The tenant-landlord relationship is a unique business partnership. The landlord offers valuable space in the right location to house the tenant’s business. And in return, the tenant provides cash flow and profitability for the landlord. Both sides have to maintain a certain level of benefits to each other to make the relationship successful.
But how does that relationship develop? And what criteria can help best prepare a business to be the ideal commercial tenant? The specific details often vary from one commercial landlord to the next. But there are a few, basic things that many landlords look for when considering a new commercial tenant.
Clear Background Checks
Landlords may perform background checks if the potential tenant is a single business owner rather than a large corporation. They may also request the tenant’s rent history and financial details for the business. Tenants that have a clear background check and reliable record for paying on time will have a better chance of leasing the property.
Tenant Loyalty
Longer lease terms guarantee income for the landlord for a longer period of time. They also save them the expenses of finding tenants more often and converting the space each time. Financial benefits and overall ease of keeping the same tenant in place makes tenant loyalty a significant draw for landlords.
Tenants That Fit the Property Type and Zoning
Landlords have concerns when it comes to which type of business they allow to lease their facility. Commercial spaces often require renovations between tenants. Landlords have to review each potential tenant’s needs to determine whether they can provide them. Medical tenants, for example, require additional plumbing and cabinetry. They may also need several individual rooms for patient exams, as well as extra cabinet and storage space per room. A medical tenant’s facility layout and structural needs will be much different from a restaurant space. Landlords need to review what their facility can handle and how to handle the costs of their new tenant’s initial redesign.
Zoning laws dictate where a specific type of business can operate. Zoning areas typically include office, leisure, industrial, and retail/restaurant. These laws could make or break a business’s decision regarding where they should lease a commercial property. And even if a vacant property is in a prime location, tenants cannot always adapt a space for a different industry than what the zoning allows. When reviewing properties, a business owner should research the commercial zoning laws in the city or county where they plan to open their business. Landlords will need tenants that fit their building’s zoning criteria.
How to Navigate the Details
Businesses that are looking to relocate or open new facilities should strongly consider hiring a commercial real estate advisor. They are skilled in finding the right property types in the right locations for their tenants. They also know what landlords are looking for in their commercial spaces, and they can guide the tenant through the lease negotiations.
And in the unique sector of medical real estate, advisors that are skilled in working with landlords, physicians, and health systems, are the best types of CRE advisors to hire. HBRE’s team of commercial advisors have the experience and skill set to finalize tenant-landlord transactions. They have walked multiple clients through the process and know just how to help their tenants fit their future landlord’s requirements.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
