3 Things You Wish You Knew About Your CRE Tenant BEFORE They Moved In
When it comes to moving a new commercial tenant into a commercial space, managers are often moving on themselves to fill another vacant space or secure another lease renewal. These are the times when the process between tenant application and move-in go fabulously smooth, when all parties are excited for the new relationship and the future is bright.
However, there are also times when the honeymoon ends, and details that were unknown at the time of lease signing come to light to reveal a troublesome situation. These are the times when managers want a do-over, a mulligan, to right the wrong that is destined for disaster. Here are three things you wish you knew about your CRE tenant before they signed on the dotted line.
I wish I would have known that my tenant was swimming uphill in a dying industry.
The traditional application has been processed. Background check completed. Proper licensing provided. Financial documents verified. Yes, this appliance repair shop seemed a perfect fit for the midtown retail location awaiting the perfect tenant—that is, until appliances became cheaper to replace than to repair. Had the manager looked into industry trends, accessed real-time market data, the ultimate demise of the We Fix Your Appliances Fast, LLC would not have affected the manager’s portfolio. (RE)meter’s Industry (RE)port would have better informed the manager of this property of the risk factors associated with this tenant and avoided the lease default 11 months later.
I wish I would have known that my tenant was under IRS investigation.
Another strong tenant on paper, a third-party employment service flowed through the tenant application process like a breeze. Security deposit paid and lease signed, the tenant moved into 1,800 square feet of second-level office space in August. In October of the same year, the manager received a copy of a certified letter from the IRS stating a claim to all of the tenant’s assets and a hold on the tenant’s finances. Having a report that could access real-time government data could have led the manager of the office space to spot the problem in advance of lease underwriting.
I wish I would have known that my tenant had defaulted on his previous long-term lease.
This commercial tenant presented with good financials and cash on hand to secure the warehouse space in a swift manner. However, after signing the lease, the manager heard through the grapevine that the tenant had defaulted on a previous long-term lease with damages. As history tends to repeat itself, the same tenant skipped town after six months in the property, long enough to store and leave behind hazardous material, of which the property owner absorbed the cost of disposal.
In cases like these, (RE)meter’s TIL Report could have significantly changed the course, minimized risk, and maximized use of space for CRE professionals. Knowing industry and tenant details in real-time before the lease is signed can make the difference between profit and loss, success and failure.