In the current market environment, a commercial building without stable, long-term tenants is a big risk to an investor, while financially sound tenants strengthen an asset and contribute to its long-term value.
For pension fund executives, understanding the kind of tenants in a prospective commercial real estate investment — and how to keep them — is critical.
Given commercial real estate's state of play, an evolved investment strategy demands a vigorous plan to keep tenants happy and renewing their leases.
There are two things we know for sure: tenant satisfaction is directly linked to higher renewal intentions and replacing a tenant is almost always difficult and unprofitable. But as an investor, how can you possibly know if tenants are satisfied and how can you influence that satisfaction and protect your investment?
For investors considering a real estate allocation, particular attention should be paid during due diligence to the strategies in place to retain tenants. Here's how that works.