Having a commercial property that isn’t leasing is a frustrating situation. Having a vacant space can lead to major money loss and headaches to go with it. If your property isn’t leasing, you may need to hire a new leasing team to fix these problems.
At AQUILA we’ve leased hundreds of commercial properties over the last decade, and our expert team of project leasing brokers has a strong track record of diagnosing and fixing properties that aren’t leasing.
In this article, we go through some of the most common reasons why a property isn’t leasing and walk you through some simple solutions you can implement to fix these issues.
1. Your asking rental rates aren’t competitive.
One of the most common reasons a space isn’t leasing is that the rates aren’t competitive. If your asking rental rates are too high you could miss out on deals. By the same token, if they’re too low tenants and tenant rep brokers may ask “What is wrong with the space?”
What You Can Do
It’s important to make sure your asking rates are in line with the market. Your project leasing broker should be able to provide market data and a competitive set analysis to help you understand what market rental rates are in your area and price your space accordingly.
Reputable leasing firms should also be able to provide lease comps at competitive buildings so you can better understand how asking rates differ from the striking point where deals are actually being done.
Rely on the intelligence and experience of your local boots on the ground leasing brokers to properly price your space so you don’t miss out on deals.
To find out what average asking rental rates are in Austin’s major submarkets, read our article How Much Does It Cost to Lease Office Space in Austin, Texas?
2. Your tenant improvement (TI) allowances aren’t in-line with the market or with what the vacant space actually needs.
If you aren’t offering competitive tenant improvement (TI) allowances you may lose out on leases to those who are.
Or, if you have an older space that needs a lot of work you may need to offer slightly more than market to get the space leased.
What You Can Do
Research other properties that are in a similar condition to yours and find out what the typical TI allowance is. Also, pay attention to location, market trends and other factors. Currently, we’re seeing many tenants that prefer more open layouts. If your space is primarily comprised of hard-wall offices and conference rooms then it is going to be more expensive to open it up compared to an already open layout space.
Base your TI allowance offer on the competitive property set as well as the condition of your space to make sure you have a competitive TI that isn’t too high or too low.
3. Your property needs updating.
If your property is older or worn down, it may be in need of some renovations or capital improvements to bring the building up-to-date. While location and cost play a large role in the desirability of a space, aesthetics and amenities are also important. This is especially true for tenants who are looking to use their office as a recruiting tool or who will have lots of clients in and out of their space.
What You Can Do
Consult with your leasing team and property managers to see what renovations would be most beneficial for your property. These teams can provide crucial input on what they’re hearing from tenants and on prospect tours. Your leasing team will also have insights into competitive properties and what improvements they’ve seen prove successful at other projects.
Then make a plan to invest in those improvements for your property. It may be as simple as painting the lobby and modernizing your landscaping, or your property could need more extensive renovations like adding amenities such as a fitness center or a tenant lounge. This will all depend on the condition of your property and how much money you can put into these renovations.
4. It’s lacking attention from your leasing and marketing team.
If your project has been sitting vacant for too long, you may want to revisit your leasing team’s marketing efforts. Did they stick a sign up, put it on the website and then start a monotonous email campaign that’s failing to bring any new interest to your property?
If your property is not getting attention from your target tenants and brokers alike, it will not get leased. It may be time to encourage your leasing team to propose some new ideas to bring some life and attention to your property marketing campaign.
What You Can Do
Your leasing team should be marketing your property with the basic marketing materials for a commercial property. This includes flyers, dedicated listing page, email campaign and more.
However, if your property isn’t leasing, they should be bringing fresh ideas to the table to bring more attention and interest to your property. Ideas may include:
- Events at the property
- Road shows
- Broker bonus or tour incentives
- Email marketing campaign calendar
- Digital or social advertising
If you are marketing a larger development, re-development or multi-building campus, you may need to invest in a custom brand identity for your property. This could include a logo, typeface, colors, messaging and more depending on the size of the project.
Implementing regular calls to discuss leasing and marketing momentum can help keep your team accountable for the plans you discuss. If your leasing team is not providing these materials or cannot give your property the necessary attention, it may be time for you to consider hiring a new leasing team.
WANT TO CREATE A SUCCESSFUL MARKETING PLAN FOR YOUR PROPERTY?
Download our Property Marketing Checklist to make sure your property’s marketing is on track for success.
5. Your property has a negative stigma.
Unfortunately, some properties can garner a poor reputation or stigma in the market. Even once you’ve overcome these issues, the reputation may still stick.
Some factors that could cause your property to have a bad reputation include:
- It’s in a less desirable location, not close to any amenities, or has poor access
- It is known for having a difficult property management team
- Not enough parking
- No amenities
- Dated common areas
- Construction issues
- There was an accident on your property/in your building
What You Can Do
With all of these issues, you need to repromote your property with new branding. This could mean you need a custom brand identity with a new property name and more. Or, you may just need to revamp your marketing efforts to a new audience.
If the stigma attached is no longer an issue – say you’ve recently renovated the common areas or new amenities have opened up around your property – it’s important to promote these through email campaigns, video, new photography and even events to get the brokers out to see how the property has changed.
If location is your issue, this can be hard to change. Make up for the undesirable location by offering unique amenities or by building out unique interiors.
Not having enough parking can be a deal-breaker for some. If parking is your property’s major issues, consider using some creative parking solutions.
If you don’t have amenities…consider adding some! Or, highlight and promote the other advantages of your property such as the location, parking, rate, etc.
A property management team is one of the most important parts of a property as they will be dealing with the tenant more often than the landlord. This is why it’s important that you hire the right property management company for your property. It’s not too late to change your property management team.
6. Your property isn’t on the radar of tenant rep brokers.
Tenant representation brokers aren’t bringing tenants to tour your property or don’t know about your property at all. Or maybe they know about it, but won’t give it the time of day.
What You Can Do
First, be sure that your property is being listed on major listing sites like CoStar so it shows up in relevant searches. Second, make sure your leasing team is reaching tenant reps directly about your property by either email or physical mailers.
If you are already doing these basics, consider offering tenant rep incentives or hosting broker events at or around your property. While these will require an upfront investment, the rental income received from the vacant space being filled should quickly make up for it.
7. Your property photos are bad.
Having photos of your space can be a great asset when done well, but can be a major liability if they are low quality or don’t show off the right aspects of the space.
What You Can Do
Hire a professional photographer to take photos of your property. You may also want to hire a videographer or even someone who can take photographs and videos with a drone.
Having professional photos, or getting professional renderings if your building hasn’t been built yet, can make your building really stand out from the rest of the buildings in your area and help you highlight the best aspects of your property. Once you have new photos, make sure to publicize them via print and digital marketing collateral.
8. Your leasing broker or owner has a bad reputation.
Sometimes leasing brokers or even owners can garner a bad reputation. The broker could be difficult to negotiate with or simply unfriendly. In other cases, the owner may have a reputation for withholding or not paying fair leasing commissions.
Either way, if tenant rep brokers are actively avoiding a property because they don’t want to have to deal with a specific owner or leasing broker, this could be harmful to you and your property.
What You Can Do
It’s important to be connected enough in your market to understand when a leasing broker is on the outs. You can try to speak with your leasing team and get any misunderstandings worked out, but, in some cases, you may just need to hire a new broker or leasing team.
It’s also important to understand market leasing commissions and make sure your owner is paying them fairly and on-time.
Additionally, if you recently acquired a property from an owner with a less-than-stellar reputation, it’s important to announce the change in ownership to the market.
To understand what market commissions are in Austin, Texas, read our article Cost to Hire a Commercial Project Leasing Broker.
DO YOU NEED TO HIRE A NEW LEASING TEAM?
Download the 25 Questions to Ask Before You Hire a Project Leasing Broker to make sure you hire the right leasing team.
As you can see, there can be a lot of different reasons why your property isn’t leasing. Your first step should be to figure out what your biggest issues are. Once you know the “why” it’s time to take action to correct the problem.
Ultimately, your leasing team should be able to help you understand why your property isn’t leasing and should work with you to help resolve whatever issues you are having.
If you are having issues with your property or your current leasing team, schedule a consultation with one of our project leasing experts today.