"Landlords Working Hard to Keep Tenants" - Commercial real estate article for The Miami Herald
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By Rochelle Broder-Singer | 11/2/2008
During the real estate boom, losing a tenant didn't matter so much. Any tenant, whether office, industrial or retail, could easily be replaced.
Now, empty space is taking longer to lease every month. Amid a credit crunch and a slowing economy, tenants who can pay the rent are suddenly a hot commodity.
That leaves landlords working overtime to keep the tenants they have. They are more focused than ever on renewing leases, willing to negotiate terms and offer concessions such as tenant improvements, months of free rent and sometimes even reduced rental rates.
Landlords are also trying to keep tenants happy by paying more attention to the appearance and upkeep of properties and responding faster to maintenance requests and complaints.
''Typically people don't like to give concessions, but the reality is the reality,'' said Barry Sharpe, whose Hialeah-based Sharpe Properties owns retail, warehouse and office properties.
Some landlords are going so far as to extend help to tenants that are struggling to stay in business.
''We had a wave of them a couple months ago and there seems to be kind of a second wave here that's starting,'' said Andrew Ansin, vice president of Sunbeam Properties and Development, whose holdings include the Miramar Park of Commerce.
The park has a vacancy rate of 5 percent, compared with 3 percent a year ago. To keep tenants, Ansin helps firms he feels have strong future prospects. For example, Sunbeam acts as a source of credit, allowing companies to delay rent payments. Ansin also has renegotiated leases, lowering rent rates in exchange for a longer lease or for dropping contract provisions Sunbeam didn't like. He has also moved tenants into smaller spaces at reduced rents.
''It gives us the opportunity to work with [companies] and hopefully help them stay in business,'' Ansin said. "We could certainly put them out of business, but we don't want to.''
Sunbeam, which has no debt and is privately held, has the freedom to make such deals. Owners that bought properties during the last five years or so often do not. For them, as for most property owners, the priority is renewing leases that will expire within the next few years.
