Why do some factories or warehouses “stick” on the market? Certain properties remain on the market for long periods of time. Why is this? There are many reasons, such as, the property could have become functionally obscolete. This is true for many of the old clothing factories in Cape Town, that are multi storey, low roofed and devoid of yard space. Clever landlords seek a new market for these properties, turn them around and price them accordingly.
Most properties remain on the market for two reasons
- They are over priced
- They are in poor condition
Usually, I find that behind most properties that “stick” on market, is a stubborn landlord who is unwilling to accept the true value of his property and unwilling to spend any money on it until it a tenant is found. The problem is that most tenants are put off by a property that is in bad condition and these first impressions count.
These landlords often allow the property to be plastered with brokers boards which gives the surrounding business community the impression that there is something wrong with it (99% of tenants come from the surrounding area!). This weakens the landlords negotiation position as he is perceived to be desperate.
Put quite simply, successfull landlords are proactive. They anticpiate the vacancy well before it happens and they call in brokers that know the local market well. These brokers will advise them on the achievable rentals and on the actions needed to make the property more lettable. The property is then marketed properly and the result is a short period on the market and significant savings for the landlord.
I have seen properties that are highly lettable remain on the market for well over a year because they are in bad condition and over priced. How does a landlord expect to recover a years lost rental with an already over inflated square metre rental rate?
Guy de la Porte is Cape Town’s Airport and Cape Town Industrial Property specialist.