Got a vacancy? Here’s what to expect in a commercial real estate marketing report

Some of you reading this column own a company that occupies a building you also own. Others are involved in some facet of the commercial real estate profession – a broker, lender, architect, escrow holder, title officer, or contractor.

Still others might own a strip center, office building, or small industrial condo from which you derive monthly rent to supplement your income. (Hi, Rudy.)

Regardless of your angle – you’ve been on the receiving end – or have prepared – a marketing report. You see, when a vacancy occurs, a broker is hired to find a tenant or buyer for said vacancy. That is, of course, unless you choose to go it alone, which I strongly discourage — but I digress.

What information should expect from your broker in the report? I generally like to update three specific areas. Akin to a microscope zooming in – my reports start with the overall market conditions and zero in on specific recommendations for the assignment.

Market activity

The market in which your vacancy competes should be constantly reviewed by your commercial real estate professional. Let’s say you own an industrial building of 100,000 square feet that is 10 years old. How many spaces are available? What are the most recent comps? Speaking of comps, are they mainly sales or leases? What active requirements are circling?

Based on all of these data points, market conditions emerge from which decisions can be made. As an example: If you’re attempting to attract a tenant and the vast majority of recent activity is from buyers, you might consider altering your plan.

Conversely, if your asking price eclipses the market sales, you better have some staying power to allow the pricing to catch up. But if you find yourself in a downward trending time, you may wait a very long time.

Active interest

Who has inquired? Are they kicking tires or is there some motivation for their search? I try very hard to find out specifically which company is represented, what else they are considering, and why our building may or may not work.

Next steps

Fresh coat of paint? Add an office or two? Freshen the landscape? Lower the pricing? Offer some owner-carried financing? Offer something that others can’t — an option to buy as an example. All could appear in the recommendations to an owner of commercial real estate.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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