Marketing Properties for Lease or Sale

Landlords and commercial real estate sellers have plenty of competition in today’s retail and office market. The work-from-home movement’s impact on office space and the one-two punch of online retailing and COIV-19 impact on retail space have left many owners swapping tenant signage for “For Lease/Sale” signage.

Sellers need to be proactive in positioning their property for the highest sale or lease value. It needs to make the best first impression. That means building exterior, parking, landscaping, and signage. Decent landscaping means your plants actually have to be alive. Having dead or stunted plants among thriving plants will still give the impression of neglect. Old mulch (around your shrubs/building) is drab. You can buy mulch at $1/cubic foot and make grass look greener and flowers brighter. A new seal on the driveway and freshly striped parking lines are more costly but make the property look crisp, new, and professional.

Getting the first impression right sets the tone for the entire process, right through the closing. Bob Hartt, Managing Partner of Hartt Realty Advisors, helps sellers get properties ready for market. “If a property does not show as well, the buyer might assume the seller is unsophisticated or not paying attention and they go looking for problems. They will look harder during due diligence to find reasons to decrease the sales price.”

The lobby should not only be clean and in good repair, but also not too plain  it should at least have something interesting on the wall. Another thing that cannot be ignored, especially with prospective buyers, is the mechanical spaces. According to Hartt, these should be “spotless – painted and swept”.

If you are marketing a space for lease and are not going to update the entire space (e.g., paint, carpet, ceiling, etc.), we recommend updating at least a part of the space in order to showcase the potential attractiveness/suitability and your willingness as a landlord to invest in the property. We also advise sellers and landlords to plan the route that prospects will take through the building to highlight the most attractive perspectives.

The property owners that are getting the best return are going beyond these basic steps. They get creative. For ex- ample, some owners are staging (e.g., adding and/or changing furniture and fixtures) and even building out (e.g., altering floor plans) in a manner anticipating the highest and best use. These steps are not necessarily expensive. Providing furniture is especially attractive to smaller tenants who might lack experience in procuring furniture on their own. Not only does the space show better but moving into a furnished space feels much easier to a small prospective tenant.

Updating a space can cost $6-10/square foot (sf) for ceiling tiles, $2-5/sf for carpet (carpet tiles being at the higher end), and $1.50 - $2.00/sf for painting. Updating all three components virtually would cost less than $44/image. Virtual staging and fixtures can add furniture, equipment, door, windows, and/or stairs for ~$24/image. A virtual renovation can include the addition or removal of walls (~$40). These virtual steps allow property owners to show space anyway they want as a store, a restaurant, a dentist’s office at negligible cost. In fact, owners will occasionally market a variety of virtual versions of the property at the same time. These steps enable owners to highlight a property’s potential to a variety of valuable prospects.