When it comes to vacancy leasing within an investment property, the fit out standards that you set and work to are very important. Those standards will help you when it comes to ongoing occupancy and property presentation. Over time a property controlled in that way will maintain its appearance and its leasing standards. That then helps with establishing and strengthening market rentals, and minimizing vacancies.
Poor Property Presentation
Most people can relate to and would have seen a property that is poorly presented and maintained. In any office building or retail shopping centre you can soon see where the maintenance is inadequate and where things are not being done. In many ‘owner managed’ properties that inadequacy can be a common problem. Many investment property owners are ‘too close’ to the decisions required of expenditure and maintenance. They can sometimes have differing priorities when it comes to property presentation compared to income paid and banked.
A well maintained property will attract tenants and achieve better levels of tenant retention. A property of that type will also see lower vacancy levels and stable market rentals. It directly follows that the appearance of the property and the maintenance program within is very important to help the investment improve over time.
Set Fitout Standards
Setting the correct fit out standards and policing those standards as part of the leasing process will help with overall property presentation and tenant retention. Here are some specific topics to focus on as part of that overall standards strategy:
- Shop fronts – When you are leasing a property with multiple tenants in occupancy, the shop fronts and the entrance ways to each and every tenancy should be carefully considered and controlled from a visual aspect. The shop fronts should be standardised to a particular design, size, and lay out. What you are trying to do here is maintain the appearance of the property.
- Marketing material and signage – Some tenants will try to ‘bend the rules’ when it comes to signage and marketing material. As part of the leasing process, the landlord and or the property manager should reserve the right to approve and control any signage within the property and on the premises for the duration of the lease.
- Air conditioning – Whilst the property may have central plant and machinery to supply air conditioning conditions, the tenant will need to tap into the plant capability and design. The tenants fit out should be adjusted to the air conditioning capability of the building. There are unfortunately plenty of cases where that strategy has been overlooked or not properly controlled, and the performance of the air conditioning within the building is thereby compromised.
- Lighting – You can specify the types of lighting and layout for a tenancy fitout. That then has benefits from the aspects of energy consumption, illumination, and presentation. You want a tenancy to look good, and lighting will have a lot to do with that.
- Electrical connections – There will be certain capabilities of energy supply to a property and a tenancy. Consumption monitoring is one factor to watch, but energy efficiency today is now a concern in property operational costs and outgoings.
- Standards and finishes – In any modern newly constructed investment property, the finishes and standards of fitout will be critical to overall wear and tear as well as appearance. Set the standards in consultation with the building architects.
- Entrance ways – The entrance to a tenant area and the entrance to a property are unique spaces requiring control. Entrance design and functionality should be balanced against safety and appearance. Locks, finishes, and size of entrances will all impact those decisions as well as existing building construction codes.
- Fire and safety – Fitout designs require the integration of special factors of fire and personal safety. Building codes apply. All tenant plans and approvals should be considered given the existing fire and safety codes for the property and the location.
- Floor coverings and wall treatments – Good quality floor coverings give longer serviceable life. The walls should also be painted with quality paints that give longer term protection and presentation to the property.
- Maintenance – How will the property and the premises be maintained? Who will pay for upkeep? The terms of the lease will need to set out who pays for regular property maintenance and how that is to be done.
These are some of the bigger issues to work through as part of fitout design, approval, and construction. Use a checklist to keep things under control.