Commercial Real Estate Lease: 7 Steps Landlords Should Take Before Listing

A commercial real estate lease can have a significant impact on a property’s income, tenant quality, and long-term value, which is why landlords should begin preparing well before a property is placed on the market.

For commercial property owners, leasing a space is more than simply deciding on a rental rate and putting up a listing. The strongest leasing campaigns begin with preparation. Understanding the market, evaluating the property, preparing accurate information, identifying the right tenant, and developing a clear leasing strategy can put a landlord in a much stronger position when it is time to market the property.

In a recent video, Larry Emmons walks through seven key steps every landlord should consider before listing commercial space for lease.

Watch the full video on YouTube

1. Understand Your Competition

Before establishing rental rates, landlords should understand what is happening in the surrounding market.

What properties are competing for the same tenants? What rental rates are being quoted? What concessions are other landlords offering? How much comparable space is currently available?

These questions can help determine how a property should be positioned.

A rental rate that looks attractive on paper may not be competitive if similar properties are offering better terms or concessions. On the other hand, pricing a property too aggressively without considering tenant demand can increase vacancy and extend the time it takes to secure a lease.

Understanding the competitive landscape gives property owners a better starting point for developing a leasing strategy.

2. Evaluate the Property’s Condition

First impressions matter when prospective tenants tour a commercial property.

Before beginning a marketing campaign, walk through the property from the perspective of a potential tenant. Look at the parking lot, landscaping, building entrance, lighting, common areas, signage, and overall presentation.

Some improvements may be relatively minor but can make a meaningful difference in how a property is perceived.

The goal isn’t necessarily to complete a major renovation before leasing. Instead, landlords should identify issues that could negatively affect a tenant’s first impression and determine which improvements are worth addressing before the property goes to market.

3. Prepare Accurate Marketing Materials

Prospective tenants want information, and incomplete or inaccurate information can slow down the leasing process.

Before marketing commercial space, make sure the property’s key information is accurate and readily available. This can include:

Square footage
Property specifications
Photos
Floor plans
Site plans, when available
Available space
Property features and amenities

Clear marketing materials make it easier for prospective tenants and their advisors to determine whether the property fits their requirements.

Strong property marketing also gives a commercial broker the information needed to present the opportunity effectively to the market.

4. Identify Your Ideal Tenant

Not every tenant is necessarily the right tenant for a particular property.

Before launching a leasing campaign, landlords should consider what type of business is most likely to succeed in the space. What uses are permitted? What businesses align with the property’s location and physical characteristics? What type of tenant would complement the property’s existing occupancy?

Identifying an ideal tenant profile can help make marketing more targeted and productive.

Instead of simply trying to find any tenant, the objective is to find a tenant that makes sense for the property.

5. Establish a Leasing Strategy

Rental rate is important, but it is only one part of a commercial lease.

Tenants may also evaluate lease term flexibility, tenant improvement allowances, expansion options, operating expenses, and other business considerations.

For landlords, these factors can influence both the attractiveness of the property and the long-term economics of the lease.

A strong leasing strategy should balance the goal of securing occupancy with the goal of protecting and potentially increasing long-term property value. The best approach isn’t always the one that produces the highest initial rental rate. It is the strategy that makes sense for the property, the market, and the landlord’s objectives.

For additional insight, landlords may also find it useful to review our article on Capital Expenditures in Commercial Real Estate Leases and What Is a Triple Net Lease?.

6. Prepare for Negotiations

Very few commercial leases are completed exactly as initially presented.

Landlords should expect questions, requests, and negotiations throughout the leasing process. Prospective tenants may have different expectations regarding rental rates, lease terms, improvements, operating expenses, or other provisions.

Preparing for those conversations ahead of time can help create a smoother transaction.

It is also important to understand which terms are flexible and which terms are essential to the landlord’s investment strategy. Having that understanding before negotiations begin can make it easier to evaluate proposals and respond strategically.

7. Work With the Right Team

Commercial leasing is rarely a one-person process.

Depending on the property and transaction, landlords may work with commercial real estate brokers, attorneys, property managers, contractors, and other professionals.

Having the right team involved can help property owners navigate the different stages of leasing, from preparing the property and marketing the space to negotiating terms and moving toward a completed lease.

For property owners considering their broader investment strategy, our guides on Due Diligence Commercial Real Estate and Essential Documents for Your Commercial Property Valuation provide additional resources.

Preparation Can Make a Difference

A successful leasing campaign starts before the property is marketed.

By understanding the competition, evaluating the property’s condition, preparing accurate marketing materials, identifying the ideal tenant, establishing a leasing strategy, preparing for negotiations, and working with the right professionals, landlords can approach the leasing process from a much stronger position.

For commercial property owners in Metro Detroit, having a clear strategy before bringing a property to market can help reduce unnecessary delays and improve the overall leasing process.

If you’re considering leasing a commercial property and would like to discuss your options, Larry Emmons can help you evaluate the opportunity and develop a strategy based on your property’s goals and the current market.

Larry Emmons
Newmark
Email: larry.emmons@nmrk.com
Mobile: 248.705.9115
Office: 248.447.2707

Watch Larry’s full video on YouTube