Taking part in a 1031 property exchange is a great way to grow your holding in the lucrative real estate market. You can customize the property swap o align with your investment strategy. If you’re looking for a handsfree investment, you can go after a tenant-in-common (TIC) property.
On the other hand, if you are a hands-on kind of investor, you can go for a bigger commercial facility and enjoy a higher rental income. Here are some proven ways to increase the occupancy level in the newly acquired property.
1. Refine your marketing strategy.
Traditionally, 10- to 15-year leases were all the rage, but with the current uncertain markets, tenants are opting for shorter contracts. Most companies are looking to downsize their risks, meaning that you need to rethink your business model.
Since short-term leases will alter your financial projections and property valuation, it’s imperative that you keep the occupancy levels high. If you’re having trouble filling up a property with tenants, you might consider giving away some of your empty space.
Now before you object, consider such an action to be part of your Corporate Social Responsibility. That means donating a small portion of your office spaces to co-working companies or startup incubators.
While such tenants don’t get to pay any rent, they will help raise the profile of your property in exchange for a little space. Startup companies are all the rage now are continually making news headlines.
Hosting such companies increases your properties visibility as well as foot traffic. In turn, that makes the facility more desirable to prospective tenants.
2. Pick the right tenant mix.
It’s only natural for mall owners to favor anchor clients such a leading supermarket chain. Such tenants are crucial in drawing foot traffic into the facility. As such, your choice of anchor tenants can make or break your property’s performance and occupancy rate.
It’s also vital that you diversify your tenant mix to help the property meet its ideal customer profile. As such, you need to strike a delicate balance between the anchor tenants and the specialty tenants. The overall interaction between these two groups of tenants determines the success of your property.
With proper handling and clustering, the smaller tenants can benefit and feed off the foot traffic drawn by the anchor tenants. It’s imperative then that you choose anchor tenants with a great deal of care.
If the anchor tenant isn’t capable of drawing enough foot traffic, the entire property is likely to suffer. It means you will struggle to retain the smaller tenants.
3. Diversify your tenants.
Economic downturns and market upheavals are increasingly becoming a common phenomenon, and they have a profound effect on the property sector.
Spreading your tenants’ profile over various industries can help shield your facility from such upheavals. Catering to companies in one line of specialization, say financial investment firms, poses a threat to your income.
If the sector has a downturn, it could leave all your tenants struggling to make ends meet. That could lead to delayed rent remittance, which can ruin your finance projection. Or you can have many of the tenants downsizing their office spaces.