That said, don’t overlook all big players, cautions Legacy’s Morrison. “For instance, Starbucks pretty much tells you what they want to pay, and they’ll hold landlords’ feet to the fire. But I’d rather back off rents and keep the place full for now. That helps get residents in the building and brings nonresidents in. Those people may see the apartments and think, ‘I want to live here,’” he says.
To keep residential units full, many apartment communities are also choosing to slightly modify qualification criteria. “We do not hold foreclosures and bankruptcies against the prospect,” Cohen explains. Instead, leasing agents evaluate credit history after the negative event and will tend to accept an applicant if it’s been good since then.
4. SEEK PROFESSIONAL HELP. Lower lease velocity means tenant and landlord brokers are as hungry for deals as owners are. “The most significant landlords are doing something completely contrary to a few years back and that’s more direct outreach to tenant-brokers,” says Neil Resnick, executive vice president of transaction services and a leading broker with Grubb & Ellis in Los Angeles. “They’re chasing the most successful brokers with bonuses and enticements.”
But that doesn’t mean you should go with the most eager broker. “You need to align yourself with a broker who specializes in each use,” Morrison notes. “I’m primarily an apartment guy, so I chose to use a broker with 22 years of experience in retail.” And Morrison then “encourages” him with a worthwhile commission. “Let’s be honest, if your broker has a choice of showing your community versus someone else’s, if he’s making a bigger commission, he’s going to come to you.”
5. SELL, SELL, SELL. While many owners are looking for the magic marketing bullet, Resnick warns, “There’s no one-size-fits-all way to market a property. With so much competition trying to grab the same audience, landlords need to find a hook and enticements for the ultimate users.”
Look no further than the distinct characteristics of your community and development to form a solid marketing strategy. “Study the demographics of your neighborhood or region and appeal to those groups, particularly for the retail component. Showcase what the community is lacking, and the right mix will sell itself to residential prospects and retailers who want to keep company with your early commercial tenants,” Resnick recommends. “Demonstrating your ability to attract necessary foot traffic is a significant draw for commercial prospects who will need high numbers to survive the downturn.”
ReCor’s Register works an extensive network to keep commercial space filled. “We work with all the national tenants and franchisors, presenting our sites on a continual basis through direct phone contact, [International Council of Shopping Centers] meetings, and e-mail blasts featuring a new property each week,” she notes. “Our database also includes local and regional tenants who are contacted in the same manner, and our company has created a relationship with the retailers and their tenant representatives, which is especially important in today’s economic environment.”
Owners still rely on slick printed materials and strategic ad buys to promote their properties, but it’s important to consider new media, too. Cohen says, “We get the word out to the masses via guide books, out-of-home and Internet advertising, and a fully optimized and multifunctional Web site, as well as non-traditional methods such as street teams and mobile text messaging.”
In the end, the best strategy involves a little of all these tactics. Because managing occupancy now is the key to surviving the recession and creating a solid foundation for success in the future—one that will hopefully include your daily Caramel Macchiato.
MARGOT CARMICHAEL LESTER is a freelance writer based in Carrboro, N.C.
Tip Sheet Striving to drive occupancy to your mixed-use project?
Don’t forget these three rules: Build, build, build.
- BUILD RELATIONSHIPS. To sustain strong occupancy, Patti Pearlberg, vice president of asset management at Atlanta-based Coro Realty Advisors, advocates building strong relationships with tenants to ensure their long-term loyalty. “There may not be a replacement if they go out,” she says. “You have to really understand each tenant’s commercial business and determine if they are viable, suffering from the economic downturn, or short for this world, regardless. In some respects, you may become their short-term partner, underwriting their business during these tough times with the potential to save a good tenant for the future and recoup your investment.”
- BUILD FLEXIBILITY. This is especially true for commercial clients. “You want to be able to subdivide space, so make sure you have enough doors. For instance, in a 10,000-square-foot retail component below an apartment building, I’ll put in 10 doors for 10 1,000-square-foot bays. That way, people can still take one-and-a-half spaces and so on,” says Scott Morrison, senior vice president for Irvine, Calif.-based Legacy Partners Residential. “If you can lower the square footage, you can lower the absolute rent.”
- BUILD SECURITY. With so much uncertainty, tenants are hungry for stability. Financially sound owners with a strong track record can be very attractive. “Residents want to feel that they have good value for the dollar—and the security of knowing that they are not going to be living in a place that’s going to be foreclosed,” says Jeff Cohen, property manager for Altman Management Co. in Fort Lauderdale, Fla. “We are a well-established company, and residents can be assured that we are going to be here for a long time to come.”