Two Commercial Property Market Trends Landlords May Wish To Consider

The commercial property market is a fast moving environment which is constantly evolving, here are a couple of trends to keep an eye on.

Green is here to stay. Being able to advertise your office building as a green commercial property is a major attraction to tenants now.

In order to class a commercial property as green, there are a few things to look out for: Besides energy and water conservation, other mainstays of the green movement include buying local and in moderation, waste is most definitely discouraged. Building components are preserved and recycled, rather than discarded. Buildings should be built with long lasting materials and those that require low maintenance. Energy conscious materials (such as recycled components) and those with low toxicity to the environment are chosen in the green building trend.

While these choices may be more expensive to incorporate into buildings, landlords are reaping the benefit over the long term in cost savings and efficiencies. Besides being politically correct, landlords who build or retrofit buildings that can market with the ‘green’ label are attractive for multiple reasons. Buildings carrying the label are often easier to rent to tenants, as workers log in less sick days and fewer complaints of ‘toxic building syndrome,’ which can lead to asthma and sickness. Tenants are drawn to green buildings for energy and water conservation, cost savings, and the ‘because it just feels good to do the right thing’ benefit.

Temporary tenants are another trend to look out for. Short term lease storefronts and ‘pop up’ retail operations are not a new idea. Frequently malls would use the concept to fill vacant holes in their properties when a tenant vacated. Seasonal stores have always been around, especially in the last few months leading up to Christmas. But in the past year we have seen more ‘pop up’ stores prospering from high vacancy rates and lower rents. Some are testing new retail concepts, while others are simply taking advantage of the cheaper prices.

Whatever the rationale, landlords win in that they get to fill vacant storefronts and collect rents, even if it’s at a reduced rate. They’re hoping the new tenants do well enough to convert to longer term leases and higher rents eventually. But until we get through this economic downturn, it’s better to have some cash flow than zero, and better to make your property look like it’s bustling than a filled with a bunch of vacant spaces.