Can I lease my property myself?  Yes, you can!  Here are some tips when leasing your commercial property.

Dealing with property can be challenging.  There is a lot to consider and commercial tenancies can be long lasting.  You want to make sure the tenancy is sustainable and beneficial for both you, and your tenant.  Before you get started it always pays to do some research.

Set a price point

The Market

Have a look at what the market is doing.  Are there similar properties available for lease?  Is the market flooded or is competition low?  Be sure to check your suburb and surrounding suburbs.  What  do these properties have to offer and what price are they asking for?  The most recent leases are a good indicator of what price point you can ask for your property.  So, what have similar properties in the area leased for?  The market does shift so try and find the most recent leases for comparison.

There are always other factors that will affect the price a landlord is willing to accept and a tenant is willing to pay.  These include things such as building condition, premises fit out, parking and lease terms.

Building condition

The condition of the building may affect how many tenants you attract to your site.  Keeping your building tidy and giving it a lick of paint between tenants can be a small price to pay in terms of financial cost and time in order to increase the interest of tenants.

Fit outs

The type of business you are hoping to have in your premises may determine whether you lease your site as a shell, fit out for a particular purpose, or offer a fit out for the right tenant.  The cost to outlay a premises may be a deterring factor for your ideal tenant.  Absorbing this cost in the rent may increase interest by allowing the tenant stability when they are trying to relocate or start up.

Parking

Does your site offer parking and enough of it?  Is there plenty of street parking for your tenant and their customers?  Alternatively, is it near public transport and does it offer end of journey bike storage or shower and change facilities.  These are all things that can keep a businesses employees happy and therefore add value to your site.

Lease period

A standard commercial lease period normally starts between three and five years and includes one or two rights to renew.  The benefit of a long lease is income stability however, some landlords will accept a shorter lease period for a higher price.  It all just depends on what the you are looking for and what your future plans are for the site.  Remember that lease price directly impacts the value and indicative sale price of your site and therefore can impact your lending.  Keep this in mind should you wish to sell down the track or refinance.  You may wish use a development clause should you wish to develop your property in the future.  Bear in mind these can be seen as a barrier for some businesses.

Local developments

Check whether there are any upcoming developments in the area that would make your property more or less appealing to tenants.  Are you near a main highway development?  Is this going to disrupt businesses in the area or will it increase their clientele?

Advertising

Advertising rules in NZ are strict and as property is a big ticket item and consequences can be extensive you must be careful and sure to abide by the various legislations, such as the Fair Trading Act.

There are different ways to advertise your property however, tenant leads most commonly come through websites such as Trademe.  Creating a listing on Trademe is straightforward and easy.  You just need some photos of your property and the details.  Depending on your skills you may like to engage a professional photographer to show your property in the best light or to get those difficult shots such as drone shots.  You can choose to either advertise a set price or remain open to negotiations.  Although showing a set price is transparent, it can be limiting as it doesn’t reflect your openness to negotiate in consideration to the other terms and you may miss out on conversations with otherwise potentially ideal tenants.  I like to set my listing to negotiation and include a search price range which brings the property up as a suggestion for anyone looking in your price range.

The Agreement

Once signed this agreement will be legally binding.  That means that the consequence of breaches to the agreement can result in legal action for either party.  You should always seek specialist legal advice before entering into any contract and as property transactions are substantial this is even more of a reason to ensure this is right.  The lease agreement covers the involved parties, the owner/ownership entity name, the property description, lease terms, rent reviews, chattels, OPEX, outgoings and parking information.  It should clearly outline obligations of both parties such as who is responsible for things such as repairs and maintenance, and what actions may be required in certain situations such as early termination.  Be sure to include clauses that cover any additional terms you have discussed.  Here is some further information on lease agreements.

Hope this has given you some food for thought.  Remember, you can always engage a real estate professional to lease your property for you.

Steve

NB: This is an opinion piece based on personal experiences and is not a substitute for seeking professional or legal advice.