Owners of office buildings know that business leaders are influenced by good marketing and salesmanship just as anyone else. Yet, building owners often make the counterproductive decision to wait until a prospective tenant indicates the improvements they want before investing in 7 areas delineated below. These essential steps speed up the leasing process, generate rent revenue faster and at a higher price by changing the current conditions and setting the path to leasing success. However, the single worse decision a landlord can make in office leasing will undermine all the right decisions landlords make. I’ll get to that shortly.
Is leasing office space to an executive that much different than selling any other product to Joe Public? Most people understand that selling a shiny, clean car is easier than selling a dirty car. Making improvements and staging a house for sale will yield a faster sale at a higher price. The products a store wants to really move get placed in a high visibility display case with special lighting, not just put on the regular shelf with the rest of the ordinary products. Much thought and expense goes into the presentation of the box that a product comes in because many buying decisions begin and end with the box. Curb appeal and presentation really matter!
I once heard the phrase that you get sold on the sizzle, not the bacon. Another common phrase is “first impressions count.” They count the most and you can never get a second chance to make a first impression.
Sadly, many office landlords leave the conditions of office space just as the last tenant left them and wonder why their real estate broker can’t find a good tenant or why tenant’s negotiations are so aggressive.
If making a good first impression is stage one, its the crucial starting point. Moving onto stage two is a leasing proposal and discussing a tenant’s build-out needs. Many landlords delay getting to stage two simply because the office environment was left in a poor state of condition. The old saying applies, “It takes money to make money.”
The basics for a quick leasing experience, achieving a higher rent and beating the market and competition are as follows:
1. Curb appeal!
Take care of the landscaping, parking lots and outside building entrance. Don’t put a smoking area next to the main entrance.
2. The Long and Winding Road
That leads to your door… anyone remember this Beatles song? In the building lobby and corridors leading to the vacant office suite, replace dingy and worn carpet/flooring. Fix and paint damage to the walls.
3. Broom Cleaned Less Wear and Tear
That may sound good in a lease to your current tenant, but it won’t impress new prospects! Do the same as item 2 in the reception area or other immediately seen areas as one enters the vacant office suite.
4. What Leak?
Replace stained ceiling tiles. Leaking issues tend to be a nonstarter for most prospective tenants. A leak that was fixed 5 years ago might as well have happened yesterday for an executive who looks up and sees stained ceiling tiles.
Steps 1 -4 are the minimum because these are first impressions of the office building and the first impressions of the actual office space. Problems seen lead to concerns about problems unseen. Tenants can come up with imaginative questions about unseen problems that don’t exist or even make sense.
5. Don’t Go with Your Gut!
Gutting a space so it is ready for a tenant’s design specifications may be necessary and practical. It may even sound like a good idea, but visually it is not. Its appeal is no match for a finished and clean open office space. For most people, exposed concrete floors, HVAC equipment, duct work, wiring, plumbing, sprinkler pipes and girders coated in fire-retardant material are simply just not that attractive. Architects may love it like an artist loves a blank canvas, but everyone else will not. However, if an office condition is so bad or perhaps so cluttered with a maze of private offices, gutting may be the best alternative.
6. To Stage or Not to Stage? That is the Question.
Stage the corner office if one exists. More than likely, the business owner or top decision maker is getting a corner office. Staging that one area as a high end furnished office helps the executive focus in and easily visualize themselves working in that space. This is why toy makers put pictures of kids having fun playing with the toy on the back of the box. Providing the visual encourages the sale. If your target market is a tech firm, stage a collaborate work space area instead.
7. The Sizzle!
Spec suites! If you do it, don’t build using the “Building Standard Finishes.” Just make sure your broker has a clear understanding of what is standard and what is not. I don’t do any residential sales, but I enjoy visiting an occasional model home with my wife to get ideas for our home. Have you ever gone into a model home and found the very basic offering package? Nope. You see the highest end options showing all the extras because that is what sells new homes. It’s the sizzle! You want a breakfast nook? That’s extra! You want crown molding? That’s extra! Hardwood floors and gourmet kitchen? That’s extra! They often end up selling a new home without many of the extras. Similarly, the high end spec suite is a landlord’s selling advantage.
With all that, would the vacancy sell itself? No. Landlords still need a good representative that understands salesmanship and loyalty. Complacency due to an abundance of listings is the primary reason a brokerage team exhibits a lack of customer service. This alone counteracts the good decisions landlords make in positioning their buildings in the marketplace. Though brokers may display an excellent work ethic, a lack of time because of having too many listings will undermine the investments and best steps landlords have made.
Saving the best for last, here it is. The worse decision a landlord can make in the leasing process is hiring a conflicted broker that is not fully dedicated to the success of leasing space in the subject building(s). If they don’t return phone calls, create a sense of urgency and move the sales process forward, or worse yet, take a prospective tenant to other building owners, then the landlord has made the number one worse decision in leasing office space and those vacancies will linger.
For More About the Author, Brian Rossi: CLICK HERE.