MacRo, Ltd is starting a new movement:  Occupy Commercial Real Estate!

It all started in New York City last fall with the Occupy Wall Street (OWS) movement and then has spread across the nation.

Something must have worked, because from a real estate perspective, while lease rates have fallen or flattened the occupancy rates for Class A commercial office buildings in lower Manhattan have improved to around 92%!

Driving through the historic City of Frederick by way of South Market Street last week, you couldn’t help but notice that the Occupy Frederick movement was “occupying” some prime real estate on Carroll Creek. Only in our beautiful downtown could the “Occupy” movement find such a charming spot for a protest.

In a daze of wonderment, I thought could this small band of peaceful vagabonds bring luck to an increase in occupancy of commercial real estate in Frederick, Maryland?

How do you improve Frederick’s commercial occupancy rates in a recession when businesses are downsizing, failing, or brilliantly increasing productivity with technology instead of humans?

You start by keeping the {good} tenants you already have.

This is Real Estate Marketing 101, folks. Not something that the OWSers understand, mind you.

But statistics show that on average it costs roughly five times as much to find and sign a new customer as it does to keep the birds in hand.

Maybe this isn’t such a big deal if you are GoDaddy or McDonald’s, but five times the cost of marketing and signing a new commercial lease is a heck of an expense to a landlord. Not to mention the costs of carrying vacant space, the impact of turnover on your building’s market value, the risk of replacing a good tenant with a marginal one… this list could go on for a while.

Here are some quick tips to prevent your tenants from occupying someone else’s space:

1. Get to know them. Your tenants are your bread and butter. Follow their industries, their business successes and failures, and be sure that you stay in constant contact. Good communication will always pay off.
2. Play ball. If a good tenant of long standing asks for a rent reduction or lease re-negotiation, be open-minded. Landlords notoriously underestimate the costs incurred in finding a new tenant in a sluggish economy. (Don’t re-negotiate yourself, though—call us! There is good reason for this besides the fact that we’d like your business!)
3. To heck with the exit interview. Keep in mind that in the current real estate market, tenants can easily feel tempted to seek better lease terms or nicer facilities. Check with your tenants well in advance to be sure they are planning to renew their leases. If a tenant hands in notice that they are moving elsewhere, ask WHY they are leaving before they sign that new lease! You would be amazed at the turnover than can be prevented by simple accommodations.
4. Offer re-signing bonuses. This is a proactive way to prevent a tenant from exploring other options when lease renewal time comes around.
5. Speaking of proactive … be proactive! If you’ve noticed a tenant’s business has hit a prolonged rough patch, or they have been carrying significant shadow space, or their business is booming and they are bursting at the seams… don’t wait for them to come to you. Get a commercial agent involved and start on Plan B now!

Do you need help dealing with (or preventing!) impending tenant turnover? Call MacRo!

We can assist with lease re-negotiations, listings for new tenants, or “Plan B.”  Contact Rocky Mackintosh at 301-698-9696 or visit our website for more information.

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Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes for TheTentacle.com.