2148 Pomona Blvd, Pomona CA 91768
10,539 SF WAREHOUSE
The tenant, an electronics company with a parent company in China, occupied the space with four months remaining on their lease. However, they had not yet decided on a renewal. Landlords typically prefer an early decision to minimize vacancy time and associated financial losses, as time is money in real estate. After much deliberation, the tenant's parent company chose to cease their operations in the US, leaving about two months on the lease. This timing coincided with the end of the year when business activity generally slows due to the holiday season. This slowdown can be costly for landlords facing upcoming vacancies, potentially resulting in thousands of dollars in lost rent.
Landlords and sellers aim to achieve the highest possible rent or sale price within their desired timeframe, striving for market price—defined as the price agreed upon by two willing parties in an open market, based on the supply and demand dynamics. In practice, real estate values are influenced by unique property features and fluctuating market conditions, making valuation both subjective and dynamic.
So, how does one achieve market price, or in simpler terms, top dollar? Once we received approval from the tenant, we began taking photos and preparing marketing materials, despite the challenges of marketing a tenant-occupied property, which include restricted access, confidentiality concerns, and inconvenience to the tenant. We then had to decide on the asking rate: below, at, or above market value. For this property, we set the asking price slightly lower than comparable nearby properties, considering whether the potential rent increase was worth additional vacancy time. The asking rate was set at $0.95 per square foot for a 10,000 square foot warehouse.
Post-lease, touring the property became easier, and we soon had multiple offers, none of which met the asking rate. Previously, the space was leased for $0.80 per square foot; our asking rate of $0.95 represented an 18% increase, which surprised many who do not closely follow market fluctuations. We carefully analyzed the offers and the financial standing, reputation, and industry outlook of each prospective tenant, as the nature of leasing involves considering a potential multi-year relationship.
Ultimately, we selected a tenant who demonstrated professionalism, financial responsibility, and industry stability. This decision, while challenging for the landlord, aligned with our commitment to finding a reliable tenant.