No one really needs to be reminded of the current economic downturn and the impact it has on building owners who want to do everything they can to maintain occupancy levels. The ripple effect from the shrinking economy is felt by all tenants, which in turn decreases their ability--or willingness--to keep paying the higher rents of recent years. There are several key strategies which an owner can pursue to minimize the impact of the tough times.

Strategy #1: Number one on the list is to meet the market. The reality now is that shrinking demand means that overall rents are going down for a while. Few things kill the bottom line more than vacant space. It takes a long time to make up the rent in a unit which has been paying zero even for a month or two. Vacancies are a "triple whammy"--not only is there no money coming in, but a new tenant will want TI's of some magnitude, and commissions will have to be paid.

This means that for some tenants a rent reduction may be necessary in order to retain them as a paying customer. ("It's cheaper to keep her"). However, the focus should be on a short term reduction so that when the market returns again to more normal levels in 12 or 18 months the lower rent will not be locked in.

Strategy #2: Another key strategy is to make investments in the property during the slow period. Does the parking lot need attention? Does the building need new signage? Can the landscaping be upgraded? While it may seem counter-intuitive to spend more money when less is coming in, upgrades not only keep the existing tenants happy with their surroundings but also improve the building's image such that when the market rebounds, new tenants will be attracted to the best looking properties, leading to higher occupancy levels and higher rents.

A broker who is able to give sound professional advice to owners regarding asset management will always be seen as an asset by a building owner. GMB Management recognizes the need to work with and through brokers in providing the highest level of service.