How to get commercial space rented?

[Mark Rowan]

Hello everyone. My partners and I are looking at a building with 16 residential units and 2 floors of commercial office space. The 16 apartments are rented of and the commercial space is vacant. The building will still have positive cash flow with out the commercial space rented, so the question is...What incentives could we use to get renters into the commercial space? Lower rent for the first year? Free rent for 1 year with extended lease? Or another option, convert into more residential space? Just wondering what may have worked for someone in the past. Thanks everyone. Mark Rowan JKM² Properties

[Bill Gulley]

I sure wouldn't suggest a year of free rent for any term of lease unless the company/person was strong to sue and get the award for the remaining term.

What is it zoned for?

In commercial, all is fair just as in war. If you want an insurance agent, contact agents about your office space, get competitive. Make them an offer! If they have a buyout on a lease, compensate them by twice as much to make it worth moving.

You need to get active to either find a tenant or make one. Finding means contact the types of business operators you want, mail a letter, follow up with a call, walk in and see them, tell them you'd like to have them and make them an offer.

Making a tenant, two ways. 1st what operation needs to be in there? Then examine the market for that business, if it's a good location now go to those . businesses and talk about expanding their business in your area. The biggest roadblock for a small business expansion is the leasing of the new space and build up in a new area to cover expenses. You have control over that, make it easy for them to expand, lower rents in a start up period and perhaps devise rents from gross receipts so the business owner has much less risk in expanding.

The other way is build the business to go in there. Hundreds of ways to do this but what you're doing is identifying the right business, then find operators in that industry that 1. as above will expand but need a partner, 2. people in that business wanting to start their own. Lots of small businesses out there working out of a home or garage. Partner with them, bring them in the store front. This approach takes longer and requires more effort on your part, but you're building a business in your space, partnering with them and gradually move out as a partner into landlording. Or, man, you can end up with another business venture!

If you have a restaurant space, it's not hard to find a good cook, some long term assistant manager at another place and to steal some waitresses. Inventory and fixtures can come from you, investors and from financing....all this takes some knowledge and guts as most mom-pop types fail in 4 years, but if you're the landlord it makes getting over the hump much easier.....but this may not be for you, but I've done this and got out with more than rents

Just saying, instead of putting an ad in the paper and hanging a sign, get active in seeking out the tenants you want. :). .