How We Find The Perfect Tenants For Commercial Premises
Finding great tenants is something Mackersy Property prides ourselves on – as we know just how important this factor is for your investment. Attracting excellent businesses to work in the right buildings requires considering various aspects of the property itself, the characteristics of a business likely to be most successful, and how the terms are negotiated. In this guide we provide an inside look into some of the ways we source valuable businesses and people to work in the commercial buildings that we manage for investors throughout New Zealand.
Please note: the information provided in this guide is of a general nature and should not be considered personal investment advice. Investing in commercial property, as any investment, carries potential risk. Before investing, please seek advice from a financial advisor who can advise on the best options for you.
Offering highly desirable commercial premises
Before starting to search for tenants, the best foundation a commercial property can have is to be highly sought after – the right property in the right location can make or break an investment. “Desirable” can mean different things for different businesses, and the Mackersy Property team are thinking about the different boxes a property will tick from the moment it is considered for acquisition.
The Mackersy Property portfolio spans CBD office buildings for corporate businesses, large-footprint industrial premises and centres under management, and ‘big box retail’ (eg. Mitre 10 Mega, The Warehouse, Harvey Norman). While serving a diverse range of potential tenants, each new property is considered on location and tenant desirability to ensure there will be real competition from reputable businesses to tenant them.
Outside of location, are the features and design of the buildings themselves. As you’ll see from Mackersy Property’s portfolio, the buildings are architecturally modern and offer the facilities (or potential) that will attract prospective tenants. Consideration to the building footprint, customisability, sustainability, integration of parking, temperature management are examples of the many elements that can demand a premium in the market.
Conducting careful review of prospective tenants
Tenanting a commercial property is a longer, more detailed process than residential. The commitment for a lease is usually longer and the rent amount much higher. The costs associated with maintaining a commercial building are also more considerable and ongoing. For these reasons, Mackersy Property ensures we carry out rigorous due diligence on any potential tenants.
This can include:
- Credit checks.
- Financial statements to determine ability to meet lease payment obligations.
- Reference checks from other reputable businesses.
- Understanding the nature of the business, its market and future plans.
- Ownership and shareholding structure, including any personal guarantees that may be required.
- Discussions around fit out requirements and costs.
- Assessing the business' public reputation and standing - will this tenancy help enhance the popularity of the premises?
The Property Management team uses a variety of methods to best determine the fit of a tenant and a property. If you want to learn more about this process, get in touch with our team.
Negotiating tenancies that work for everyone
It is crucial the negotiation process is done properly as skipping over detail can give rise to big issues later. At Mackersy Property we strive to manage positive, thorough negotiations that result in a lease that works for all parties.
Various financial and non-financial aspects of the agreement are covered during negotiation. Some of the clauses that will be worked through at this stage include rental amounts, responsibilities for maintenance, recoverable operating expenses for the building, length of the term, timing and mechanic of rent reviews, and codes of conduct.
Different businesses will have individual needs that will be discussed and included on a case-by-case basis to ensure a bespoke solution that suits the needs of the tenant and the landlord.
Mackersy Property’s goal is to ensure investors have the peace of mind of knowing they have profitable, long term, reputable tenants that gives the building the most consistent and attractive rent return. Expert Property Managers understand that it may require accommodating bespoke requests from highly desirable tenants to secure preferred businesses. These types of requests could mean revising a design (for a property still being completed) or relate to more administrative details such as the cadence of rent reviews to give the business more surety financially.
Prioritising building quality to attract great businesses
Quality buildings have curb appeal that can garner the interest of more high value businesses. Across Mackersy Property’s portfolio you will find best practice construction, materials and designs. We appreciate that for tenants, perception for their customers can be greatly affected by the environment they exist within.
Mackersy Property properties are built and maintained to demonstrate the level of care we know great businesses prioritise. This extends to our facilities management and repairs - issues are resolved swiftly if they occur, minimising the impact to our tenants and their visitors.
Conveying this to our tenants and their clients is a matter of getting the little details perfect. This may include:
- Ensuring lobby areas are clean, well-lit and easy to navigate.
- Including lift systems that are reliable, fully up to date with safety compliance and easy for visitors to operate.
- Incorporation of exterior design touches like sophisticated design facades and use of texture.
- Use of lighting to illuminate/enhance the quality of the space for the property both internally and externally.
- Modern air conditioning/heating.
This commitment to building quality can make the difference between a business deciding whether to pursue a tenancy or to look elsewhere.
Clearly communicating lease obligations
Proactive communication is the most powerful tool in keeping relationships with tenants positive. When either side stops communicating, small issues can grow into big ones and the tenancy relationship suffers. One part of this is the clarity around the expectations that either party has of the other - formalised through the lease contract, and reinforced in practice through the frequency and manner in which Mackersy Property communicates. Before confirming a lease, the Property Manager will spend time with the prospective tenant to ensure they understand the lease obligations, specifically including the costs, maintenance, reviews and responsibilities. Secondarily, it is always recommended that a tenant seeks legal advice before signing a lease so they have a full appreciation of both party’s obligations.
This process is as much about the tenant knowing the support they can expect from Mackersy Property as it is reinforcing what is expected from them. We make sure that the very start of the tenancy relationship has been built on transparency.
Listening and addressing tenant concerns
Communication doesn’t just apply to lease obligations. Mackersy Property’s Property Management team encourages tenants to be proactive with any questions or concerns they have, in the interest of open, positive dialogue throughout the tenancy. From before they have signed the lease, it’s our belief that great tenants will likely share our values - including an expectation of others to help find solutions to problems when they occur.
There are no avoiding challenges with commercial property leases - it’s the nature of operating a building and the moving parts that come along with this (maintenance, cleaning, security etc). However, in the interest of a positive tenancy relationship, the focus of our Facility and Property Management team is to be on hand to address these challenges and sort out any issues quickly, with minimal business disruption.
Mackersy Property sets high standards for ourselves as managers which helps attract businesses who hold the same values in their operations. Holding up - and exceeding - our end of the tenancy relationship helps to secure longer leases and more constructive interactions. For buildings that accommodate multiple organisations, our reputation with existing tenants can help our word-of-mouth reputation and attract other high quality, like-minded businesses to consider a Mackersy Property-managed commercial property.
