Cautious Owners Take Tougher Stance Against Tenants

Cautious Owners Take Tougher Stance Against Tenants

Owners across the country, who are caught between the proverbial “rock and a hard place,” are taking a more aggressive and cautious approach to doing business as they wait for the commercial real estate market to rebound.

The collapse of financial giants, such as Bear Stearns Co. and Lehman Brothers Inc., and a combination of routine layoff reports, limited credit, and rising business bankruptcies have put office building owners on the offensive as they try to shield themselves from struggling tenants, protect their bottom line and maintain full occupancy in their buildings.

Asset mangers are working closely with leasing agents to assess the creditworthiness of tenants. They are monitoring every piece of data that they can and are in many more conversations with tenants than they were in the past. While owners have always made it routine practice to find out all they can about tenants, their efforts have been ramped up.

Owners are scrutinizing existing and prospective tenants, reviewing their businesses and getting a solid understanding of business plans and credit history. They monitor any and all information—whether it’s from a competitor, industry insiders, or other brokers—that might shed light on the condition of a company. Owners are also starting to scour their portfolios to see if they’ve had any trouble tenants that they need to monitor.

Source: Philadelphia Business Journal