WHAT CAN YOU DO ABOUT THAT EMPTY COMMERCIAL SPACE YOU OWN?
On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Thursday, June 21, 2018.
An empty commercial space is a big problem for the owner. Aside from the obvious problems (losing money, having to pay a mortgage or overhead on an unused space), a space that stays empty too long can attract negative attention that ultimately makes it harder to rent again.
To keep that empty space from becoming a problem while you look for the right tenant, consider allowing a few short-term leases instead. It’s time to think about renting to a pop-up business.
What are they? You’ve seen them, even if you didn’t consciously realize that’s what you were seeing. Every year around tax time there’s a flood of temporary offices by companies like H&R Block or Jackson-Hewitt. Similarly, around the holidays, you’ll see pop-ups by Halloween USA and numerous Christmas supply stores and novelty gift shops.
However, these aren’t your only choices. The odds are good that right in your own community, right now, someone is looking for a short-term lease to stage an art sale by independent artists, introduce people to the wonderful world of bonsai trees, or maybe showcase their inventory of Celtic goods for the summer’s Irish Festival.
Even some local retailers and wholesale shops will look for temporary space to get rid of their excess merchandise when they’re overloaded. Some big-name companies, like Apple, may need space to handle the influx of customers when a new product is released simply because their regular stores can’t handle that much traffic at once. A lot of entrepreneurs with small budgets but big ideas can also use a short-term lease to introduce their latest product to the market. This gives them a chance to test the waters in a market without making a long-term commitment.
While rents for short-term leases tend to be lower, you can offset the lower rent by insisting that the pop-ups make do with the space “as-is” and not allowing any major modifications the way you would with a long-term lease. Plus, the foot traffic from an engaging pop-up helps make your property seem more attractive to potential long-term tenants and can keep the whole area from seeming economically depressed.
Since leases used in long-term rental agreements are so different, make sure that you get some solid advice on drafting a good short-term lease that won’t hamper your ability to find another tenant down the line.
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