Case study
Real estate question:
1. Mr. Johnson owns a small commercial property which
has 4 units with a total square footage of 9384. The
property is located in an area suffering from high
vacancies. The current tenants remaining are ABC
Corporation, who occupies 2888sq ft. And recently
renegotiated and lowered their lease rate through 2011 and
XYZ electronics corp., who occupies 3350 sq.ft. With their
lease due to expire December 2010. The remaining 2 vacancies
are marketed by a local broker. Currently there are no
potential tenants viewing the vacant graces.
What might Mr. Johnson do to retain his 2 tenants and
attract new renters to his property and how might this
impact his income and/or expenses this year and next year?
Please explain your answer.
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Answer Posted / vijay reddy last mile
The case can be broken up into 3 main parts
1. Retain Existing Customers who occupy 6238sft
- Lower the sft rate on par with the market
- Free Maintenance
- Free Water
- One month free rent with tenant who is about renew
2. Attract 2 new tenants to fill 3146sft
- Aggressive marketing of space
- Attractive Pricing
- Free first one month rent, full year maintenance and water
- Lower the deposit
3. Impact on Johnson income/expense
- The impact can be either increased income because the additional 2 portions are filled with aggressive marketing and pricing options
- If the options do not work and the 2 spaces are not filled along with one existing tenant not renewing then there is drastic effect in the income and percentage of expense to income will increase
| Is This Answer Correct ? | 29 Yes | 4 No |
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