When a suite sits empty, every month costs you rent, and often operating expenses you can’t pass through. The good news is that most of what decides how fast a commercial space leases is in the owner’s control. Here is how leasing usually works for office, retail and industrial owners in Glendale, Pasadena and Burbank, and where the time goes.
The Commercial Lease-Up Process, Step by Step
- Market review and pricing. Your broker pulls lease comps and current availability for similar space nearby and recommends an asking rent, lease type (Full Service Gross, Modified Gross or NNN) and concession package.
- Getting the space ready. Decide whether to deliver the suite as-is, spec it out (paint, carpet, lighting, a refreshed restroom or kitchenette), or offer a tenant improvement (TI) allowance.
- Marketing. Listing on the commercial listing services tenant brokers use, signage, a flyer with floor plan and photos, and direct calls to tenant representation brokers who work the area.
- Tours and proposals. Showings, tenant qualification and financial review, then letters of intent (LOIs) and counter-proposals.
- Lease negotiation and signing. The LOI terms are turned into a lease with your attorney, followed by TI construction if needed and move-in.
What Slows a Lease-Up Down
- Asking rent above the market. Tenant brokers compare your space side by side with every option in their client’s search. Overpricing usually means fewer tours, not a better deal.
- A space that shows poorly. Dated finishes, odd layouts and deferred maintenance make tenants imagine cost and delay.
- Slow responses. Tenants often have several options. Owners who answer proposals in days, not weeks, win more deals.
- Unclear operating expenses. Tenants and their brokers want to know the full occupancy cost up front.
- Not working with tenant brokers. Many office and industrial tenants hire a broker, so your listing has to reach them and pay a cooperating fee they can work with.
How to Lease Faster Without Giving Away Value
Price close to the market and give yourself room on concessions rather than on base rent. Spec suites that will appeal to the most common tenant size in your building. Offer flexible lease terms where it makes sense. Most importantly, decide your negotiating limits before proposals arrive so you can respond quickly.
Lease Up First, or Sell?
If you are thinking about selling, a building with signed leases is usually worth more to investors than one with vacancies, because investors price on income. If the likely buyer is an owner-user who wants to occupy the space, selling vacant can make more sense. See selling your commercial building for how we compare the two.
Talk to a Commercial Leasing Agent
Iliad Real Estate Group provides commercial real estate landlord representation for property owners in Glendale, Pasadena, Burbank and greater Los Angeles. Call (818) 836-4070 or send us a message for a free market review of your vacancy.