Tips to keeping your tenants

The current economic situation being experienced in South Africa and around the world, although improving somewhat on last year, is still putting great pressure on commercial and retail property owners who are seeing significant pressure on commercial property values.

Statistics show that rentals are down and vacancies are up, which has major implications for rental growth, the main driver of optimistic valuations of commercial property.

Certain retail centres are feeling the pressure with consumers keeping their belts tightened, to the point that some retailers have shut shop or moved to cheaper premises - leaving rental vacancies that landlords can ill afford.

Landlords need to make tenant retention in retail, commercial and industrial property their number one priority, as the biggest threat to property owners is that tenants will (as a result of higher market vacancies) be offered a better deal elsewhere and not renew their lease agreement as a result. This has a negative effect on property values given the likely vacancy a tenant's departure will create.

With a vacancy and having to source a new tenant, come the costs of increased commission payable to property brokers as well as high installation costs. An effective discussion with the existing tenants, listening to their wants and needs and accommodating those where possible is generally a far more cost effective and prudent approach.

Property operating costs need to be carefully monitored to ensure that the most competitive price is being paid for the best possible service.

Slower economic times may actually prove the perfect time to undertake needed maintenance work to properties, as building and maintenance costs tend to reduce due to the lack of work for contractors and increased price competition in the sector as a result.

*Marc Edwards is managing director of Spire Property Management

Article by: Marc Edwards - www.spireprop.co.za