Leasing battle the key

In the final part of the development series Tracey Cook examines some of the methods used across residential, retail and commercial markets to find tenants or owners for new developments.

IN its purest sense a successful property development is one that is fully tenanted or sold and where the developer has pocketed a healthy return.

Depending on the type of development, the ways developers and associated bodies fill their buildings can be varied.

While the majority of retail developments only go ahead with a major tenant and most residential developments have a level of pre-sales, commercial developments have traditionally always had difficulty attracting pre-commitment in the Perth market.

NSC Corporate leasing manager Warren Wright said pre-commitment was not easy to get, particularly in a tough leasing market when tenants could afford to wait and see what the product looked like.

“You can show them the plans and finishes but until it is finished and they can walk over the floors and see the ceilings it is hard to get commitment,” he said.

Leasing agents use different levels of press advertising, signage and direct mailing to alert the market to a new available space.

Mr Wright said nothing could replace the knowledge and under-standing of a good leasing agent.

“At the end of the day real estate is a people business…you get tenants by being out there and knowing the industry,” Mr Wright said.

Provided it is a good product, retail developments usually find it easier to attract tenants.

For example inquiries about the retail area in the Woodside building have been flowing into leasing agents even though the building is yet to be completed.

Saracen Properties director Luke Saraceni said he never embarked on a retail development without 50 per cent pre-commitment.

Mr Saraceni said developers needed to know in advance which tenants were expanding and what their specialist needs were.

At the commercial end, Mr Saraceni is yet to have any pre-commitment luck with his 161 St Georges Terrace development.

“The CBD office market is the toughest market in the metropolitan area,” he said.

At the high-end residential development side Swanline Developments has found it can take up to two years to have a development fully sold due to the higher proportion of owner occupiers than investors in that market.

Swanline managing director James Harris said as well as using traditional media advertising, the company always preferred to appoint an exclusive agent.

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