Being a commercial landlord can be a lucrative business, as long as you are able to keep your properties occupied and generating rental income. However, many budding landlords fail to factor in the possibility of void periods where a property might be vacant, and how that will impact on not only their income, but the potential profitability of the property going forward.
A commercial property can become vacant due to a tenant moving out at the end of their tenancy, or a tenant having to cease trading. Also, it could be that, as the landlord, you are looking to refurbish or sell the property. Whatever the scenario is, it is important that the property remains in a condition where it can be quickly made available to a new tenant or a new buyer. You need to safeguard the property against various factors which can contribute to the property degrading in condition, losing value and therefore becoming less appealing and less profitable.
How can a property become less profitable when vacant?
When a commercial property becomes vacant, i.e. for an abnormal length of time, this usually becomes obvious relatively quickly. People who pass by a property regularly will start to notice there is no activity and that day-to-day nothing changes. This will certainly become apparent to people with underhand motives who specifically monitor properties for these signs, such as trespassers, vandals and thieves. The building is now much more vulnerable to this type of activity.
And because the building is now empty, nobody is looking after basic health and safety duties, such as inspecting utilities, carrying out basic inspection and maintenance tasks, testing alarms etc. Meanwhile, there are no security checks taking place which can result in easy access points such as open doors and broken windows. And all the time that a property is empty, nobody can respond if there is a water leak, or a gas leak, or if a crack appears in a structural wall or in the roof. This can lead to the conditional fabric of a building degenerating very quickly. All these issues can compound the fact that there is no rental income from the property. In addition to this rent loss, the property is depreciating in value and is less attractive to a potential tenant or a potential buyer. And if you don’t have suitable measures in place you are probably in breach of your insurance terms and conditions.
What to do to maintain a vacant property and keep it profitable
Essentially, a commercial landlord should maintain a vacant property in such a condition that it is always available to be occupied by a new tenant or a new buyer. This is minimising the impact of the loss of rental income by ensuring new people can move into it straight away, and there are no delays and further costs caused by repairs and maintenance. It is also essential to maintain insurance compliance.
Managing a vacant property therefore can require:
- Inspection – Routine vacant property inspections survey the fabric and structure of the building to report and act upon any visible deterioration.
- Security – Regular perimeter and internal patrols to guard against theft, vandalism and trespass. This can also involve setting up temporary or permanent CCTV systems, while access points can be guarded with protected steel security screens and concrete barriers. Health & Safety – Routine health and safety checks and inspections should be carried out to ensure the property remains compliant.
- Cleaning and clearance – It is common for previous tenants to leave rubbish and/or hazardous substances when they vacate. A comprehensive sweep of the property should be undertaken to ensure it is clean and clear for a new occupant – and safe for anyone on site in the meantime, this includes trespassers and urban explorers.
- Utilities – Utilities such as water and power should be shut off to avoid damage from leaks.
Contact First Response Group for a comprehensive vacant property management programme
While all these activities may seem widespread and challenging to keep track of, you can outsource the complete management of your vacant property to First Response Group. We can take care of all these activities to ensure your vacant property is structurally maintained, is safe and secure and remains appealing so that it can be leased to a new tenant immediately, or is in the optimum condition to be sold.
First Response Group have the multi-discipline skills and experience to ensure your vacant property retains market value and is attractive to potential renters and buyers. This minimises the potential losses you may encounter from void periods. Contact our team at First Response Group today to discuss vacant property management and we can work with you to ensure your commercial space remains profitable.
Article By:
Director
