What Building Owners Need to Know to Score Good Tenants

By Greg Schenk

Right now, vacancies vary greatly across the country and by property type, but landlords from every property type need to stay sharp to ensure that they can attract every possible (and every good) tenant in 2008 and beyond. This article is an overview of what building owners need to do (by property type) to make certain they get these tenants — and what incentives building owners should expect to provide to tenants who are looking for new space.

Attracting/Finding Good Tenants
There are several things that should be important to building owners when selecting tenants.

1. First and foremost in terms of importance is the credit of the tenant.
2. Second is the size of the tenant - in terms of sales and profits, and the size of the space it wants to lease.
3. Third is the length of the lease that the tenant will sign (3 to 10 years, in most cases). The longer the lease, the better the terms and conditions for the tenant, and, depending on property type, a longer lease may be needed to offset the higher build-out costs of the space.
4. Fourth is the expense of the build-out of the space that the tenant will be leasing. Costs have increased dramatically over the last few years: Steel, cement, drywall, copper, water tap fees, and other items have made build-out costs increase by more than 20 percent in the last few years.

Obviously, good marketing is one way to attract tenants. But, a good marketing package today is more important than ever in attracting good tenants — not just offering fancy, slick glossies, but providing fully detailed information about the property that is easily accessible online. It should also include the following: a site plan; a building plan; floorplans, including as-builts (if second-generation space is very important); a list of amenities in the building (Wi-Fi, a café, underground parking); a location map; a list of local amenities; easy points of ingress/egress; proximity to the owner, employees, clients, customers, etc.

Office Properties
Every office tenant has its own hot buttons, but one thing is clear: You have one chance to make a good first impression on a prospective tenant. It may sound simple, but these types of things are often overlooked in office spaces. The building needs to be clean (including a clean parking lot and a clean lobby) and should be well lit. It needs to offer an efficient elevator (if the building has multiple levels), handicap accessibility for parking and ingress and egress, and easily divisible floorplans for average-sized tenants (you wouldn't believe the number of nice buildings that have floorplans set up to accommodate full-floor tenants, but that don't divide well for smaller tenants - and, in most markets, there aren't as many full-floor tenants looking for space right now).

In a new building, building owners should work closely with leasing agents and tenant rep brokers to look at the size/number of tenants before buildings are designed - this will determine what type of tenant the building owner is marketing to.

From the tenant's perspective, knowing how much space they need before they tour the building is paramount. For tenants, it's suggested that they get a non-building-specific space plan assessment completed to make sure they know how much space they really need (this way, they're not wasting time and resources by looking at spaces that don't fit them and/or their budget). Check out (www.irepthetenant.com) for a form to help with this assessment.

Good tenant signage — both on the exterior of the building and in the lobby — should be easy to find, read, and follow. Cleanliness, as mentioned earlier, is paramount. The restrooms should be spotless with no visible trash. The smoking area(s) outside should be enclosed.

Recycling has become a bigger issue (paper, bottles, etc.), along with green buildings, as tenants become more aware of their impact on the environment. Building owners should plan new buildings (and think about existing buildings) with these things in mind, as well as provide bike racks, storage for recyclables, etc.

Parking and HVAC systems are typically office tenants' No. 1 hot buttons. Tenants will complain more about these two items than about the rent being too high (along with poor management and poor maintenance of a facility). You should have plenty of parking available (tenants are packing more and more people into their building spaces) and HVAC systems that are broken up into multiple zones.

Buildings with not enough functioning and efficient elevators, not enough parking space, dim lighting, poor maintenance and janitorial services, etc. are definitely behind the eight ball. You shouldn't even show your property if these things are going on inside your walls — word gets around quickly about which building owners provide a high level of service and which ones squeeze every nickel out of the property without regard to tenants' wishes and needs.