Since commercial property vacancy rates are on the rise across Missouri, landlords must choose the right investments. Comparing different lease terms to come up with an ironclad document can help you stay competitive.
Read on to learn some commercial lease analysis facts to help landlords maximize lease value and turn a high ROI.
The Basics of Commercial Lease Analysis
Those conducting a commercial lease analysis look into several terms of lease agreements. Some include:
- Rental rates
- How much rent increases over time
- Gross leases vs net leases
- Property expense responsibilities
- The length of commercial leases
- Options to renew leases
- Whether tenants can improve/change the property
The person analyzing the agreement offers investors a clear understanding of how much they'll need to spend on the property.
The aim is to:
- Understand whether a potential investment compares favorably to similar properties on the market
- Help landlords create leases/portfolios that are both fair and lucrative
Benefits of Analyzing Commercial Leases
Landlords benefit from property management insights in several ways.
First, a commercial lease analysis can help landlords make informed investment decisions. In conducting an assessment before purchasing property, they'll learn whether it's worth the money. Some properties look nice but don't allow for competitive leasing terms, so it lets landlords know to avoid those.
This means better risk mitigation because of a better portfolio.
Risks also go down because a comparative lease analysis shows potential buyers:
- Hidden fees
- Unforeseen operating expenses
- Termination clauses
This all allows for more informed decision-making.
After a landlord decides on an investment, commercial lease analysis also makes it easier to set competitive terms. Leases will better appeal to renters since you can create more favorable leasing terms than those who own similar properties. This:
- Ensures you get the highest rent possible
- Helps you come up with lease negotiation strategies
- Gives renters a fair bargain so they'll choose your property
- Decreases your vacancy rates and brings in consistent income
The Types of Commercial Real Estate Analysis
As a landlord, there are three main types of commercial lease evaluation.
A market analysis helps buyers identify viable Blue Springs lease opportunities. The person performing the assessment will learn about:
- What makes a property lucrative
- What assets will appreciate the most in the future
- Current market rates for various property types
A comparative analysis puts multiple leases for comparable properties next to each other. The analyzer will look at their similarities and differences. They'll decide which are the most competitive so landlords can emulate them to stay on top of the game.
A net present value calculation is the narrowest type of assessment. It looks into the present value of future lease payments. This lets professionals see several different lease options for a given property so they can create the best possible terms.
Get Property Management Insights in MO
Now that you know the basics of commercial lease analysis, it's time to learn more about buying and selling commercial property. PMI KC Metro is excited to help Blue Springs landlords create and negotiate legally binding commercial leases.
We look into various comparable leases for similar properties to ensure that you set appropriate rates for the highest possible profit. Get a free rental analysis to learn how much you can profit from your rental ASAP!
