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Property Leasing Guide
A RESOURCE FOR LANDLORDS & PROPERTY OWNERS
Commercial Property Leasing Guide P. 1
“The broker showed
up with a big, fancy
proposal and made
me all sorts of
what she would do
for my property—
but nothing has
WE WANT TO
NEVER SAY THIS.
That’s why we created this guide exclusively for landlords and
property owners, to help you choose the right business partners—
brokers and property managers.
We also offer suggestions on setting the right strategy for your
building and following through with measurable solutions and
“What really makes me mad is that the
building down the street just leased to
a tenant that I didn’t know was looking.”
“He hung a sign and made a flyer…
and then waited for the phone to
ring. I haven’t heard from him in
a month, so I assume he hasn’t
P. 2 Commercial Property Leasing Guide
PROPERTY LIFE CYCLE
Approach your asset from every angle,
taking advantage of unique collaboration.
TOP 12 LANDLORD MISTAKES
Find out where other property owners
stumble in leasing decisions, from leasing
the wrong space first to spending capital
improvement dollars in the wrong place.
ASK TOUGHER QUESTIONS
Don’t settle for the same old claims of
“biggest, smartest, best.” Before hiring a
broker, cut to the core of what makes them
different and find out how they will add real
value to your building.
ANOTHER ONE BITES THE DUST
STAYING ON THE SAME PAGE
Property managers can make or break
tenant retention: paving the way toward
a win-win lease renewal or turning off
a tenant prospect.
Set up a specific, customized reporting
plan to track not only your building’s leasing
performance, but also the performance of
True Cost of Vacancy
BEYOND CURB APPEAL
Positioning your property against competitors
starts with a story—creating a compelling
hook that makes prospects take another look.
HAVING ALL THE ANSWERS
You think you know your building inside-out.
Pinpointing certain property limitations early
avoids prospecting to the wrong tenant market.
Leasing Process Chart
Defining Your Building’s Theme
Key Contract Considerations
Commercial Property Leasing Guide P. 3
> Investment sales
> Capital markets
> Contract administration
> Investment sales
EVALUATION & IMPROVEMENT
> Brokerage leasing services
> Project management
LEASING & STABILIZATION
> Brokerage leasing services
> Property management
> Lease & tax audit
ACCESSING THE RIGHT RESOURCES
We’re working to fundamentally change your
partner, and how to set up systems to ensure
management, valuation, project management,
AT EACH STAGE OF OWNERSHIP
experience from a relationship with a vendor
mortgage banking and consulting. Although
This is not a promotional brochure. It’s not
to a strategic partnership.
A key theme that emerged was that owners
about us. It’s about you—owners and asset
What makes a partnership work? We listened
want their service partners to see them
managers—and how to get the most out of
to dozens of success stories—and horror stories
through a property’s full life cycle.
the services provided by brokers and property
—from clients, brokers, property managers
and asset managers to find out. This book is
about how to carefully choose your business
P. 4 Commercial Property Leasing Guide
That’s why our approach is based on an
integrated team, including brokerage, property
you might not need all of our professionals at
all times, we believe the team approach helps
us offer a seamless experience at any stage.
At Colliers, partnership means approaching
assignments with clients’ interests first, and
treating the property as if it were our own.
Top 12 Landlord Mistakes
MAJOR MISSTEPS THAT CAN SLOW OR DERAIL YOUR LEASING EFFORTS
Signing leases without a strategic
Hiring a broker without the
a come-as-you-are creative firm
plan. A whole-building approach
is bound to create friction.
to leasing is critical to achieve
working with properties of a
the best rates and best tenants.
similar type and location.
Leasing the best space first. This
Pricing the building incorrectly.
Holding out for an extra nickel
Failing to investigate the tenant’s
or dime in pricing may keep the
can devalue the rest of the building’s
finances, business plan and revenue
building stuck in vacancy limbo.
available space, such as leasing
stream, and failing to require a
half of a floor with a better view,
substantial security deposit.
10. Failing to evaluate the competition.
12. The biggest mistake? Lacking a
story. Your building should have a
compelling message that differentiates it from the competition.
The building’s story should be
tailored to a key tenant driver, such
as visibility, tech infrastructure or
Ruthlessly compare your building’s
accessibility. Some landlords develop
Allocating capital incorrectly:
pros and cons against competitors—
a theme or foster tenant clustering.
Failing to ensure each tenant’s
spending money on things that
aided by your broker—to determine
lease terms support the long-
won’t help lease the building, such
your unique selling points and high-
The “story” is a creative ele-
term investment objectives for
as replacing sconces on the exterior
ment of a leasing business plan
repositioning or disposition.
of a building. A better use of funds
or leaving small spaces vacant.
might be replacing dated light lenses
Faulty termination clauses that
in a vacant space to refresh it. Ask,
allow tenants easy “outs” can leave
“Does my improvement help lease
you, the landlord, with unamortized
the building more quickly or at a
costs from tenant improvements
higher rate?” before spending.
(TIs), incentives and fees.
11. Forgetting the small stuff.
Prospective tenants can be turned
off by the little things, so keep
empty spaces free of debris, lights
working and blinds open. Common
areas should be clean, parking
Choosing incompatible tenants.
and signs in good condition, and
Placing a staid law firm next to a
consider investing in seasonal
bustling sales organization or
plants at entrance points.
that many brokers fail to develop.
Your broker will collaborate with
you to identify and enhance your
property’s unique story, and then
use that story’s powerful potential
to drive tours and contracts.
Commercial Property Leasing Guide P. 5
Ask Tougher Questions
TEN QUESTIONS TO CLEAR THE CLUTTER
AND HELP YOU CHOOSE THE RIGHT PARTNER
Virtually every commercial real estate broker tells property owners
the same story. They are experienced. They’re knowledgeable. They’ll
work hard. They’ll spend a lot of time on the project. They promise,
promise, promise, promise.
property will not be their top priority (or even
Our resources cross geographic boundaries,
close). These brokers may speak only in general
property types and client types.
terms to what they’ll do for your property.
To ensure your broker will devote substantial
WHAT IS THE BROKER’S SERVICE
time to the project, ask to see the broker’s
detailed marketing strategy and action plan.
BUT WILL THEY DELIVER?
WHAT IS THE BROKER’S EXPERIENCE?
Choosing a broker as your business partner
Your broker should provide information
is daunting, especially when wading through
on his or her track record of dealing with
a sea of sameness. These points—questions
similar leasing challenges, similar building
to ask when hiring—are designed to clear the
types and buildings in the same area.
clutter, and help you choose the partner who
best fits your needs.
WHAT IS THE BROKER’S SPECIALIZATION?
WHAT IS THE BROKER’S MOTIVATION?
Will your goals for the property be aligned
with the broker’s goals? For example, hiring
Although no one can guarantee an outcome
For example, ask whether the broker will
based on the marketplace, our sales profes-
be present at every property tour. They can
sionals and their support teams are committed
describe the value proposition of the building,
to keep their promises.
learn about the motivations and needs of the
prospect, and hear feedback that can help your
That means we guarantee our services through
a specific action plan. We will define, from the
beginning, expectations for service, reporting
WHAT ARE THE BROKER’S RESOURCES?
Many boutique and local commercial real estate
WHAT IS UNIQUE ABOUT THE BROKER’S
firms have very limited platforms, with little
Does he or she focus specifically on the geo-
a broker who is not specialized in properties
graphic area where your building is located
like yours might mean he or she spends less
and your building’s type and class? Does the
time studying your submarket and specific
At Colliers, we believe a collaborative approach
company seems to have, what kind of insight
broker specialize in representing owners?
serves our clients best, which is why a portion
can your broker offer? What uncommon market
of your gross commission dollars supports our
knowledge will help you identify trends and
specialized team of researchers, marketers
take advantage of them, or ensure that you see
and administrative staff, who provide deeper
every tenant prospect in the market?
We believe it’s impossible to know the market
unless you live, sleep and breathe it, which is
why we strongly support specialization.
P. 6 Commercial Property Leasing Guide
WHAT IS THE BROKER’S CAPACITY?
research, marketing and administrative support.
Some brokers who claim to dominate the market
market insight, unique go-to-market strategies,
have taken on so many assignments that your
and responsive administration.
Beyond the quarterly market reports that every
How we segment tenant targets to reach the best
prospects with the strongest tactics
How marketing moves a tenant prospect
toward a successful transaction
The prospect moves
through the negotiation
and contract phase.
We connect with our database list
of appropriate targets through direct
marketing flyers, mail and e-mail, and
Find out whether the broker considered all of
strategy. But prospecting for tenants requires
A marketing strategy that takes each prospect
and converting likely tenants, as well as a
a more thoughtful approach on two levels.
through the transaction filter to build awareness,
supporting a broadcast marketing program
understanding, interaction and then cement the
(such as advertising, online listings and signs)
transaction is critical. Otherwise, your broker
to ensure every potential tenant is aware of
may be basing your building’s promotion on
your building’s opportunity.
the possibilities for your building before they
First, the broker must define which tenants
selected their action plan.
are most likely to lease the space and pay the
Too often, brokers simply recycle a proposal
from one owner to the next. We believe you
deserve a plan tailored to the unique opportunities and challenges of your property.
highest price. The characteristics of this group
should be used to sort the database. The broker
Many brokers submit a laundry list of market-
little more than a flyer, a sign and a prayer.
should describe how a high-touch, personal and
fast-acting campaign will be implemented.
Second, the broker must define how each mar-
WHAT IS THE BROKER’S STRATEGY?
The prospect tours the
building and/or does
WHAT IS THE BROKER’S METHODOLOGY?
The prospect sees value
for his/her own business &
with the best
contact such as
calls and tours.
ing tactics to a landlord and call that their
The prospect is
aware of the building
availability, its location
We ensure we connect
with every potential
target with broadcast
tactics, such as
listings, signs and
If you’ve worked with several brokers in the
past, consider which of them were true busi-
HOW WILL I KNOW I’VE SEEN EVERY
ness partners, working in an advisory capacity
to support your building’s value long after the
tenants had been placed in your vacant space.
keting element connects with a specific group
Among owners’ greatest fears is missing
of potential tenants, including those prospects
an opportunity to lease their space to the
Your assignment should open the door for the
that you didn’t even know were looking.
best possible tenant. The broker should
broker to add value to your business, both now
provide a clear plan for defining, approaching
and in the future.
Commercial Property Leasing Guide P. 7
Bites the Dust
A relationship with the property
manager is key to tenant retention.
The property manager could have worked out
reported back to the owner for a complete
the problem in advance, by scheduling the
perspective on the property.
contractor for a day the sales organization was
closed, by temporarily relocating the sales
force, or by rebating rent or another financial
It seemed like the hard part was behind
them—the broker identified a good prospect,
brought the firm in for multiple tours, helped
the owner through negotiations, shepherded
the contract through legal review and, finally,
handed the keys to the new tenant.
And then it all fell apart.
The number one reason that an owner’s
relationship with his or her tenants falls apart
is lack of communication—and this is often
the responsibility of the property manager.
For example, one property manager sent
tenants a memo about street construction
the next day. And sure enough, the next day,
the property owner got a call from a tenant
who was shouting into the phone because
incentive for tolerance. But after the fact, few
solutions were possible, and the tenant said,
“You’ll be hearing from my lawyer.”
“Tenants have long memories,” said a Colliers
manager, who previously worked as an
owner’s representative. “You can have the
best customer service on the planet, but
when property management breaks down
personally connect with the tenants. Only
through this routine face time will they notice
simple things like a broken handle or missing
A towel dispenser hanging askew might never
be reported by tenants—it’s not critical—yet
tenants will continue to be annoyed by it until
through lack of foresight or poor communica-
Security personnel can be a strong partner,
tion, that one action can strike a fatal blow
as these people are often the most visible
against all the goodwill you had built up.”
members of the building staff. Those who
That’s why owners should carefully select
a property management company with the
experience to anticipate and solve problems
before they happen, and the resources to take
care of issues immediately.
he couldn’t be heard over the jackhammer in
Colliers’ 24-hour Service Center logs, tracks
the street. There was no way his sales force
and reports every call to reveal common
could work with that kind of disruption.
tenant concerns, frequent maintenance
challenges and property trends. These are
P. 8 Commercial Property Leasing Guide
Property managers must also get out of their
offices frequently to walk the building and
learn tenants’ names and make an effort
to provide a personal touch can take the
tenants’ overall experience from average to
Ultimately, property management is an
essential link to a building’s positioning. When
a manager demonstrates they care about the
building, in the tenant’s mind, it also means
“they care about me.”
LEASING PROCESS CHART
>> Owner’s long-term
>> Building’s immediate
and future leasing
>> Define competitive set
>> Create building
>> Determine unique
>> Create a building
>> Develop marketing
plan to support this
>> Define target
>> Create target tracking
lists from databases
>> Plan marketing tactics
>> Determine direct
tactics and volume
>> Determine broadcast
tactics and frequency
>> Create system for
>> Gather and synthesize
>> Track each prospect’s
>> Evaluate activity,
>> Determine next steps
*Strengths, Weaknesses, Opportunities and Threats
The True Cost of Vacancy
HOW THE COST OF REPLACING A TENANT CAN ADD UP FOR PROPERTY OWNERS
Losing a tenant can be a bigger financial blow
Professional services—including space plan-
to owners than simple loss of income.
ning, architectural and consulting services
The cost to re-lease and refurbish a space can
Demolition—removal and disposal of the
add up, which is why spending a little extra to
former tenant’s improvements
ensure strong tenant retention can yield solid
financial returns in the long term.
We suggest taking into account the full scope
of potential costs when choosing whether to
renew a tenant in their existing space.
Vacancy time—no lease payments made
Marketing costs—signs, open houses, direct
mail, property web sites, tour incentives
Leasing costs—brokerage commission,
Materials—for tenant improvement
Signs—both inside and outside the building
Professional services—legal, accounting and
Relationship—to other tenants: is another
tenant’s business tied to the departing tenant’s?
Labor—for demolition, construction and
Tenant surveys can increase satisfaction
Moving costs—a typical incentive to encourage
for your current tenants, and highlight both
a tenant to relocate
benefits and problems with your property.
Free rent—in some markets, free rent may
Surveys offer a rich source of information to
be offered in lieu of or in addition to tenant
owners and brokers who are preparing a leas-
ing strategy for the property’s vacant space.
Tenants can also be allies—or detractors—in
the leasing process.
Consider asking these questions, and be sure
to follow up on any “trouble areas” as well
as using the information from the latter two
questions to create your building’s story.
– What are we doing right?
– What can we do better?
– What about the property supports your
– Why did you choose this property/location?
Commercial Property Leasing Guide P. 9
DEFINING THE PROPERTY’S UNIQUE VALUE
AND HAMMERING IT HOME WITH PROSPECTS
A standard approach to marketing commercial real estate—how much
space, how much cost—is an analog approach to this new digital world.
Many commercial real estate flyers advertising vacant space fall into
the same ho-hum, heard-it-before advertising patterns: “Well-located,
modern building ...