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Looking at the costs of re-tenanting should motivate you to try to keep tenants. In office and commercial buildings you have vacancy costs plus leasing commissions, tenant improvements as well as the challenges of the construction coordination that will affect other tenants. We know that you will not be able to keep every tenant. Some tenants don’t pay their rent or pay their rent late. Some tenants are just not the right fit. Just this last month we asked a tenant to move from a building because their clients were harassing other tenants in a building. But the landlord’s objective needs to be to keep every tenant they can. |
This leads us to the concept of tenant mix. Many years ago before I knew better, I leased a large space to an office tenant in an industrial park. My client’s were very happy, the rent was low, and the location was great. Even the parking was good. They were happy until the new neighbor moved in. The new neighbor was a metal stamping operation. Their equipment went bang-bang all day long. My client’s employees were very frustrated. The walls and the floors were shaking with every stamp. Those people located within 20 feet of the wall they shared could not make phone calls anymore. We learned a big lesson then about how to combine tenants with similar uses, to keep them all happy.
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