According to the Orlando Economic Partnership, in the fourth quarter of 2024, the Orlando region had an average of 59,400 monthly job postings. It also reached an industry employment milestone, with 1.5 million total jobs. At this rate, the metropolitan statistical area will likely outperform the national economy in 2025.
As a commercial property owner in the City Beautiful, you should take those stats and facts as excellent news. After all, job and economic growth signal an increased need for commercial space.
So, if you have yet to perform a commercial lease analysis, now is the best time.
PMI Main Street Mgmt has shared expert lease analysis and property management insights in this commercial leasing guide, so please read on.
Why Does Commercial Lease Analysis Matter?
Commercial lease analysis is critical to understanding the intricacies of lease agreements and:
- Allows stakeholders to make informed decisions that directly impact profitability
- Reveals opportunities for improving cash flow and operational efficiency
- Provides insights on positioning commercial properties competitively
- Uncovers essential elements such as terms and conditions and their potential financial implications
Essentially, the primary goal of commercial lease analysis is to attract the right tenants and get the best ones to renew the lease.
Factors to Include in a Commercial Lease Analysis
When analyzing your commercial property's leases, pay careful attention to the following:
- Lease Duration: Short-term versus long-term can influence cash flow and flexibility
- Rental Rates: Analyze current market rates compared to your lease terms to determine whether you're charging too little or too much
- Renewal Options: Make tenants more likely to stay by offering flexible lease renewal options
- Responsibility for Maintenance: Determine who bears costs for repairs and upgrades
Income-Boosting Lease Evaluation Tips
Commercial real estate owners enjoy lengthier lease contracts and considerably higher cash flow stability than residential property owners and landlords. However, as Investopedia.com points out, they can face higher tenant turnovers and renovation costs.
Therefore, analyzing leases before and throughout the tenancy should be a top priority. Such practices allow landlords to spot and fix problems while identifying opportunities that may encourage tenants to extend their agreements.
So, to maximize lease profits, consider implementing these tactics:
- Negotiate Terms: Understand your leverage and approach tenants with data-backed proposals
- Monitor Market Trends: Stay informed about local rental rates and occupancy trends
- Consider Subleasing Options: This can provide additional revenue streams if permissible under lease terms
- Assess Tenant Mix: Ensure the property attracts businesses that complement each other, enhancing foot traffic
Simplify Lease Analysis With Expert Help
As critical as commercial lease analysis is, it's complex, time-consuming, and full of nuances that investors, especially first-timers, may find confusing. Luckily, you don't have to do it alone, as PMI Main Street Mgmt is here to help.
We're a full-service property management company specializing in real estate brokerage services in Orlando, FL. Our owner, Christian Trani, is a seasoned real estate professional with over two decades of experience. With Mr. Trani and the rest of the PMI Main Street Mgmt team, we can handle all your lease-related tasks, from lease analysis to tenant screening, rent collection, property upkeep, and tenant management, on your behalf.
Speak with us today for a complimentary consultation!
