Tough economic times like the downward cycle we are in now calls for a new and fresh approach to ensure you are not sitting with costly vacancies. We are seeing a rise in vacancies linked with a rate correction and a downward push in rentals across our client portfolios. This is now affecting our clients across the spectrum, from listed REITs to individual property owners.
It is time for property owners with vacancies to start thinking out of the box to fill those vacancies and get ahead of their competitors. Here are some suggestions to reduce those vacancies:Start marketing as soon as possible.
One of the best ways to keep your vacancies low is to proactively start marketing your property as soon as you know you’re going to have an impending vacancy. By starting your marketing process as soon as possible you will ensure that you have a new tenant signed up before your current tenant vacates the premises.Set rentals at market levels.
Market rentals depend on a number of factors, including vacancies in the area, the current economic lookout and political landscape, as well as the desirability of the property, and market rentals differ from property to property in the same area. Doing your market research before setting your asking rental will enable you to price your property at the correct price and attract the right tenant. Pricing above market rentals will certainly leave your property vacant and pricing it too low will unnecessarily leave money on the table.
Ask around before making a decision on what rentals to charge. It's always a good idea to speak to a broking firm that has the critical mass in the area where your property is situated, a firm with a track record in placing tenants in your area.Get your property marketable.
When it comes to vacancies, it is necessary to have a critical look at the property from a tenant's perspective. A quick clean-up and a coat of paint will go far in helping to promote a fresh new look. Get rid of old and dated blinds, clean or replace the carpets and paint light and neutral colours. None of this needs to be expensive, but would give you the edge when it comes to attracting a tenant.
Don't leave it up to the tenant and expect them to work out the potential of the property - there is a good chance that they will only see the dirty carpets, dated blinds and the dark spaces and not what the space can be for their business and their brand.Renew your current tenants.
Retaining your current tenants is arguably the most cost effective way to reducing vacancies. Know when their leases are expiring and start discussions about a new lease period well in advance. Its always cheaper to try and keep a current (good paying) tenant than sitting with vacancies for a month or six and then once you've found a tenant, having to a pay tenant installation allowance and agent's commission on top of it all. Retain your longstanding tenants by renewing their unit with new carpets and some paint and reduce their rentals to be in line with what the market pays.
Tenants will also do their homework and know what the market rentals are for a specific area - our broking firm gets calls almost on a daily basis of tenants doing a price check for a specific area.Market aggressively.
Our advice to property owners is always try and get as many eyes on your property as possible. Use a broker with a big database of prospective clients and a wide advertising platform. Use aggressive marketing tactics and make sure your broker lists the property on all the major online sites. There are a host of tools available to effectively market your property which may include 'To Let' boards, digital flyers, online advertising on property portals, direct marketing efforts to a prospect database, social media advertising and networking.
Don't be afraid to ask your broker to provide you with their plan to make sure your property gets the marketing effort it deserves. If you are not satisfied with the plan - get yourself another broking firm.Carefully screen tenants.
Tenant screening is a crucial part of any tenancy process that should not be omitted, even more so in a sluggish economy. Even if you are under pressure to fill a vacancy, make sure you do proper credit checks and do payment references of your prospective tenants from their previous landlord. There are some clever online tools in the market that can assist you with drawing tenant payment profiles and rental payment history.
A bad tenant placement decision can be more costly than you think. It's not just the cost of replacing a tenant, but also the missed opportunities of signing the good tenants out there.Make use of a trusted broker.
It goes without saying that a good broking firm with a footprint in your area and the necessary market knowledge and profile in the market will get the job done for you in no time. Pick a company that has a critical mass of personnel and property stock in your area - as they are most likely to get the bulk of the leasing enquiries in a specific area. There is also a case to be made for paying full commission for the service and not taking shortcuts when making use of a broker as paying below market rates for the placement of a tenant might just mean that your property will not get first option or the right number of eyes that you need to fill the space.
The current market conditions and tough trading environment is likely to continue for the next while, leaving tenants under pressure to reduce costs or face closure. Landlords with a plan to reduce or minimise their vacancies will pull through and will be ready to capitalise on the upturn when it eventually comes.