Today, we’re going to be talking about How to Find Tenants for Your Commercial Space
And be sure to stick around to the end where I’m going to give you a bonus tip that I
think 80% of investors just ignore, which is why they struggle with the leasing process.
What’s going on guys, my name is Tyler Cauble and I’m the resident talking head here on
my channel giving you weekly investment strategy, leasing & management tips, and more.
Of course, there are many different ways to find businesses to lease space to, depending
on how creative you get, but today we’re going to cover the three that I’ve found
most effective on my properties. Finding tenants and leasing commercial space
can be pretty time consuming for more property owners. Especially if you’re not a full-time
investor. It basically becomes a 2nd job. And it can be a pretty frustrating process.
Handling those incoming phone calls, screening out the not-so-great prospects, site tour
after site tour - and that’s all before you even get to the negotiations.
I’ve been there myself and I’ve also helped many other commercial investors along the
way.
Why’s it so difficult? Unlike the residential world, commercial real
estate doesn’t have a centralized listing resource like the MLS or Zillow.
While you can certainly utilize some of these online tools, they often populate your listing
with incorrect information, the platform can be difficult to use, and you have to really
pay to play if you want to get any attention whatsoever.
So, how do you find tenants for your commercial space?
Well, you do still have a few options. Here are the three most effective ways to
find commercial tenants. The first strategy is to list your property
with a commercial real estate brokerage. In my opinion, this is hands down the easiest
and most efficient way to find tenants. Just hire a commercial real estate broker to do
it for you! Trust me - the 6% they’re going to charge? More than worth it.
Commercial real estate brokerages are dedicated exclusively to the leasing and selling of
commercial property, which includes office, retail, and industrial real estate.
Since commercial real estate doesn’t have a listing database, brokers are the best resource
to find out which businesses are currently on the search and which ones may be needing
to relocate in the near future. They’re constantly in touch with business owners,
property management companies, and other brokers so that they know what’s happening in their
market. Commercial real estate brokers have a fiduciary
responsibility to you, so they’re working in your best interests and their fees are
a percentage of the total lease value, so you won’t have to pay them until they provide
you with a fully-executed lease. You can also structure these payments so that
you don’t pay their fees until you have money coming in. The most common way is to
pay 50% of the commission upon lease execution after you’ve collected first month’s rent
and security deposit and the other 50% at rent commencement - it won’t quite keep
you from coming out of pocket but it’ll help. The other way is to pay a percentage
of the monthly collected rents, but most brokers will raise their fee in this scenario, since
they get paid over a much longer time period. In addition to your commercial attorney, your
landlord rep broker will be your expert adviser throughout the leasing process. So, not only
can they help you find the tenant, they can assist with negotiating your letter of intent
(which will save you on attorney’s fees), coordinate any vendors that you’ll need,
such as contractors and architects, and assist in lease negotiations so that you know you’re
getting the best deal possible for you. Now, unless your commercial real estate broker
also has their law degree they cannot give you legal advice, but they do know what’s
standard in the market since they do it every day, so they can advise on whether or not
concessions may be necessary. Landlords that hire brokers to lease their
space often find higher quality tenants and negotiate stronger deals.
Your second best option is to list your space for lease online.
If you’re looking to acquire a piece of property or you’re preparing for an upcoming
vacancy, you may not yet need a broker to help you find a tenant.
Maybe you’re in the early planning stages trying to put a proforma together and just
want to see what market rates and terms are. Options like Loopnet, CREXi, and Craigslist
allow you to scratch the surface and familiarize yourself with the market so that you at least
have a basic understanding of what you’re looking at.
Sure, these online resources may not have the best reach and you’ll definitely be
dealing with some unsophisticated and low quality prospects, but you never know what
may come your way. These platforms do give tenants the ability
to search by product type (such as office or retail), the total square footage available,
and (other than Craigslist) other minor details, such as loading docks, ceiling height, or
access, so as long as you are as detailed as possible when listing your property, you
should only get targeted prospects. One nice side effect of utilizing these online
platforms, too, is that you may be able to find a commercial real estate broker that’s
focused on the neighborhood or area where your property is located.
They’re receiving calls on other properties in the area from tenants that may not be a
fit for those buildings, but could be prospective tenants for yours.
The final strategy is to place high quality signage on the property.
That’s right - actually put a sign up in the window.
And not just any sign - you need to be very intentional with the information on the sign
so that you hone in your targeting here. Don’t just grab a sign from home depot that
says “for lease” with a number below it. Those signs are barely visible, they’re
too small, and they don’t give off a professional feel at all.
And trust me - tenants can be very concerned about how professional their landlord is.
Many of them have had bad landlord experiences in the past and don’t want to cross that
bridge again. The signs I use on my properties are at least
4’x4’. If I can’t place one up in a window, I’ll get a pallet stand and place
it out front near the road. Feel free to place information about the space
on the sign, such as the size and type of space or whatever you feel is appropriate.
Keep in mind, though, that you won’t be able to reuse that sign for any other properties.
So here’s a bonus tip - return those phone calls!
I know, it sounds so silly, but just call people back.
I know far too many investors and brokers that just never return phone calls - because
I hear it firsthand from tenants that call me. I can’t tell you how many times the
business owner looking for space has been surprised and literally said to me “you’re
the only person that’s answered the phone.” If you’re going to get the space leased,
you need to put a bit of effort into it, as well and if you’re too busy to be answering
the phone, you could hire an answering service like PATLIVE or have an assistant do it for
you. So that’s it for my three favorite strategies
to find tenants for your commercial space. Subscribe if you’re looking for more commercial
real estate investing strategies, leasing & management tips, market updates and more.
Smash that thumbs up button if you liked this video and I will see you, next week.