South Mississippi Commercial Real Estate Market Update

South Mississippi Commercial Real Estate Market Update

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

As you may or may not know from previous posts, our company serves as a landlord in Gulfport, Mississippi.  We have a couple of properties that we manage that contain several office buildings and office/warehouse buildings. 

From time to time we will post market updates of what we see in our area in South Mississippi.

Like commercial real estate brokers, our best gauge as to how the local economy is doing is by the types of phone calls we are getting (and whether phone calls turn into transactions).

However, unlike local brokers, we only operate on one side of the equation.  We do not offer any of our properties for sale so we only see the leasing side of the local market.

Of course, we discuss our market with local brokers and get a good feel from just being aware of what is going on.  After all, when there are construction cranes everywhere vs. a bunch of for sale signs in front of properties, it is easy to tell what kind of market we are in.

The broad (national) market had a very good year in 2014.  By contrast, 2014 was a bit of a slow year for our company and local economy.  We heard rumblings of expansion from some of our larger tenants (the types of tenants who have a national presence).  We even completed an expansion with one tenant.  Overall though, businesses were still struggling and several businesses were closing (not just in our business parks – throughout the local economy).

As we read reports of the national market doing so well, we wondered, "Was the commercial real estate boom going to miss South Mississippi?"

To shed some light on this question, let us relay what our local banker told us when meeting with our company a few years ago.  The bank this representative works for is a large, regional bank that has locations that span from Texas to Florida.  He told us that in their experience, the South Mississippi market lags behind the rest of the country (no real surprise there). 

Further, once the bank starts noticing activity on the Florida Panhandle, it slowly makes its way west, first hitting Alabama and ultimately, increased (or decreased) activity hits Mississippi.

Since we heard this, we have seen this concept in action.  

Last year, the articles we read around the country talked about commercial real estate’s resurgence and how times were really picking up.  Would our banker’s advice hold true for 2015?

Halfway through 2015...so far, so good!

In 2014, we were getting calls from people not quite ready to pull the trigger.  Since the beginning of 2015, we have had new businesses looking to open locations in our area, some in our business parks.  We have had existing tenants either talk or go through expansions already.  There have also been phone calls discussing expansion for new clients.

The signs are all here for an improving local economy.  Our business park is not unique in having lots of new business.  Strip centers are filling up again.  For sale signs are being removed from the fronts of buildings.  New signs are going up.  Things are exciting once again in the commercial real estate market on the Mississippi Gulf Coast.

We can only hope that if our market lags behind the broad national market, and 2015 has been a better year than 2014 nationally, 2016 will be even better for those of us in South Mississippi!

Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.

The Most IMPORTANT Part of Being a Landlord is...

The Most Important Part of Being a Landlord Is…

 

Image courtesy of Ambro at FreeDigitalPhotos.net

As landlords, we are always searching for our next tenant.

After all, we must seek new deals in order to expand our business and to fill our vacant spaces.

We look for good buys on raw land and buildings.  We market our existing office spaces and warehouse spaces.  And we solicit to prospects that we think would be a good fit for our business parks.

However, the most important part of our jobs as landlords is really quite simple.

It even sounds a little too simple.  Without this single action, we would not be able to stay in business.

That one thing is: KEEP YOUR CUSTOMERS HAPPY!

Sounds easy, right?

There have been numerous studies that find that signing up a new customer is 5x-10x more expensive than keeping an existing customer.  Some studies find that it costs even more.

In our business, we strive to keep tenant turnover as low as possible.  We lose cash flow for every month an office space or warehouse space is vacant.

Plus, vacant spaces in commercial real estate cost money (utilities, taxes, insurance, overhead, etc.).  Not to mention, you have additional expenses in marketing vacant spaces.  Wouldn’t it be better to just keep your current customers happy so that there is no need for a vacant space?

Of course, sometimes, vacancies are inevitable.

Businesses expand, downsize and occasionally close.  If you can’t accommodate a tenant’s needs at lease expiration, a vacancy will happen.

But we have had countless prospects come to our business parks because, quite simply, they are unhappy with their current landlord.

So, the main question is: How do you keep your customers happy?

To illustrate some of the things we do, allow us to tell you a story of a transaction that took place.

Recently, we completed an expansion with one of our existing tenants.

The regional manager in charge of the real estate transaction was repeatedly thanking us for being so helpful throughout the entire process and kept complimenting us on how smooth of a transition we made their expansion (which included quite a bit of construction in a different building).

What did we do that was so exemplary?

We constantly followed up to give status updates.  Whenever a question came up in construction, we promptly asked our customer for guidance so as not to delay their move-in.  We asked if they were happy with the progress and the work being done.

We answered any questions our customer had as quickly as we could.  We offered to have our janitorial service clean up after the construction crews were out of the office and warehouse.

In other words, there was no single thing that we did that made someone say “Wow!”

We treated our customer the right way and tried to go the extra mile.

Did the lease say we had to have a janitorial service clean up after the construction?  No.  But that was a minimal expense and our customer will definitely remember it.

In fact, the regional manager asked us if we had any property in our neighboring state, as they have a store relocation coming up in that area.

Not only did we secure repeat business from one of our existing tenants, but we might have secured a future deal.

And all of that came from keeping our customer happy.

This expansion story is just one example of how we strive to keep our tenants happy.

We also make a point to address maintenance issues promptly.  After all, summers in Gulfport, Mississippi get quite hot, and nobody wants to sit in their office when the A/C is not working.

Meet with your customers and ask them for suggestions.

Be proactive.

Make sure everything is okay with your tenant’s space needs.

Thank your customers for their business (maybe even a holiday card or gift basket).

Conclusion:

Keeping your customers happy is an ongoing process. 

Don’t think that you can send a gift basket when a new tenant first moves in and forget about them until the lease renewal.

Being a good landlord means focusing on your existing clientele throughout the lease term and not just looking for the next deal after you sign a lease.

Use common sense.

Welcome feedback.

Be proactive.

Put yourself in your customer’s shoes.

Keep your customers happy!  J

Please feel free to leave comments.  We promise to read them all.  You can also email us with any questions/comments at leasing@seawaybusinesspark.com.  As a reminder, we provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  For more information, visit our website at www.seawaybusinesspark.com or call us at (228) 575-7731.