As COVID has changed the commercial real estate landscape, landlords are facing increased competition for tenants in most markets. The commercial real estate industry is in flux, and landlords are working hard to attract tenants. Some commercial real estate companies have taken the opportunity of increased competition for property owners to offer a better rental deal or more flexible lease agreements. Other landlords are taking steps to increase their appeal by updating building lobbies with new furniture, installing green energy features on roofs, or adding fitness centers.
The best way to attract and retain these business owners is by implementing a few strategies that can help differentiates their properties from their competitors’. After all, tenancy volume for a property the main driver for how it earns value. We asked Otso commercial landlords what strategies they are using that work best in today’s leasing environment. Our landlord customers span across the country and own all asset classes (office, retail, industrial/flex).
- Evaluate rent strategy. One landlord told us, “We want to be seen as an affordable option for tenants without sacrificing quality.” This sentiment was echoed by another who said, “I am renting units below market rates because I have more supply than demand right now.” That being said, you need to make sure your pricing is realistic given the vacancy rate in your area. Otherwise, it’ll become difficult or impossible to get desirable prospects interested in moving into your property at all!
- Expand or create outdoor spaces such as a rooftop lounge area or a dog park. These are necessary, especially amidst the COVID environment. This is also another way to increase foot traffic because it helps tenants and customers connect with the outdoors, which increases their sense of wellbeing.
- Deliver high-quality digital experiences for your tenants leveraging platforms such as Hq0 and Cove. HqO helps building owners and property teams thrive in the experience economy with technology that engages tenants and data that creates the most value for their assets. Cove partners with owners & operators to realize greater value and differentiate their assets by unlocking the services and experiences that people are seeking — all in a modern, tech-enabled way.
- Convert to flex space and offering flexible lease terms. The biggest challenge with vacant space is coming up with creative ways to use it. One way of doing this is by turning the space into a flex office and offering multiple month-to-month lease agreements. Flexible contracts can be an effective tool when it comes to bringing in new tenants. With flexible lease terms, you can customize your contract according to the tenant’s needs.
- Promoting amenities. One of the best ways to promote your property is by adding amenities that people crave. – A lot of landlords like providing amenities such as bike racks, gyms, conference rooms, public lounges, or parking spaces on site. The Cauble group outlines why and what amenities should be a priority for every investor in commercial real estate here.
- Provide leasing incentives. When a commercial property is leasing, landlords have to make sure they are offering the best terms and rates possible. It’s important for tenants to know that there will be no other offers available in order to create excitement and anticipation about their commercial space. This can include providing rent deals or freebies such as furniture packages or business support services like office cleaning, recycling, pest extermination, parking lot maintenance, etc. Providing these types of perks makes it easy for new renters because they don’t need to do any additional research on what may already be included with their lease agreement so you’re able to apply more time elsewhere (elements not related to your commercial real estate).
- Offer Deposit-Free Leasing through Otso. Otso provides coverage for lease security, an alternative to traditional cash deposits and letters of credit. This type of insurance allows landlords increased protection against default while unlocking essential capital for tenants. 83% of Tenants who are offered Otso as an option use it in their lease. Our customers are finding tenants are specifically seeking out Otso landlords to lease with in order to save essential capital. It’s really a win-win for all parties because the landlord is able to gain more coverage than they would be collecting traditional cash deposits or letters of credit.
These are a few strategies that landlords can use to attract and retain tenants post COVID. There is still some uncertainty as to how companies will return to their offices. A lot of companies are currently adopting the “hybrid workplace” model but there is uncertainty about how long that trend will actually last. The commercial real estate market is always changing and landlords have to think outside of the box in order to stay ahead. If you’re the landlord of any type of commercial property, we recommend implementing one or more of these tenant retention and attraction techniques. What do you think? Have you used any of these methods before? Share your thoughts below!