Protecting your commercial property investment involves being across and handling many different moving pieces. Your first layer of protecting your asset is finding the right tenant or tenants.
Choosing the right tenant can be like finding a golden goose egg. However, choosing the wrong tenant can waste a lot of your time and energy and result in unnecessary costs and stress.
In this blog, we’ll be touching on how to find tenants, important factors to consider, how to vet prospective tenants, and your rights as a landlord.
Finding tenants
There are two key things to consider when sifting through your pile of prospective tenants.
The first is how established their business is. While any business will experience fluctuating profits and see changes to their requirements, you want to find a business that has managed to withstand the changing world for a respectable amount of time (this number can vary by industry, so it’s important to do your research). It is also important to know how the business is set up, what the structure is and who is backing this business.
If you are willing to take on a business that is new to the market, pay special attention to their industry as some have a reputation for lasting longer than others. Ultimately, you’re looking to find someone who’s going to stay in your property long-term. As any vacancy is expensive, not only is there limited or no rental coming in there is also the cost of using an agent and marketing requirements to fill the space.
The second key factor to consider is their reputation, especially around their morals and ethics. The relationship between a landlord and their tenant needs to be solid for a longer-term arrangement that satisfies both parties. Ensuring that your values align will play a key part in the success of the relationship.
Keeping other tenants happy
If you own a property which is multi-tenanted or if you own a unit that is part of a body corporate, you will need to select tenants whose business won’t be in direct competition with any of the other businesses in the building or unduly impact any other tenant’s quiet enjoyment of their premises.
It’s important to maintain existing relationships with your other tenants or with the other landlords in the body corporate to keep those long-term relationships going.
Vetting tenants
Once you’ve chosen the tenants that are the best fit for the premises, the next step is to vet them properly.
Ask for financial history, business plans, and get references from either previous landlords, trades contracts, or anyone else that they pay regularly to ensure you feel confident in the tenant’s ability to be a good tenant and to pay on time.
Holding an interview is also an essential part of this process. This is one of the best ways to determine a tenant’s character and will give you a better understanding of how they’ll fit into your portfolio.
Assignment of a lease and subleases
Much of the above is concerned with filling a vacant commercial property. However, that isn’t the only way a new tenant can come into your property.
If an existing tenant sells their business to a new individual, the lease can be assigned to the new tenant. A tenant can also move out with their business before their lease is up and sublease the space to a new business.
While the tenant still needs the landlord’s approval in either of these cases, the landlord has to be reasonable. However, they still have the right to refuse a proposed tenant if they are not the right fit for the premises.
Azure’s process
At Azure, we have developed an in-depth and robust process to assist landlords in sourcing and vetting new tenants.
We carefully review applications, references and any information provided by prospective tenants which is confidential in nature.
Most importantly, we believe that our industry is comprised of two invaluable elements: people and property. The people aspect is something we highly value, and we ensure that we are matching tenants and landlords who we know will be able to have a long-lasting and cooperative relationship.
Our highly experienced team have backgrounds in retail so have a sound understanding in how to balance a tenant mix, which is needed in multi-tenanted properties as well as a experience with all asset classes.
Get in touch with our team to see how we can help you find the right tenants for your commercial property.