How can you increase revenue from your commercial tenants?

3 Implement escalations

A third way to increase revenue from your commercial tenants is to implement escalations, which are clauses in your lease that allow you to increase the rent periodically based on a predetermined formula or index. Escalations can help you keep up with inflation, market conditions, or operating costs, and avoid losing money or value over time. However, you need to be reasonable and transparent about your escalation terms, as they can also affect your tenant's budget and expectations. You also need to make sure that your escalation clauses are compliant with the relevant laws and regulations in your jurisdiction.

4 Leverage renewals

A fourth way to increase revenue from your commercial tenants is to leverage renewals, which are opportunities to renegotiate your lease terms and conditions when your existing lease is about to expire. Renewals can give you a chance to increase your rent, adjust your fees, or add new services or clauses, depending on the market demand and your tenant's performance. However, you also need to be mindful of your tenant's needs and preferences, as they may have other options or alternatives. You also need to communicate and negotiate with your tenant well in advance, and offer them incentives or concessions to encourage them to renew.

5 Optimize space utilization

A fifth way to increase revenue from your commercial tenants is to optimize space utilization, which means making the most efficient and effective use of your available space. This could involve things like subdividing, combining, or reconfiguring your units, adding or removing partitions or walls, or upgrading or modifying your fixtures or amenities. By optimizing space utilization, you can not only increase your rentable area, but also attract more or different types of tenants, or charge higher rates for premium or customized spaces. However, you need to consider the costs and benefits of your space optimization projects, as well as the impact on your existing tenants and leases.

6 Diversify your tenant mix

A sixth way to increase revenue from your commercial tenants is to diversify your tenant mix, which means having a variety of tenants from different industries, sectors, or niches. This can help you reduce your risk and exposure to market fluctuations, increase your cross-selling and referral opportunities, and create a more dynamic and vibrant environment for your tenants and customers. However, you also need to balance your tenant mix with your property's identity, vision, and goals, as well as ensure that your tenants are compatible and complementary with each other.