As hybrid offices become increasingly popular, commercial landlords are faced with the challenge of falling occupancy rates. The hybrid work environment puts greater emphasis on flexibility, as tenants are demanding shorter lease terms and adjustable lease space to better accommodate the workspaces they are providing their employees.
In response to this challenge, proactive commercial landlords can use the following strategies to renew current leases and attract new tenants.
- Communicate. Initiate a conversation with your current tenants about their concerns and help resolve them well before lease expiration. The best outcome for all parties will occur when tenant and landlord maintain an open dialogue on the tenant’s changing needs. Simply sending a copy of the current lease with updated terms as it nears expiration is a recipe for non-renewal.
- Be flexible. Understand the current lease market has a surplus of five- and ten-year leases that are becoming available, thus increasing the inventory for companies seeking to lease on more flexible terms. Landlords should be mindful of these market conditions when competing for potential tenants.
- Consider upgrades. Convert office property to flexible workspace to differentiate yourself from competitors. Landlords should be looking for opportunities to partner with tenants in investing in upgrades that will enhance value for both sides.
- Invest in marketing. Research preferences of both current and potential tenants to create a marketing strategy to use in generating increased exposure through various marketing channels. For example, a program could be started to encourage referrals from your current renters by offering incentives for leads to potential tenants.
Each of the strategies depends on a landlord developing awareness to better respond to the changing market conditions. The one constant for landlords moving forward is change.
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