The Growing Pains of Vacant Space


I recently completed a consulting engagement for a client on tenant recruitment in a nonprofit shared space center.  As the centers in our network mature, more are going through the growing pains of vacant space and the dilemma of recruiting the right tenants, both for financial reasons and to complement the collaboration in their spaces.  Getting the right tenant mix can be more art than science but there are some key principles I would recommend.

  • Base is Best – Your current tenant base is your best asset.  How are they feeling about the center?  It might be a good time to touch base if you haven’t lately.  Are there nagging issues that you don’t know about?  Make sure to address tenant concerns to the best of your ability so that they will continue to be your best advocate.
  • Incentivize! – Along the same lines, do you offer referral incentives?  In my research I found that many large centers (over 40,000 square feet) offer incentives that range from $500 to the equivalent of the first month’s rent of the new tenant.  That can be sizeable, but what a great reward!  Our friends in the for-profit shared office space world tell us that new tenants are the best source of referrals.  And if you want to offer more modest financial incentives, make sure to give the referring tenant lots of free publicity.  Everyone likes to be recognized!
  • To Advertise or Not? – The jury seems to be out on using brokers and listing space with LoopNet or CoStar.  Most of the nonprofit shared space center operators I spoke to said it can be hard to recoup the investment given that our centers are often looking for very specific types of tenants.  But, very large centers (> 50,000 square feet) or those with multiple sites/campuses may benefit from using a broker and/or advertising based on the volume of space they need to fill on a regular basis.  Another piece of advice I heard was to identify brokers who work with nonprofits in your community and work out an arrangement in advance regarding commissions.

What was consistent in all my research was to persevere!  The model works if you focus on your center’s mission, keep doing what sets you apart from the rest of the market, and provide your tenants with a quality experience.  If you are struggling with tenant recruitment, please let me know so we can provide you with other best practices we’ve learned.




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