10 Big Ideas for Small Spaces
Use These Tips to Profitably Lease Small Retail and Office Properties.
Small spaces are a conundrum for brokers, owners, and leasing agents. These 250-to-2,000-square-foot properties, often found in strip centers, office parks, and storefronts, command less-than-remarkable rents. Sometimes they also attract less-than-creditworthy tenants—start-ups, family businesses, and local entrepreneurs who may not have the financial track records or solid credit ratings of national or regional companies. Such a tenant pool may lead to constant turnover of the space, which can be detrimental in a retail situation and frustrating in an office building or park.
So why consider working with small spaces? Since renting them involves spending as much time and effort as renting larger spaces—but for less money—they may not seem worth the trouble. But although the monetary rewards of small-space leasing may not be exceptional, a pay-off in additional business, either brokerage or management, may result from your efforts. If you view small-space leasing as a gateway to larger deals and more referrals, it might be worth taking another look at building this niche into a profit center for your business.
While some of the following tips work equally well for large and small spaces, consider applying them in an aggressive attempt to market small spaces.
1. Don’t overlook the potential for a bigger deal.
Even though these are small transactions, offer service as if they were big deals. Consider the dentist who was shopping for 900 square feet and couldn’t get the time of day from most brokers. Eventually he ended up with a chain of dental offices and bought a multistory office building that also needed management.
Big-deal service for small-space clients can translate into repeat business and referrals. Many brokers don’t want to waste their time on smaller deals. If you work with potential tenants on comparable rental rates and to help them understand leases, your willingness to invest time or show an interest can win exclusive control of the prospect and get the deal done.
2. Offer enhanced fees for troubled or small spaces.
Offering enhanced fees will encourage brokers to put your property on their showing lists. Ask owners to make the fee 150 percent. If another broker brings in the tenant who leases the space, offer a full fee by taking the 50 percent for yourself and offering the 100 percent to cooperating brokers. In some circumstances, you might consider giving 150 percent to 200 percent to the cooperating broker. How you share that enhanced fee is up to you, but if you offer more than the area’s average fee, be sure that the cooperating brokerage community knows about it, early and often.
You also might want to set an expiration date on the enhanced fees or offer them only for certain types of transactions, such as longer leases or with minor tenant improvements.
3. Develop relationships with other brokers to get their small-space business.
In some instances, large-space brokers get small-space users—they should feel free to call you to handle the prospect for them while they do big deals. The same results work with residential agents who don’t have the time or expertise to handle commercial deals. If the deal works out, pay them the cooperating broker’s fee to ensure that the next time, they’ll think of you again.
4. Talk to current tenants in the same building or area.
Always offer current tenants the opportunity to up-size. If they aren’t ready or interested in expanding their space, they may give you leads to friends and business acquaintances who are looking for a better or even an additional location. For example, Tom had a sporting goods store that specialized in clothing for local schools. He was a fixture in the area and knew many local businesspeople. When asked who his neighbor should be, he mentioned a flower shop owner on the other side of town who was an old buddy. Tom had been telling the shop owner over the years that he ought to branch out and cover the north side of town, too. The flower shop owner was receptive and ready to expand his business.
5. Create synergy among related businesses.
Again, the best source of leads may be current tenants. A doctor may know another doctor practicing a different specialty who needs an office, or a massage therapist may know a chiropractor. A computer networking company tenant enticed two suppliers to lease in the same property, then more than doubled his space to handle the increased business that resulted.
Another approach is to market to a specific industry group actively by contacting members by phone or direct mail. Hospitals may know of doctors needing offices or the local bar association may know of lawyers looking for office space.
6. Put retail clients in an office setting.
Office parks often can benefit from the addition of small service tenants, such as a copy shop, a coffee and sandwich shop, a newsstand, or even a travel agency. Larger tenants often appreciate having these services close by; the service tenants benefit from a captive market. To start, ask larger tenants what services their employees might like to have on site.
7. Think incubator space.
Many new technology companies are small start-ups—two or three people with no support staff. These companies in the fields of biotechnology, software development, and computer utilities often seek out the synergy of being with other technology-related companies in small-business incubators. Successful incubators attract tenants by including communal services such as copy machines, receptionists and phones, and conference rooms. The market for incubators usually is strong near research universities or large technology firms.
8. Small spaces need signs.
Posting an attractive sign that advertises vacancies works. Small-space tenants often drive through a neighborhood that they have identified as being ideal, so your phone number is the most important item on the sign. A billboard for your name and all the other items you might want to put on it is nice—but having an easily seen phone number is critical. Sign calls are the best calls because these people already are interested in the location.
9. Expand your networking.
Wherever you go, take information about your listings with you. This 'survival' package should include a copy of each offering you have, plus appropriate forms, applications, and contracts you need to begin a transaction, such as financial statement forms or leases. If you go to a meeting that other brokers will be attending, take your listings with you. When you make new contacts, get their e-mail addresses and add them to your broadcast e-mail list so you can send them new listings regularly.
10. After the phone call, give them something.
Present as many colorful quality pages as needed to give potential clients the full story to make a decision. Fax it to them, hand it to them, mail it to them. Pictures tell as much as words, but provide complete, easy-to-understand materials.
To help develop your marketing materials, consult with the client to put together a list of 10 reasons why someone should consider the property over all others. This list helps target the marketing as well as enhances the printed material. A list might include characteristics such as a high traffic count, good sign exposure, competitive rents, good tenant mix, adequate parking, dramatic architecture, inexpensive utilities, and close proximity to an expressway.
If you know all about your listing, and appear to know about the balance of the market, you stand an excellent chance of standing out above other brokers.