The COVID-19 pandemic brought massive changes to so many parts of our society, including the commercial property industry. Many small businesses have suffered significant losses in the past few years, making it difficult for commercial landlords to find new tenants or keep their existing ones.
If you are a commercial landlord and have trouble attracting or keeping tenants in a post-COVID business landscape, what are your options? One thing to consider is offering some new incentives for potential or existing tenants. While these incentives may sometimes take a bite out of your short-term profits, the long-term benefits are great. With that in mind, let the North Carolina commercial real estate lawyers at Mullen Holland & Cooper, P.A. share some advice on some potential lease incentives to offer and how they can benefit you.
Types of Commercial Lease Incentives To Consider as a Landlord
Some of the commercial lease incentives you can offer to prospective or existing tenants include:
- Lower rents — This is the simplest incentive you can offer, and your tenants will appreciate it. If vacancy rates are high in your area, you need to offer competitive rates to prevent tenants from going to other landlords. While lowering rents will reduce your short-term income, keeping tenants in your building is how you maintain long-term success.
- Cash incentives — As a commercial landlord, you need to focus on your property’s long-term value. One way to maintain the value of your property without lowering rents is to offer cash incentives to your tenants. This way, they will have an easier time paying their bills, but by keeping the actual rent levels the same, you maintain the value of your property.
- Offer rent-free periods — Letting a tenant use your space for free can hurt your bottom line in the short term, but if that same tenant signs a long-term lease, you can eventually reap a significant windfall from having them in your building. Many businesses struggle in the early stages, but giving a tenant a rent-free period can help them find their footing, making it more likely that they’ll stay in your building to provide you with long-term income.
- Offer to pay for a tenant’s furnishing, fixtures, etc. — A significant expense a business faces when moving into a commercial property is the cost of installing furnishings, appliances, electrical and plumbing fixtures, and so on. This can be costly, but it also provides commercial landlords with an opportunity. By offering to help a tenant pay for some of these expenses, you may convince them to sign a lease with you instead of someone else. It’s a short-term investment that can pay big dividends in the long run.
- Flexible lease terms — As a landlord, it’s understandable to want stable, long-term leases to ensure a steady income stream. But as the COVID-19 pandemic has demonstrated, there’s no predicting what can happen in the world of business. By being flexible with the length of a lease, the conditions to break it, and other terms, you can demonstrate to a tenant that you understand the risks they face and that you’re on their side.
Negotiating a Commercial Lease? Talk to a North Carolina Business Lawyer Today
No matter what commercial lease incentives you are considering offering your tenants, you need to make sure your interests are protected. The North Carolina commercial real estate attorneys at Mullen Holland & Cooper have over 60 years of experience negotiating leases and assisting our clients with other personal and business matters. We can help you draft and review any lease agreement, so you are informed and know that your needs are accounted for. Contact us today for more information on our services.