Commercial Real Estate Businesses Currently Facing Problems

Commercial real estate is one of the most lucrative real estate ventures in the industry, but recently, there have been indications of an ongoing supply being more than the demand.

For example, even though more and more office spaces are being developed with about 63% of the commercial office development pipeline under construction, and an increased supply of commercial property, there are high rates of vacancy, reaching 12% for the Grade A offices and 36% for the grade B offices.

Since vacancy rates are high, what this means for both current and potential Landlords is that they will have to work harder to figure out how to attract and retain tenants.

Some office spaces seem to have only 50% occupied, some are partly occupied and some have been repurposed or sold off.

What Has Caused the Dip In Rentals?

Grade A properties sure have had their share of dips in rentals, but Grade B properties seem to have it much worse. Grade B has had an annual decline of 23.8%, worse than Grade A’s 12%.

Why is that?

1. It could be that standards and tastes are going up and owners of Grade B properties will have to do better with renovations and refurbishing to meet up with the tastes of the current markets.
2. It could also be the location of many Grade B properties

However, many investors seem to still have faith in the commercial real estate market with the consistent push out of more commercial properties.

As a potential or current Landlord, are you experiencing these challenges too?

What You Can Do as a Landlord

1. Be more flexible with your arrangements. It seems that tenants are seeking flexibility currently and if you can offer this, then your current demand may improve.
2. Consider affordability. Making your spaces more affordable could put you ahead of your competitors, especially if your spaces are well thought out and of good quality.
3. Consider the quality of your spaces. You may have to do some renovation or refurbishing to have it look great, especially if your space is a Grade B property.
4. Be more thoughtful about your physical vacancy signage. First, physical signage is important. Second, don’t just put anything up, actually put some effort and make sure it looks attractive and credible enough. You want to aim for a professional outlook, as this will have people who know their stuff contacting you. Tenants want to know that you’re professional and not another bad Landlord. Also, make sure that the signage is big enough to be seen.
5. Consider hiring a commercial real estate broker. This is easy and since they are a professional, it will most likely be easy for them to get Tenants trooping because it’s their full-time job. Plus, brokers are always in contact with property management companies, business owners, and other brokers, so they can always stay afloat and current. Using a broker may bring higher-quality tenants with better deals.

Are you a potential commercial real estate landlord who needs help finding good properties? Contact us, we’ll be more than happy to make it easier for you,

Don’t forget to subscribe to our email newsletters here.