We’re already into the second month of 2016… Can you believe how quickly time flies?
February’s start also means you should be moving headlong into your New Year’s Resolutions. What’s that, you haven’t quite sorted out your 2016 resolutions yet?
Well for most business owners and investors, New Year’s Resolutions revolve around improving their business and bettering their investments.
And if you’re like most shopping center landlords, your goals for the New Year revolve around improving your property – thereby bettering your investment.
Here are three of the most common goals for shopping center improvement…
Are you struggling with lingering vacancies that you just can’t seem to fill? Despite the economy’s improvement, many landlords are in exactly the same boat.
If you’re facing this problem, here are the three most likely culprits:
End-cap spaces in prime locations command high dollar rents. Inline and elbow spaces in sub-prime locations do not. It’s really that simple.
So if you’re dealing with a lingering vacancy, it may be time to consider lowering your asking rate or being more flexible with the offers you receive.
Also, if you’re trying to fill a larger space, it may be worthwhile to market small space availability, and offer tenant improvement dollars to subdivide the larger space.
For Lease By Owner
It’s certainly fair to say you know your property, likely better than anyone else. And having owned the property in its current location for some time, you’re probably knowledgeable about the surrounding area.
Leasing agents, however, are zeroed in on the tenants best suited to your property-type, the tenants active in the marketplace, and the real PULSE of the area. If you’re like most landlords, it’s doubtful you have the time to acquire and maintain this board of a knowledge-base.
And a leasing agent’s value doesn’t end with property-type and market knowledge. Typically agents have a list of tenants actively seeking space. And they’re connected to a city, state and even nationwide network of brokers and corporate tenant real estate agents all representing active tenants.
Hiring a leasing agent, who doesn’t get paid until your vacancy is leased, puts all of these resources to work in the effort to find you a higher quality tenant, faster.
Time For Some New Blood
Perhaps your property is already listed with a broker. Maybe it’s been listed with that broker for a long time. A REALLY long time. But with little or no results to show for the time and effort.
This doesn’t mean your current broker isn’t competent or qualified. And it doesn’t mean they’re not doing a good job.
Sometimes listings just get tired. There may have been a rush of activity when your property first came on the market. But that time has long passed, and now your empty unit is just one more in vast sea of vacancies.
In this scenario, the best thing to do is to bring in some new blood. A new broker with a fresh perspective, different connections and another approach to leasing your vacancy.
Lowering Property Expenses
Your shopping center is an investment, right? It’s supposed to generate money. Not rack up costs.
Yet each month as look down your list of property expenses, you scratch your head and wonder “what are all of these charges!?”
Unfortunately, it does cost money to maintain a shopping center. But there is a strong possibility that you’re paying for more than you have to.
Here are three potential property cost-reducing strategies:
Lower Your Vendor Expenses
Of course vendors are necessary to maintain your property. But are their services REALLY worth what you’re paying? In other words, is the quality of the service your current vendors provide really worth the fees they charge?
Could it be other vendors provide comparable or even superior quality services for less money? Seek bids from alternative vendors, and you’re likely to find higher quality, lower cost providers begging for your business.
Reassess Your Property Taxes
The economy has certainly improved since the depths of the Great Recession. But that doesn’t mean your property’s value has rebounded to its pre-recession level. And that means in all probability, your property’s current assessed value exceeds its actual market value.
Fortunately, there are companies that specialize in reducing commercial property assessments. They don’t charge a dime unless they’re successful in lowering your assessment. And their fee is merely a percentage of you assessment reduction.
Convert to Triple Net (NNN) Lease
We probably don’t need to reiterate the details of how a Triple Net lease works, but here’s a quick crash course… Your tenants pay for your property taxes, building insurance, and common area maintenance (with a charge added to their monthly rent).
If your tenants aren’t on Triple Net Leases, your property expenses are SIGNIFANCLY higher than they could be.
But this is an easy fix. As existing tenants come up for lease renewals, and as new tenants enter your shopping center, sign them to Triple Net Leases. It’s the single largest property expense reducing tool at your disposal.
As we’ve already discussed, your property is supposed to generate money, not vacuum it out of your bank account. That’s what makes maintenance, especially big, expensive projects such a bitter pill.
But the reality is, the condition of your property is directly proportional to its value and income generating potential.
A property in poor physical condition, with lingering issues – leaky roof, cracked and deteriorating parking lot and sidewalks, dying or dead landscaping, ADA non-compliance – isn’t well-patronized. And it winds up filled with frustrated, underperforming tenants that grow more and more eager to vacate the property every day.
One by one, your tenants depart. And you’re left with an empty shopping center no one wants to lease, because no one wants to shop there.
Liability Issues & ADA Non-Compliance
Cracked and broken parking lots and sidewalks are trip and fall lawsuits waiting to happen.
And ADA non-compliance is a huge legal can of worms that no landlord wants opened.
In short, deferring maintenance may improve cash flow in the short term. But it seriously hurts your property’s value in long term. The potential lawsuits can be financially devastating.
How CBM’s Professional Leasing & Property Management Services Can Enhance the Value of Your Shopping Center
Whether you’re facing long term vacancy, rising property expenses or mounting maintenance issues, CBM can help.
Our team of industry leading shopping center leasing and management pros will solve your problems.
And the end result? You’ll achieve your 2016 goal of improving your shopping center’s investment value!
Find Out More About CBM’s Leasing & Property Management Services
Click here for more info on how CBM can help enhance your property’s investment value.