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Maintaining vacated space.

Maintaining Vacated Space

Vacant space is one of the biggest costs in our business. Vacancies represent lost revenues which are never recovered. Often, the continuing rent loss to owners becomes an important and serious factor in the success or possible failure of the investment.

Most cities are still experiencing high vacancy rates in very competitive markets. The Fall/Winter 1988 report of the Office Network estimates that the national vacancy rate in office buildings is 19.2 percent, up from 19 percent in 1987. The vast majority of this available space is in existing buildings. So even as construction slows, existing, often previously occupied space, may remain available for a considerable time.

Condition of space

Before the space can be successfully released, it must be in marketable condition. Is your vacant space ready to be shown to prospects? It is very unlikely!

When the space is vacated and returned to the landlord, it is often left dirty and in need of maintenance. Does anyone inspect it or is the office door closed and not opened again until a prospective tenant is shown through sometime in the future?

In spite of the increasing sophistication in all aspects of property management, it is surprising how often some of the basic essentials of sound management are overlooked in the day-to-day operation of a building. Unleased space is a case in point.

Once tenants have decided to move, the manager has no further interest in them. Likewise, tenants have no further interest in the space and are anxious to take possession of their new premises.

As a result, when a tenant moves out, the premises are very often left dirty, untidy, and littered with debris. Venetian blinds are hanging half raised, old telephone directories, coat hangers, and paper cups are strewn about, and the existing leasehold improvements, partitions, and carpets show evidence of the inevitable wear and tear. The area has that air of neglect that such a condition engenders. It goes without saying that it should never be shown to a prospective tenant in this state. However, it very often is, with merely an apology from whomever is showing the space.

First impressions are important in selling. All space should be presented as attractively as possible. Presenting vacant offices as clean, quality space will greatly increase the chances of leasing it. Failure to keep the area in a neat and clean condition makes it difficult for the leasing manager to show the space at its best.

Retaining existing improvements

After space is vacated, the question arises as to whether the leasehold improvements of the former tenant should be left in place or removed. This is a judgement decision, of course.

For example, if the tenant's leasehold improvements are well laid out and of good quality, the manager may be reluctant to remove them with the thought that they may be a contributing factor in leasing the space. The manager could point out to the prospective tenant that the existing leasehold improvements will save considerable capital cost and avoid the time spent in preparing drawings, obtaining quotations, and building out the premises.

It is very rare, however, that an incoming tenant is satisfied with the space as it exists. No matter how high the quality of prior leasehold improvements, it is most unlikely that the partition layout will be appropriate. If the space has been leased as executive offices, it may be even over-improved with items like private washrooms, showers, and bars.

In addition, in today's competitive market, most tenants receive very

generous leasehold improvement allowances to install their own partitions and fixtures.

To eliminate the uncertainty inherent in such a situation, it is better to return the space to base building standards before it is put on the rental market. All existing partitions, carpets, and fixtures should be removed, and all the necessary work that is required to return the space to base building standards carried out. Leaving the improvements in place will merely delay the date of their eventual removal.

Strict control of the space should be introduced, with only leasing staff allowed in the premises. This limited access will contribute immensely to the effective leasing of the space and the consequent increase in the building revenue. If the operations staff has to enter the premises for any reason, it should be checked again when they have finished. Only in this way can it be properly controlled, shown in a professional manner, and appear competitive with more modern buildings in a very competitive market.

Short-term leasing

of vacant space

Generally, it is prudent to try and avoid subleasing vacant space on a short-term basis. Such an arrangement would remove the space from the market and make it difficult to show properly while under temporary use.

If such an arrangement is unavoidable (for example, to accommodate a major tenant), the space should once again be inspected and all evidence of the temporary occupancy removed.


Even if the building is half empty, all the vacant space should be kept immaculate at all times. It can then be shown with the confidence that it is competitive. Well-kept vacant space will demonstrate to prospective tenants the professional concern for the building and the competent management that is essential in a first-class office building. It will also ensure that the product is being presented to the market in the best possible way.

Albert Brittain, CPM [R] obtained the designation in 1965. In 1969 he was elected president of the Greater Toronto Chapter of IREM. In 1973 he was presented with the "Manager of the Year" award by the Greater Toronto chapter and the Real Estate Institute of Canada in recognition of his outstanding contribution to the advancement of professional real estate management.

Mr. Brittain is presently with the office leasing division of the Urban Development Group of Cadillac Fairview Corporation Ltd., Toronto, one of North America's best know commercial real estate development companies.
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Author:Brittain, Albert
Publication:Journal of Property Management
Date:Jan 1, 1989
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