A tenant in the hand . . .

Now is the time to start working on retaining tenants. Which tenants? All of them. If you’re serious about keeping a high occupancy rate in your building, it doesn’t matter how much time they have left on their leases. Why? Because tenants have an increasing number of options that may be cheaper than their lease with you.

Owners and managers in this tenant-driven market are learning you should not think of the waning months of a lease as the time to turn on the charm. By then, a company may already have sewn up space in another building–or purchased their own office.

Today’s low interest rates and slumping prices are prompting some smaller businesses to analyze the costs and benefits of owning their office space. While this scenario may not work for start-ups or fast-growing companies, older, slow-growth businesses often can realize benefits like fixed real estate costs and increased equity from buying real estate.

If buying doesn’t work for a company’s balance sheet, there is three times more sublease space available across the country than one year ago, according to the Los Angeles Times. High-tech and dot-com casualties of the recession vacated millions of square feet of offices that have become low-priced sublease space.

To combat this competition for your leaseholders, tenant retention must always remain top-of-mind for leasing agents, property managers, construction managers, and owners. Every interaction, even as early as the initial negotiations with a prospective tenant, will factor into the decision to stay or leave.

Many companies, enticed by favorable rates and incentives after enduring years of rising rents, are anxious to negotiate deals years out from the end of current leases. Accommodating these tenants’ needs today could keep your building full in the future.

Illustration © Digital Vision.

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.