Saturday, November 19, 2011

How to Select Tenants for Commercial or Retail Property

In the commercial property market today the fact of vacancy is quite a challenge and an ongoing issue for many property managers. As a direct result of a vacancy, the property manager will out there looking for the best tenant to suit the tenancy mix.

On that basis it pays to use a checklist in the tenant selection process given the property type and the landlord in question.

Here are some ideas to incorporate into the tenant selection process:

    Seek details from the tenant has to their occupancy history in other properties. If possible visit the earlier places of occupancy to check out the tenant story and observe their impact occupancy on the property and the tenancy.

    If the tenant will permit, talk to the previous landlord and or property manager that controlled their earlier place of occupancy. Identify if any matters of concern or default frustrated the lease situation in that location.

    The intentions of the tenant should be identified regards property usage, the required permitted use for the premises, the operations of the business, and any needs for expansion or contraction that could apply in the ongoing lease term.

    It is wise to obtain a legally binding bank guarantee and or bond that will protect the landlord in the case of lease default.

    Check that the identity of the tenant is both legal and real. This is to ensure that any default can actively pursue the legal identity.

    Any new lease you are considering should be structured around a fair and reasonable market rental, together with a rent review profile that keeps pace with the surrounding comparable properties.

    The provision of lease options or renewal options to the tenant may be counterproductive in the lifecycle of the property or the investment plans of the landlord. On this basis any request by the tenant for an option should not necessarily be agreed to.

    Seek a business history from the tenants accountant.

These simple ideas will help with the selection of tenant and the negotiation of lease. Leasing managers and property managers will find great benefit in the use of a checklist in the tenant selection process.

You can get more free ideas regards commercial property management and commercial property leasing from our website at