The challenges of effective property leasing are ever evolving, especially with constantly changing variables such as tenant requirements, increasing operating costs and the uncertainty surrounding the South African economy. Horizon Capital manages and overcomes these difficulties by emphasising the importance of great working relationships between ourselves, as landlords, and the brokers and future tenants. These relationships enable our staff to adapt and even pre-empt potential problems.
Self-Reflection – Understanding the Product
The first step is to know and understand the product and what it has to offer. Horizon Capital assesses the strengths and weaknesses of the premises in order to be able to target companies who will be a good fit. This will ultimately help lease the property faster. For example, if an office is available to lease that is well located and close to public transport yet does not have a good parking ratio, call centres could be a good tenant fit since the majority of their staff usually make use of public transport. At this stage, it is imperative for the space to be open; therefore, any partitioning is removed from the office to show the full space and its future potential, which in turn, helps sell the product.
The Matchmakers – Property Brokers
Brokers are still some of the most important players in the property market. Property Brokerages are known to have the widest networks of space available as they deal with multiple landlords and therefore prospective tenants make use of these brokerages to find their perfect space. Horizon Capital’s vast network of brokers along with our ongoing relationship management enables us to successfully limit our vacancy risk. The brokers also play a fundamental role in the negotiation process and are ultimately the matchmakers for both parties.
Dating and Courtship – Viewings
The next step involves arranging for prospective tenants to view the premises. Horizon Capital aims to make this process as simple and effortless as possible for both the prospective tenants as well as the current tenants, should the space be occupied. If both parties are pleased with what the other has to offer, the working relationship can move forward.
Ante Nuptial Contract – Offer to Lease
Prior to any formal commitments, it is imperative to provide security for each party going forward. The offer to lease comprises general details of the offering and what each party can expect from the other. It is important to structure a deal where both parties benefit in order to ensure a lasting working relationship.
Marriage – Agreement of Lease
After the initial introduction has been made, the parties engage in a process of vetting until both are ready for a formal commitment, all the while effectively communicating and managing expectations. Once both parties are completely satisfied, the relationship is formalised by way of the final lease agreement detailing the obligations of both the tenant and the landlord.
The Possibility of Termination
As with all relationships, there is a chance that one party can outgrow the other. While termination clauses are not included in leases, all tenants are required to give six months’ notice of renewal prior to lease expiry, which enables timely advertising of any upcoming space. This, in turn, mitigates the risk of vacancy. Furthermore, we have improved brokers’ access to information on Horizon Capital’s properties with our shared Dropbox containing property brochures, images and floor plans.
