Complex real estate transactions often go more smoothly when you hire an expert. It’s hard to choose one. (iStockphoto via Getty Images)
Owning commercial real estate often means facing vacancy at some point.
In such cases, consider the opportunity to rescue the occupants.
For example, consider one of our long-term customers who recently renewed his lease after receiving our guidance. We took an unconventional approach by advising against exercising the renewal option.
Why do you ask? They believed they could find better terms from the owner outside of standard lease terms. Our hunch came true and our client renewed his contract at 8%, well below the minimum market rate.
Owners also avoided costs associated with vacancies, potential renovations, tenant improvements, and increased brokerage fees. It was a win-win for everyone involved.
But let’s be honest: Not every vacancy can be saved.
If you are unable to recover the occupied space, you may need to hire a commercial real estate professional to find a tenant or buyer who will represent your interests in the market. The question is, how do you find the best professional for the job?
Here’s a quick guide to finding your perfect match.
define reality
Is your property vacant or occupied? If occupied, will it be vacant during marketing?
Do you need major improvements, such as office renovations, equipment removal, or major repairs?
Are you a seller or a landlord? What is owed on the property?
How long can a building remain vacant?
If you are a resident, where will you relocate and what are the display protocols?
pursue expertise
Successful commercial real estate professionals often specialize in specific locations or building categories.
Consider the type of property you own (office, industrial, retail) and its subcategories.
For example, if you have a manufacturing building in Anaheim, California, look for professionals who sell or lease manufacturing buildings within a certain radius.
Comparable stock
Ask your professional for a list of comparable completed transactions and currently available properties.
However, remember that ability is just as important as quantity. Make sure the professional is a trusted representative of your property.
Assess the competition
Assess market competition. A knowledgeable professional should provide insight into the competitive properties available.
Request a tour to understand how your property compares and evaluate our experts’ market expertise.
cooperating broker
Find out what the specialist’s main competitors think about the specialist’s reputation and capabilities.
Keep in mind that competitors may have potential tenants or buyers for your property.
Creativity
Look for a professional who can recommend a unique marketing strategy tailored to your property.
Look for someone who can think creatively and make your property stand out, beyond standard tactics.
Please note that revenue lost due to vacancies cannot be recovered. Choosing the right commercial real estate professional can have a huge impact on the schedule for renting or selling your property, minimizing losses. Make informed decisions to protect your investment.
Allen C. Buchanan, SIOR, is president of Lee & Associates Commercial Real Estate Services in Orange. Contact him at abuchanan@lee-associates.com or 714.564.7104.