First and foremost, make sure, you are not the reason they are moving. If they are moving out because you refused to give them a break on the price, then you might want to crunch some numbers before you make a hasty decision. I will do that for you below.
SAMPLE NUMBERS
Consider a $1,000,000 property
Taxes sample $8,000
Insurance sample $6,000
Maintenance sample $4,000
Interest approximate $55,000
Total Cost Estimated $73,000.
If you do not have a tenant, you will pay over $6,000 per month out of your pocket.
If you are receiving $100,000 annually, and your tenant wants a break on price, consider the net effect on your pocketbook. You can say no to a decrease, and hope for another tenant. If it takes two months, then you lost $12,000, plus real estate commission. If it takes a year, you lost $73,000. If you cut their price by $20,000 you covered your cost, and maybe have a long term tenant. Remember, any vacancy month is $6,000. Any occupied month is profit, tax breaks, and appreciation on your side of the ledger. Keep that in mind in this market, and work with your tenants
Second, good tenants are hard to find, especially those who pay on time. What you were receiving from them will not match the current market rate. There will be a sticker shock on what your next tenant offers. Third, there are a lots of properties out there, and even if yours is the best, your price may not give your property a chance to prove it, as most people are shopping prices right now.
If you want to lease it right away, then you make your property the lowest price in your area, for your type and size property. If you want to be in the middle of the pack, then you wait for the others to rent, or the quality, or unique traits of your property to surface. If you insist on listing above the current market, then you must be prepared to wait, and then negotiate if someone finds your property while driving by.
As with most owners just stepping back in the market, you will see that all properties have dropped in price per square foot. And there is much more competition.
Although I don't do this on every property, here is a sample of some marketing efforts I have given my properties. It will be listed on MLS, and Loopnet, the Commercial MLS, as well as CBC worldwide. We have two different Commercial brokers meetings each month, where all the area commercial brokers meet to exchange listings and interact with each other. These meetings give us an opportunity to stand up and discuss properties with the 75 or eighty brokers present. Everyone in our database who has a business, or expressed interest in Industrial property leases, will get an email or a call. I can purchase a web address, and provide the link to anyone on Linked-In and Face Book. It will be listed on my website, and I will also distribute the flyer to all of the CBC brokers as well as all CCIM's in SW Florida.
When you are forced back into the market, be prepared. Expect that the tenants will have the upper hand because there are less of them, and more competition for their dollars. They will be ruthless, as you would be if the tables were reversed.
If you need help securing new tenants, then call me. Good Luck!
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