Once a thriving hub for office workers, Salt Lake City commercial occupancy rates have dipped to the lowest ebb since 2015. That's largely due to an increasing preference for remote work.
That means there's tough competition for tenants. Many landlords are opting to convert their buildings into long-term residential rentals instead.
If that's not an attractive option for you, you need to rethink your strategy to survive these challenging times.
A commercial lease analysis is the best way to predict success when buying a commercial property or rethinking your existing leases. Keep reading to discover the things your tenants want you to consider.
Rent vs. Occupancy Cost
Only 54% of Salt Lake City workers are currently back in the office full-time. That amounts to 50,000 empty desks and dramatically decreases the need for office space.
That means commercial businesses are scaling down their in-house operations. They're searching for smaller or more affordable properties.
Affordable rents are a huge drawcard for tenants seeking relief from ongoing economic challenges. Yet, rent calculations depend on more than compiling a few comps or slashing your prices.
You must consider the occupancy cost of your building first. Calculate what you're spending on taxes, your mortgage, insurance, utilities, etc.
An attractive lease is fair and competitive. Yet, it shouldn't result in losses for the landlord.
If you can't adjust your rental to suit market trends, you must somehow reduce your expenses.
Quality and Functionality of the Space
If your commercial property can't stand out against new developments, you're going to struggle to find tenants. Good leases include functional spaces with high-quality amenities.
Well-maintained, updated spaces will give you the edge you need to justify your rent. This encourages lease renewals and helps attract new tenants.
Most tenants would rather pay a little more for a lease with a landlord they trust than step into the unknown. Cooperation, communication, and mutual respect are vital for keeping tenants in place.
Consider the terms of your lease and the language you use in it. Does it foster a healthy landlord-tenant relationship?
Hiring an accomplished property management team encourages positive relationships. These professionals have the time and skills to keep your tenants happy.
There's little you can do about the location of a building once you've bought it. What you can do is focus on commercial markets with important amenities nearby.
Businesses with target markets and suppliers in your area are more inclined to rent your building. Consider upgrading your building or adjusting your lease to suit these companies.
Some things you can improve include parking and visibility. Tenants want buildings and leases that enhance their competitive advantage.
Get a Detailed Commercial Lease Analysis
There are many more facets to carrying out a commercial lease analysis than the basics outlined above. It's best to get expert help with a more detailed analysis.
PMI Summit can assist you with rental comparisons, tenant management, and comprehensive lease analysis. Get in touch for the professional service you need to help your commercial properties thrive.