10 Tenant Qualities Office Landlords Seek

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  • Author John Hannigan
  • Published September 26, 2010
  • Word count 576

Are you an "800 lb gorilla" or a "gnat" in the eyes of your landlord? Office tenants must recognize how they are viewed by current and prospective landlords. While this requires a realistic assessment of your size, credit and, to a lesser extent, reputation and name recognition, it also includes a more subjective understanding of your landlord’s perspective.

Ultimately, evaluating your landlord’s point of view will help you gain insight during the leasing and negotiating process.

  1. Credit

How long have you been in business, and what kind of risk do you pose? Landlords try to minimize future risk by attracting tenants with good credit. The better your credit, the more attractive your occupancy. Credit also affects the amount of your security deposit and the possibility of a future "burn down" to get it refunded.

  1. Lease Term

Just as landlords minimize risk with a high-credit tenant, they also minimize risk by seeking longer leases. Longer terms help the landlord amortize costs over time, protect against the vagaries of the real estate market, and avoid future vacancies.

  1. Size

Many landlords are looking for large tenants to lease considerable portions of the building or its floors. Larger tenants enable a reduction of common areas and corridors while saving on construction, paperwork and frequent turnover costs. Pleasing one large company invariably proves easier than two smaller ones adding up to the same size.

  1. No Brokers

Landlords are often attracted to tenants without professional representation. Local brokers know the market and often negotiate better lease terms based on their expertise. Brokers know the intrinsic value of space at a given location, and with specific amenities, based on the prices of similar buildings.

  1. Immediate Occupancy

Vacant space costs money. Each month an office sits idle represents lost income, and tenants ready to move in quickly can provide a much-needed cash infusion for landlords. On the other hand, companies with a short time frame also lose leverage during the negotiating process because they lack the ability to wait out an offer.

  1. Low Cost of Entry

Most office landlords expect to contribute capital in the form of construction costs or tenant improvement dollars. Companies willing to occupy the space "as-is" save the landlord money and headaches. Changing an office space often fails to increase its value and may actually become an impediment (see next item).

  1. Office Layout

Many companies require unique layouts of offices, open areas, conference rooms and other spaces. Landlords prefer a standard or common design suitable for a future tenant’s needs should your company move out. Specialized and expensive build-outs may need to be gutted.

  1. Expansion Potential

Growing companies bring many potential advantages to a landlord. In addition to increased financial stability, the tenant may expand its office space within the building.

  1. Low Employee Density

Offices with a low density of employees decrease wear and tear both within the office space and for amenities and exterior building systems as well. Fewer people means more parking spaces for everyone else.

  1. Brand Name

Are you a brand name in a competitive industry? In addition to financial security, name brands attract attention and improve a building’s image. That could mean increased competition leading to a higher asking price for the same space.

Tenants will rarely possess all of the factors listed above. But developing sensitivity to your landlord’s perspective provides essential insights during the negotiating process. And it may engender a more harmonious relationship when you move in as well.

John Hannigan is Principal of Choyce Peterson, Inc. To see his other articles, go to commerical real estate tips.

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