As capital is becoming more available, and conventional lenders continue to relax their basic requirements, the amount of prospects in the market for space will grow steadily. How will I know if they are the right tenant for my property? Are these prospects set up to be successful for the duration of a new lease term? Is there a way to expedite the qualifying process and get to the salient facts?
Start with these 3 KEY Initial Questions to determine your next steps:
What type of business do they have?
If they're not a recognized brand name - is the concept clearly defined? What is the prospect’s ideal size requirement? Do they need end caps or other high profile location within the property? Is grocery or other major anchor required? Do they have delivery of products that require a loading dock or other rear access?
Why are they looking for space?
Is the prospect relocating from another property? Is this a new startup business, or their second (or more) location? If it's a startup, do they have pre-approval financing? Or, do they have investors? If the prospect is opening a franchise, are they approved as a franchisee? Has the location been approved by the franchisor? It’s a good practice to have some kind of Commercial Lease Application for all startup prospects, even if they are franchisees. If they were renting an apartment, they would have to fill out the form and provide a copy of their driver’s license before they can even see the unit. Why should commercial space, which is a much more complicated transaction, be any different? If your prospects actually take the time to fill out an application, then you are ready for next steps in qualifying.
What is their rental budget?
How much can they afford to pay, including NNN charges? Does the prospect have a clear understanding of startup costs for a retail lease, i.e. security deposits, advanced rent, capital for construction, signage, advertising, etc.? Do they have a business plan? If yes to all of these, they are ahead of the game and more qualified to move forward with the transaction. If they don't have a business plan, there is no road map for the business – how will they find the path to success?
More Key Questions to Focus On:
What types of prospects are coming to your property?
Where those prospects need to be located?
When those prospects are ready to move forward?
Why they are seeking space?
How prepared are they as business operators?
These are basic fundamental questions for understanding where your prospects are in the deal process.
Finding fully-qualified prospects for the correct location saves precious time and enables you to make stronger recommendations to your owners/investors/partners, leading to more long term successful tenants.
By: Bradley T. Balbo
Senior Vice President | Strategic Retail Group
Email Bradley: email@example.com
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