The past year has thrown many business owners for a loop as they continue to work towards fully recovering from the COVID-19 pandemic. While 2020 has ended, 2021 is expected to bring its own set of challenges – particularly for commercial landlords. One of these concerns is increasing vacancy rates in commercial spaces. Reducing these rates could help landlords stay afloat in an already volatile landscape.
Commercial Vacancy Rates
Record high vacancies plagued commercial real estate for much of 2020. Certain sectors, like office spaces, retail stores, hotels and lodging, and student housing, have been hit with the brunt of those vacancies, and they continue to suffer from reduced occupancy and demand in 2021. While some elements causing these downturns are out of landlords’ control, such as government orders that dictate when businesses can be in operation and at what capacities, there are certain approaches landlords can take to help combat these struggles. Landlords can improve vacancy rates in the New Year by implementing the following strategies as best fit their business needs.
Updating Features in Commercial Spaces
Commercial properties will likely look much different in 2021 and beyond than they have in previous years. While spending more money in order to retain existing tenants or acquire new ones might seem counterintuitive, it can actually pay dividends in the long run and reduce further losses that would be incurred due to vacancy. Incorporating new design elements to help maintain a healthy working environment can help landlords retain current tenants and entice new ones as well. Having high-quality ventilation systems, spacious communal areas, and more individualized workspaces are changes tenants are likely to expect when returning to the workplace.
Additionally, simple updates to older properties can help curb increasing vacancy rates. Installing new flooring or lighting, painting the interior or exterior of the building, and even adding landscaping elements can all help landlords avoid a flood of tenant vacancies.
Opting For a More Sustainable Approach
Employing a more sustainable approach to owning commercial property can also help landlords in the long run. Incorporating technology to improve functionality and access to the property will make a major difference. For example, switching to LED lighting and/or installing automatic timers for lights can help to bring down electricity bills for tenants.
Including More Competitive Lease Terms
While the idea of lowering rent can be difficult for landlords to swallow, it can actually help attract new tenants and encourage existing ones to renew their leases as well. Reducing rent and offering competitive lease terms – such as shorter terms and smaller lease-breaking fees – can help attract and retain commercial tenants. However, it’s important for landlords to keep in mind that incentives will only go so far. For instance, if a property is older, not functional for the tenant, or in need of major updates or repairs, the tenant is unlikely to stay regardless of how competitive the lease may be.
Smaller Commercial Landlords Face Hurdles From Large Non-Paying Tenants
Because commercial landlords are often smaller than their nationally recognized tenants, they can be taken advantage of fairly easily in current times. In 2020 and into 2021, commercial landlords have suffered from tenants refusing to make timely rent payments even when they have the means to pay or from tenants even breaking their leases entirely leaving landlords with multiple vacancies. When these unfortunate events occur, it’s important to consult with experienced legal counsel to ensure your rights are protected.
Texas Commercial Lease Dispute Attorneys
Commercial landlords have struggled throughout 2020 and now into 2021. Dealing with tenants who wrongfully delay payment or fail to make lease payments at all has left landlords in a financial hole without necessary revenue. At Raizner Law, we have years of experience representing commercial landlords across the nation and in the Lone Star State. If you are a commercial landlord dealing with a large or national tenant that is delaying or refusing to make rent payments, you may be able to pursue litigation in order to receive compensation. Contact us today for more information on how we can best assist you.