2020 Boise Idaho Real Estate Blog
Some Fundamental Rules For Building Owners Main Boise Valley Commercial Real Estate
I've tried to explain to both building owners and to prospective tenants some fundamental rules as far as leasing in the Boise SMSA. I've explored ways for tenants to understand the way building owners often think about their offers. I'd also like to explore with building owners about how to treat their tenants. Sometimes I feel like building owners can forget that their often negotiating with small, conservative, new business owners who are concerned about the pitfalls of leasing. Owners often need to understand the paradigms of their tenants and need to work at a balanced relationship / partnership.
Rule # 1.  Owners of Retail PropertiesCONSUMERS ARE FINICKY!!
 
Rule # 2.  Owners of Retail Properties: Re-Read Rule #1.
 
Why is it that across the street from one of the area's most popular restaurant, nightclub, and shopping locations in the Boise metropolitan area, retailer after retailer fails?  Not 50 feet away from one of the most successful areas in the Treasure Valley! This location sits on a corner of two very popular streets. On the one side are several restaurants, bars, and shops. On the other side of the street are more shops and restaurants. But, this location has not been successful (yet) and I’ve seen 4 or 5 different restaurants fail in the last 4 or 5 years. Why is that?
 
It is as simple as that - People (aka "consumers") are finicky. Here, let me break that down for you. CONSUMERS ARE FINICKY!! Given even a small impediment to getting to where they were headed one moment, they keep going to the next location. In this very fast paced world we live in, most consumers have multiple choices and if one is not readily available or access is impeded, they probably don’t think twice about moving on to option #2.
 
I try not to mention particular commercial facilities, per se, but I have to use one of the best examples of a good job by the owner & contractor to make sure their existing tenant base was protected as much as possible during renovation. Vista Village and their general contractor Genther Masonry did an outstanding job of making sure every point of entry was accessible for tenants and their clients during the revitalization. I was simply impressed every time I toured that property during the revitalization because it was obvious they were trying to take care of their tenant base as much as possible.
 
On the other extreme, an out of town owner / developer bought a large mixed-use (office & retail) facility that had been neglected for years in northwest Boise. He bought it at the right price and could invest in renovating the facility. His initial plans looked valid and something our leasing team could support in the Boise commercial real estate market. As always, there were some material issues to work through with the tenants, several of them being retail tenants and others being professional offices with a need for access for their clients during the renovations.
 
The first deal killer was that the owner backed off many of his plans to make significant improvements which would help the tenants and ended up making many cosmetic changes only. Many people would call it putting lipstick on the pig.
 
The second deal killer was that he hired an inexperienced general contractor – but not only did the contractor lack experience, but the contractor’s experience was with industrial construction and had no commercial experience.   The contractor’s first move was to shut down the main entrance to the property - and that main entrance remained closed for SIX MONTHS!! To be fair, there are two other smaller side entrances, so what’s the problem? Hmmm, let me repeat the only rule I’ve given so far. CONSUMERS ARE FINICKY!! Local retailers in that complex told me they lost over 20% of their revenue for the year over that 6 month period simply because their customers don’t go out of their way to find the alternative entrances. They have options and given an impediment to using one retailer, they move on to their next choice.
 
Rule #3.  Tenants – Know Your Owner / Landlord / Property Manager.
 
Okay, I want to be clear on this. The owner may change during your lease term, that’s business. Owners and Property Managers change from time to time. However, don’t let that change the need for you to know the current owner and property manager. As a client and I are looking at properties, I customarily ask existing tenants how it’s going for them and how the owner / property manager is to work with. They will tell you what they think, that’s generally not a problem. Tenants can be brutally honest and if they’re not happy, they may go out of their way to let you know that – if you ask. They’ll also tell you if they think the management is working in their best interest.
 
Side note: I was in Nampa doing cold calls for a project I am working on. Yes, I was looking for tenants who were ready to move and I was hoping to steal them from an older facility. That’s how commercial real estate works. Anyway, there is one strip mall I don’t go to anymore – oh, I may visit with some of those tenants in a few years, but right now, that building is off-imits. Why??? Because time after time when I asked them how it was going for them they called the owner / property manager by his first name and told me what a good job he was doing. Boy would I like having that building owner as a client! That’s what we’re looking for! Building owners / property managers who have their tenant’s best interest at heart. Oh, and yes, there are no vacancies in that center.
 
Rule #4.  Building Owners – Cultivate Win-Win Relationships with your Tenants.

I have a friend, Jen Harris @ Blueline Marketing (http://bluelinegrassroots.com/blog/author/jharris/) who says word of mouth marketing is the ultimate marketing strategy. People are inundated with thousands of marketing messages daily and we are more and more cynical about those messages. We have a recent example here in Idaho with a politician saying he “intended” on doing things that he actually never “intended” on doing, so it's easy to get cynical? Well, without taking a wide stance on that issue, it is exactly those experiences that make word of mouth marketing more and more important.  That fact is evidenced by the growing popularity of this web site as well.   BuildingCredibility.com – what a novel idea. You mean having market credibility is important? It is as important for tenants as it is for building owners.

Rule #5.  Owners - Be Proactive With Your Tenants; They're Your Partners.

I think I'm going to wrap up this session, but I can't without being a tad more blunt on this subject.  Owners, protect your reputation.  In this highly competitive world we live in, you need your tenants telling other people / companies that you're a great landlord.  Be proactive with your tenants, anticipate their needs and take care of issues they haven't even brought to your attention, yet.  Don't sit back and wait for issues to boil over to address them.  You're going to pay for that issue in terms of repair costs &, just as importantly, you're going to pay for it when people ask for references.

 I wish everyone a safe & happy holiday season!  Be kind to one another out there.
 
Posted by Scott Nicholson at 12/4/2007 7:48:00 PM
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Michelle Penick, Build Idaho Client Real Estate Services

Michelle Penick

Client Care Team
208.629.0217
[email protected]

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