We are about to close on our first office complex. There are a few units that are vacant and working on getting people in there right away. My partners said that we should advertise every unit to see if we can get better deals than the ones currently there.
I think that is stupid, but I want to see what others think...Thoughts???
I am not following.
Your partner is wanting to advertise all units to see if he can kick out current tenants to get a higher rent??
If that is the case it makes no sense. First if the tenants existing rent is way below market you have to analyze the leases to look for outs where you can up them closer to market or find a way to break their lease.
Usually you lease up the remaining space and then look at existing spaces later on after you have leased up the vacant at higher rates.
Costar has an office program where you can look at space for rent per sq ft rate and see what nearby tenants leases are expiring to go after.
Unless there is something I'm not getting here, this doesn't make sense to me.
- Fill the empty offices. This should give you a decent idea of the market.
- If you want to raise the rents in the building, when the current tenant's leases are up, present them with the new lease price.
- Keep in mind that if they decide to leave, you will likely incur costs in putting the new tenants in unless your market is so hot that you won't have any down-time.
Nobody wants a bad landlord, especially where their business resides. Don't play games with your tenants. If they see shady behavior (i.e. the space they lease being offered for lease without them telling you they are leaving), you will likely lose good tenants and good will.
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