more of a challenge than managing a residential property.
Take a look at these important obligations of property manager to a commercial building for lease and its tenants.
Keep Your Tenants Happy
Just like in residential properties, you must keep the tenants happy inside your premises. Doing so will reduce tenant turnover and it will allow you to charge a higher rent.
Having a vacancy would result in major loss of income. The process of finding a tenant for a commercial property is lengthy and expensive.
That’s why it’s important to reduce the amount of time your commercial building for lease is vacant.
The best way to do that is to manage it so well that current tenants stay longer and prospective tenants knock on your door faster.
Establish ways for the tenants to communicate easily. Come up with a system too so that you can efficiently identify as well as address issues or problems.
As much as possible, prevent any problems that could arise during the daily operations of their business. The more of those happen while they’re in your commercial building for lease, the likelier they are to move to another building.
For example, keep a close eye on the heating system of the commercial building for lease. If problems arise with it, that could interrupt the tenant’s operations.
Hence, you need to perform regular checks on the heating system (as well as other utility systems in the commercial building for lease) for your tenant’s convenience.
Maintain and Upgrade the Property
As you can see from the example I just gave, keeping the property in good condition can help you save money by encouraging tenants to stay — thus keeping your income from rent steady.
Establish a maintenance schedule as well as a building observation schedule. A regular inspection will give you an idea of what is happening on the commercial property.
As a result, you can immediately fix any issues that do arise.
Aside from doing regular inspection and maintenance, you should also do upgrades to the commercial building for lease.
It’s important to keep up with the trends and offer new features on your property whenever the times require it.
Both maintaining and upgrading the property will increase its value. This increases your chances of getting high-quality tenants… who will usually be willing to pay more and stay for longer.
Take note that once tenants do occupy your commercial building for lease, some maintenance responsibilities may shift from you to your tenant. It all depends on the terms of your lease.
That’s why you should be clear who takes care of what in your lease. Negotiate this with your commercial tenant — such negotiations are expected when it comes to commercial leases, anyway.
Make Use of the Latest Technology
Commercial properties should offer the best office technology to their tenants. This includes excellent Internet bandwidth, workstations, and easy transportation access.
Today, emerging technologies should be offered with the basic amenities found in common commercial properties.
Most tenants seeking a commercial building for lease even specify these as requirements nowadays.
Hire a Commercial Property Manager
If you’re a property owner or investor, you should look for experts in running and maintaining commercial properties.
They can make a difference, especially if you yourself are new to the process of managing a commercial building for lease.
Hire a commercial property manager to help you with your responsibilities and tasks. Their assistance allows you to free up your time to do other important tasks.
Having a property manager will cost you some of your business’s revenue, of course. You have to pay their wages, after all.
Still, it’s an expense worth making because they can help you streamline your business. Property managers can effectively manage your commercial building for lease and make it more profitable as well as attractive for prospective tenants.
A property manager could help you do the following.
- Choose the right tenants,
- Decrease tenant turnover,
- Ensure the rent is paid on time,
- Minimize the stress of managing a commercial property,
- Maintain and upgrade the property when needed.
Depending on the property manager’s experience, he may even be able to give you insight into other things you can do to improve your business.
For instance, some property managers have sufficient experience to advise you on inducements you can offer tenants for your commercial building for lease.
For example, they can advise you to offer a month or two months free of rent if they take on a longer-term lease.
Final Thoughts on Tips for Managing Commercial Building for Lease
It’s not easy to manage a commercial building for lease. Unlike a residential property, a commercial property needs to keep up with the competition and its tenant’s needs. Failing to do so will result in vacancies and major loss of revenue.
To prevent the worst possible outcomes, make sure to follow the tips given in this article.
Always remember to screen when going through prospective tenants for your commercial building for lease. You want a tenant who’s not only going to stay for a good length of time but also willing to meet your terms for rent.
To ensure that, you have to conduct background checks on your prospective tenants. In the case of commercial applicants, that means looking into both the finances of the business and the business owner. Obtaining credit reports for both can help a lot.
Once you do get the tenants you want, you have to be sure to fulfill your responsibilities to them. Doing this will keep them happy on their rented premises… which means they’ll stay and you get to enjoy a steady flow of income from their rent.
Try to do regular maintenance of the property too. This lowers the chances of utility or system failure, which can drive tenants out of the building.
You also need to keep an eye on the latest technologies being used for office spaces. Keeping your building up to date by ensuring it has these can help you attract or keep tenants.
Lastly, consider hiring a property manager to effectively manage your commercial building for lease.
If you have more questions about commercial building for lease, leave them in the comments below.
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