Think outside the box.
So say experienced Vancouver commercial real estate brokers like Gina Barendrick of NAI Norris, Beggs, & Simpson and Brett Irons at Coldwell Banker Commercial Jenkins-Bernhardt.
"Owners who are inflexible are sitting with their properties dormant," Irons said last week. "Those owners who are willing to take risks are succeeding."
It's a difficult market to succeed in. According to Barendrick, retail vacancy is about 11.6 percent, while office vacancy hovers at about 20 percent, based on September numbers compiled by Vancouver-based Eric Fuller & Associates.
Even the Port of Vancouver, which historically has a 98 to 99 percent occupancy rate is now only 88 percent full, according to Port property manager Kathy Holtby.
Whatever Works
Commercial real estate brokers and property owners are using every strategy they can to attract tenants.
"Companies know it's a tenants' market, and know how to ask for concessions," Holtby said.
Irons stated that owners are willing to amortize expenses, such as tenant improvements, system development charges and traffic impact fees into new leases. For example, in Turner Engineering's planned relocation and expansion from Columbia Business Center to the Port of Vancouver, many improvements were made to ready the 59,400-square-foot space to fit the company's needs.
Other tactics include helping tenants with space planning, rent scenarios and flexible lease structures. Some property managers also offer free months' rent and higher fees to procuring agents.
Another strategy, according to Holtby, is to help tenants secure federal, state and local stimulus money. The availability of such incentives "has a major effect on a tenant's decision," she said.
The Port also helps existing tenants weather the economic downturn by helping them with cross-marketing and promotion. For example, Holtby says the Port website will soon feature a business directory that describes each tenant's business so people can reach them more readily.
Attention to Detail
Good property management can attract tenants, said Byron Roselli, vice president at Eric Fuller & Associates. For example, East Ridge Business Park garnered 30 new tenants this year – 12 of them in the last month. Roselli attributes some of this success to East Ridge's on-site management and maintenance staff, off-hours security and attention to landscaping, tree pruning and parking lot paving. According to Roselli, if a tenant moves out, it makes sense to install new carpet and replace stained ceiling tiles so the space is as attractive as possible to a prospective tenant.
According to Roselli, business parks with access to main east-west and north-south routes are far more likely to attract tenants than more isolated properties. "Tenants look at how quickly they can get product in and out," Roselli said.
Sometimes specific services might attract a tenant. For example, the availability of rail service was an important factor for brewing company Great Western Malting's decision to lease 43,500 square feet at the Port of Vancouver.
Silver Lining
A tough market spells opportunity for some. For example, Roselli gives examples of new tenants at East Ridge, including Papa John's, Los Jalapenos Restaurant and AKS Engineering.
Barendrick and Irons also have plenty of success stories. Earlier this month, Barendrick closed a deal for a new pizza restaurant, A Fireside Café, which will move into the space formerly occupied by Café Divine at Andresen and 63rd Street. Irons recently leased space to Happy Family Chinese Restaurant for a new dining establishment in the Four Seasons shopping center opening in December.
According to Holtby, more start-ups are beginning to show interest in Port properties. Another property, the planned Springbrook Station at 112th Avenue and S.R. 500, also holds interest for start-ups, according to Irons. Groundbreaking on the project is scheduled for January, with anchor space ready as soon as March.
However, the bargain lease deals won't last forever, according to Roselli.
"It is not anticipated that rates will stay as low as they are now," he said. "Interest rates and inflation will force rates up. Now is a good time to lock in rates and beat inflation with today's dollars."
