I spend a lot of energy in this blog writing about knucklehead commercial landlords and real estate brokers of equal stature. In a recent conversation with a very accomplished landlord representative, someone who I respect greatly, I was lightly accused of landlord bashing. After reading more of my posts, and recognizing that I give equal time to bashing bad landlords and bad brokers, those who deserve a swift kick-in-the-pants, this landlord representative changed his statement to: “You’re not anti-landlord…you’re anti-idiot! I like that!” Except “idiot” wasn’t quite the word he used.
Commercial landlords have it tough, especially these days. Many are running scared, and for good reason.
According to Andrew Florence, CEO of CoStar Group, a publicly held commercial real estate information company, “$1.4 trillion in commercial mortgages will expire in the next three to four years.” Add to this the facts that supply (vacancy) is rising, demand is unstable and remains low in many markets, capital is tight, and credit still hasn’t found its way back into the commercial real estate market.
So, yeah, landlords have it tough. But, like the Phoenix rising from the ashes, or in the Chinese way of life known as “Weji” where many believe that from Chaos comes opportunity, or even the writings of Nietzsche who wrote “You must have chaos within you to give birth to a dancing star” many landlords, those who truly understand the industry they’re really in, those who represent the majority of the commercial landlord industry, know how to be great landlords, and they work hard at it every day.
So, in the interest of giving equal time to good landlords, I thought I would jot down some of the attributes that, in my experience, make for great commercial landlords. Do you agree with this list? Can you add to it?
Landlords entitled to be called great, are those who:
- Maintain the heck out of their properties
- Improve their properties often, even if it might not positively affect short-term profits
- Recognize that the most important phrase in commercial real estate is not “Location, Location, Location” but rather is “Service, Service, Service!”
- Abide by the principle that “Honesty is the ONLY Policy!”
- Under-promise and over-deliver as a standard operating procedure
- Understand that they’re not in the real estate business, but rather, they are in the business of providing productive working environments to their tenants….tenants who are paying customers, companies that are run by people who provide landlords with monthly income streams, which permits landlords to pay their mortgages, generate profits, and achieve success.
- Keep their tenants informed about goings-on at their properties, both those happenings that are good and those that may be not so good
- Know how to apply creativity to deal-making when the situation demands, and when it doesn’t they understand that simplicity is often the best way to uncomplicate things and close a transaction
- Know how to complete transactions that are profitable for themselves and fair to their tenants
- Utilize short simplified lease documents that already contain the standard changes over which other landlords spend weeks fighting, and they strive for equally short negotiations
- Employ short commission agreements, cooperate with and compensate tenant and landlord real estate brokers fairly and quickly
- Believe that just because a tenant pays its rent on time, doesn’t mean a relationship exists between landlord and tenant, and that it also doesn’t mean the tenant would never relocate
- Recognize that a lease transaction, and possibly a relationship, STARTS when the lease is signed
- Know that a transaction is not a deal at all, but an opportunity and an obligation, in most cases, for the landlord to provide great service to its tenant-customers
- Accept those transaction and occupancy related risks that are rightfully theirs, without attempting to unfairly transfer them to tenants or brokers
- Demonstrate respect for tenants, the brokers who represent those tenants, and the tenant-broker relationship
- Strive to live-up to all terms to which they’ve agreed, and make amends when they may be in error
- Are fair and even-handed with all tenants
- Demonstrate more interest in existing tenants than in prospective tenants. They believe that the last deal is as important to them as the next one!
- Understand that they must work diligently to win new business opportunities, even from tenants that currently occupy their buildings
And, that’s just the beginning!
Is this the complete list? Are there other issues that make some landlords great? What experiences have you had with great landlords? Are you a great landlord? What’s your secret? Let me know.
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Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations. Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.
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