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P.O. Box 20069, Riverside, CA 92516
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Commercial property landlords finding new ways to rent space
By ft Editorial Staff • Aug 3rd, 2010 • Category: real estate newsflash
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While the housing market continues to stagnate, commercial property landlords are finding themselves in the same boat. For instance, in the Sacramento region, vacancy rates for the second quarter of 2010 fell to 13.4%, down from 13.7% in the first quarter 2010. It has been predicted that vacancy rates may fall as low as 11% by next summer.
The amounts of rent commercial landlords are charging their tenants are also falling. In the Sacramento region, the asking rent for a commercial space is $1.67 per square foot a month, down from $2.00 per square foot a month two years ago. Leading the charge into cheap commercial space are discount retailers and fast food restaurants who are taking advantage of lower rent. There are also some entrepreneurs who are taking advantage of lower rents and opening the business of their dreams.
first tuesday take: Until employment levels begin to rise in California at regular monthly job increases of 25,000 to 30,000 (an annual rate of 300,000 plus jobs recovered), just like the housing market, commercial property spaces and rents will continue to stagnate and falter. The market never stands still. However, businesses generally will not hire additional employees until they’re confident a recovery is underway.
There are alternative ways for renting vacant space in commercial property. Short-term businesses called pop-up retailers function as a temporary stop gap. These pop-up retailers rent empty spaces for a short duration, between a few days up to a few months. Traditionally, these types of businesses were seasonal, like a Halloween or Christmas shop, but today landlords are allowing smaller entrepreneurs to take advantage of these empty spaces and bring foot traffic back into their otherwise deserted properties.
These business ventures are beneficial to landlords as it provides them with some rental income. It is also hoped that temporary leases signed by a pop-up retailer will lead to a longer lease term in the future. It’s a win-win situation for commercial landlords and entrepreneurs, at least until the economy fully recovers. [For more information on pop-up businesses, see the June 2010 first tuesday article, Pop-up retailers help fill vacant retail space.]
Re: “Sacramento’s empty storefronts finding tenants” and “Recession kicks open door to renting retail space” from the Sacramento Bee
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Copyright © 2011 by the first tuesday Journal Online - firsttuesdayjournal.com;
P.O. Box 20069, Riverside, CA 92516
Readers are encouraged to reproduce and/or distribute this article.
Copyright © 2011 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.
ft Editorial Staff is the writing staff comprised of legal editor Fred Crane and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Bradley Markano, Jeffery Marino, Kelli Galippo, Tara Tran, Mary Balash, Carrie Bruner and Sarah Cantino.
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I agree that short term leases are beneficial for both the landlord and tenant. It helps the landlord financially with the possibility of extending the lease and it doesn’t tie down the tenant if it doesn’t work out financially.
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