Oklahoma City's commercial property owners are facing a major challenge: 25.2% office vacancy rates, far above the national average of 19.6%. Remote work, rising costs, and shifting tenant preferences are reshaping the market. But there’s hope - by adjusting to market trends and tenant needs, property owners can fill vacant spaces and boost profitability.
Here’s a quick summary of actionable strategies:
- Match Tenants to Market Demand: Focus on growing industries like aviation, healthcare, and clean energy. Offer smaller, move-in-ready spaces.
- Improve Building Quality: Upgrade appearances and add energy-saving features like LED lighting and HVAC optimization.
- Target Local Marketing: Use online tools, virtual tours, and local business networks to attract tenants.
- Adjust Lease Terms: Offer flexible lease lengths and explore sales-based rent options.
- Monitor and Prevent Vacancies: Track data, maintain strong tenant relationships, and keep properties well-maintained.
Why it matters: Adapting to these strategies can help property owners reduce vacancies, attract the right tenants, and ensure long-term returns in a tough market.
How to Tenant a Vacant Commercial Property| 4 Proven Ways Helen Tarrant Unikorn
1. Match Tenants to Market Demand
Oklahoma City (OKC) plays a major role in the state's economy, contributing nearly 40% of Oklahoma's GDP and adding 14,700 nonfarm jobs (a 2.1% increase) in 2024.
Study Market Data
Pay attention to these key market trends:
| Industry Sector | Job Growth (2024) | Leasing Potential |
|---|---|---|
| Education & Health | 6.6% | High |
| Construction | 6.5% | High |
| Leisure & Hospitality | 5.3% | Moderate |
| Other Services | 4.0% | Moderate |
| Government | 2.6% | Stable |
| Mining/Oil & Gas | 1.0% | Stable |
This data highlights sectors with strong growth, offering opportunities to tailor leasing strategies to meet demand.
Focus on Growing Industries
Aviation and aerospace dominate as Oklahoma City's largest employment and economic contributors. Meanwhile, the energy sector added $55.7 billion to the state's GDP in 2023, with Oklahoma ranking 3rd nationally in wind energy production.
A notable example of growth is Enel North America's $1 billion solar facility in Inola, set to create 1,000 jobs by 2025. Developments like this point to the need for properties designed to meet the requirements of clean energy businesses.
Example: Successful Tenant Mix
Insights from Cushman & Wakefield's Q1 2024 market analysis reveal a growing preference among office tenants for smaller, more efficient spaces in central Oklahoma City.
Key strategies to consider:
- Target industries like aviation, aerospace, bioscience, and shared services.
- Accommodate tech growth, particularly in software development and cybersecurity.
- Support expansion in education and healthcare facilities.
Additionally, the Oklahoma Quality Jobs Program offers cash incentives to companies that create high-quality jobs, making it an attractive option for businesses.
2. Improve Building Quality and Features
Update Building Appearance
The way a building looks can make or break a tenant's first impression. To elevate curb appeal, consider these exterior upgrades:
- Professional landscaping: Use drought-resistant plants for a polished, low-maintenance look.
- Fresh paint: Stick to neutral, modern colors for a clean and inviting appearance.
- Parking areas: Keep them clean and well-maintained to show attention to detail.
- Updated signage: Ensure signs are modern, clear, and compliant with local regulations.
- Lighting: Brighten entrances and common areas with proper lighting for safety and warmth.
Add Energy-Saving Features
Once the exterior is refreshed, shift focus to energy-efficient upgrades. These not only cut costs but also enhance tenant satisfaction.
| Upgrade Type | Energy Savings | ROI Timeline |
|---|---|---|
| LED Lighting | Up to 90% | 1–2 years |
| HVAC Optimization | Up to 40% | 2–3 years |
| Proper Insulation | Up to 10% | 3–4 years |
Did you know that commercial buildings waste about 30% of their energy? On top of that, research shows employees working in green-certified buildings have 26% higher cognitive function scores and are 15% more productive compared to those in traditional spaces. These numbers highlight the tangible benefits of energy-efficient upgrades.
Calculate Upgrade Returns
When considering upgrades, focus on both short-term and long-term returns:
- Short-term ROI: Aim for an annual return of 8–10% through higher rental rates and reduced vacancies.
- Long-term benefits: Energy-efficient improvements lower ongoing costs and attract tenants who value sustainability.
For example, green-certified buildings typically enjoy 20% lower maintenance costs compared to conventional properties. Plus, 73% of millennials are willing to pay more for spaces aligned with sustainable practices. That’s a clear signal of growing demand for eco-friendly features.
To maximize ROI, prioritize these high-impact upgrades:
- HVAC systems: These account for about 40% of a building’s energy use, making optimization a key step.
- LED lighting: Lighting consumes around 17% of electricity, and retrofitting with LEDs can significantly reduce this.
- Improved insulation: Keeps energy waste in check and enhances overall efficiency.
Here’s a simple formula to evaluate your upgrades:
ROI = (Net Income / Total Investment) x 100 3. Target Local Marketing Efforts
Use Online Marketing
A strong online marketing strategy can help keep vacancy rates low. By combining targeted keyword research for Oklahoma commercial real estate, high-quality visuals, clear property descriptions, and mobile-friendly designs, you can create a digital presence that attracts potential tenants.
Key elements to focus on include:
- Professional photography: Costs range from $300 to $1,200 per session, but the investment pays off with eye-catching property images.
- Local SEO: Use relevant keywords to ensure your listings appear in local search results.
- Mobile-optimized listings: Make sure your property pages are easy to navigate on smartphones and tablets.
- Pay-per-click advertising: Target local audiences to drive traffic to your listings.
Your online presence should highlight property details, local demographics, and nearby amenities that appeal to Oklahoma businesses. Partnering with local business groups can further enhance visibility and credibility.
Work with Local Business Groups
While digital marketing captures online leads, connecting with local business organizations can create direct, meaningful relationships with potential tenants. These groups offer networking opportunities, market insights, and advocacy that can help reduce vacancy rates.
"NAIOP stands for excellence and common-sense approaches, protecting industry and the American developer", says Danny Overton, President of NAIOP Oklahoma.
Here’s how local business groups can make an impact:
| Benefit | Effect on Vacancy Rates |
|---|---|
| Member Education | Keeps you informed about market trends |
| Networking Events | Provides direct access to potential tenants |
| Legislative Advocacy | Creates a more favorable business environment |
| Market Intelligence | Helps craft better leasing strategies |
Rick Guild, President of The Guild Company, shares his perspective:
"Having been involved in NAIOP for over 35 years... I can tell you without a doubt it is the finest Real Estate Organization to be a part of, not just in Tulsa, but nationwide".
Building strong local connections boosts your reputation while complementing digital efforts like virtual tours.
Create Digital Property Tours
Did you know that 80% of potential tenants prefer viewing virtual tours before scheduling an in-person visit? Virtual tours not only cater to this demand but also help you reach prospects outside the immediate area.
Here’s a breakdown of typical costs for digital tour services:
| Service | Cost Range |
|---|---|
| Drone Photography | $300–$500 |
| Drone Video | $800–$1,200 |
| 3D Virtual Tours | Custom pricing |
Flow Real Estate Photography, based in Oklahoma City, specializes in commercial property marketing. Their services include next-day delivery of professional photos and comprehensive virtual tour packages.
"Commercial real estate clients are all about transparency. This is why having a 3D virtual tour of your commercial property is so important", explains Flow Photos.
To make the most of digital tours:
- Highlight both interior and exterior views.
- Use drone shots to showcase the surrounding area.
- Include interactive floorplans for better visualization.
- Offer virtual staging to help prospects imagine the space in use.
With 100% of prospects now expecting virtual tours and floorplans before committing to an in-person visit, these tools are no longer optional - they’re essential for reducing vacancy rates in Oklahoma's commercial real estate market.
4. Adjust Lease Terms for Today's Market
Offer Different Lease Lengths
Adapting lease terms to meet current market demands can help attract and retain reliable tenants. Short-term leases, often under three years, are ideal for startups or businesses navigating uncertain markets. Meanwhile, established companies typically prefer longer leases, offering them stability and cost savings over time.
| Lease Type | Benefits for Tenants | Benefits for Property Owners |
|---|---|---|
| Short-term (1-3 years) | Flexibility to scale, lower commitment | Easier market rate adjustments, attract growing businesses |
| Mid-term (3-5 years) | Balanced stability, room for negotiation | Predictable income, lower turnover costs |
| Long-term (5+ years) | Lower monthly rates, equity-building | Stable cash flow, reduced vacancy risks |
Additionally, property owners can explore alternative rent structures to align their goals with tenant needs.
Consider Sales-Based Rent
A sales-based rent structure combines a lower base rent with a percentage of the tenant's gross sales. This approach benefits both parties by linking the property owner’s income to the tenant’s performance.
"Percentage rent benefits both parties: Percentage rent, or a percentage lease, creates a win-win scenario for landlords and tenants by linking rental income to gross sales, encouraging collaboration and shared success." - Nakisa Real Estate
Here’s why this model works:
- Tenants face lower upfront costs, making it easier to establish or grow their business.
- Property owners share in the tenant's success, creating a mutual incentive to improve the property.
- Both parties are motivated to enhance overall property performance, which can reduce vacancy rates.
"The inclusion of a percentage rent clause can be mutually motivating for both the owner and tenant of a property. If an owner receives additional income from operating a high-quality retail center, the owner is more likely to pursue physical and economic improvements that increase traffic and spending." - Altus Group
This setup fosters collaboration, encouraging tenants to contribute to a thriving property environment.
Follow Oklahoma Lease Laws
Ensuring compliance with Oklahoma lease laws is critical for maintaining secure and competitive agreements. These laws protect both tenants and property owners while outlining clear responsibilities.
Key legal points include:
- Lease Agreement Authority: The lease agreement serves as the primary governing document in commercial relationships.
- Notice Requirements: Specific timelines must be followed for lease termination, depending on the type of violation.
- Property Rights: Forcible self-help evictions, like changing locks, are prohibited by law.
- Abandoned Property: Handling tenant property must comply with Oklahoma Statutes §52.
"Commercial Landlords must exercise proper management over their tenants in order to maximize Net Operating Income (NOI), while also preserving (or improving) the condition of the property." - Travis Charles Smith
5. Monitor and Prevent Vacancies
After adjusting lease terms, the next step is keeping a close eye on your properties and taking proactive steps to maintain occupancy.
Use Data to Predict Vacancies
Staying ahead of vacancies requires data tracking. By monitoring specific metrics, you can anticipate changes and act before issues arise. Here's what to focus on:
| Monitoring Element | Key Data Points | Action Triggers |
|---|---|---|
| Lease Dates | Termination dates, renewal options, rent reviews | Monitor well before key dates approach |
| Market Trends | Local economic conditions, industry growth indicators | Conduct regular assessments (e.g., quarterly) |
| Tenant Health | Payment history, sales data | Address concerns promptly through regular reviews |
| Property Performance | Maintenance requests, utility usage | Schedule routine inspections |
"Don't wait for a tenant to tell you that they are leaving a property. Connect with them regularly so you know when they are thinking of leaving and why that may be the case. Perhaps you can offer some inducement to them to stay at lease end." - Commercial Real Estate Training
Using this data-driven strategy alongside tenant satisfaction efforts ensures a more stable occupancy rate.
Keep Current Tenants Happy
Happy tenants are more likely to renew their leases, so maintaining strong relationships is essential. Open communication and swift responses to their needs go a long way in securing long-term occupancy.
Here’s what tenants value most:
- Quick responses to maintenance issues
- Regular updates or improvements to the property
- Transparent communication about building changes
- Flexible lease terms when possible
- Recognition and rewards for long-term tenants
"There is a strong link between tenant encouragement, communication, property performance, and landlord involvement. At the base of everything sits the tenants in occupation, and their respective businesses. Without good tenants in occupation, the property suffers in so many different ways." - Commercial Real Estate Training
By prioritizing these factors, you can strengthen tenant loyalty and reduce turnover.
Keep Buildings Well-Maintained
A well-maintained property not only attracts new tenants but also keeps current ones satisfied. Regular upkeep ensures the building remains functional and energy-efficient, which benefits everyone.
Here’s a seasonal maintenance checklist to follow:
- Winter: Inspect heating systems and ensure snow removal is handled efficiently.
- Spring: Service HVAC systems, clean thoroughly, and refresh landscaping.
- Summer: Check roofs for damage and maintain cooling systems.
- Fall: Clear gutters and prepare heating systems for colder months.
"Any great property management company will work with building owners and tenants to ensure a property is well maintained. It is a key part of maximizing long term rental income and return on investment." - Brett Russo, Rent360 Property Management Ipswich
Statistics show that 88% of commercial real estate landlords believe tenant preference data is essential for shaping their business strategies. Combining this data with routine maintenance and strong tenant relationships sets the stage for consistently high occupancy rates.
Conclusion: Steps to Lower Vacancy Rates
To tackle vacancy rates in Oklahoma's commercial properties, consider these five practical strategies. Together, they blend proactive tenant management with smart property enhancements for a well-rounded approach.
| Strategy | Implementation Focus | Expected Impact |
|---|---|---|
| Market-Tenant Matching | Tailor offerings to smaller, efficient spaces | Lower vacancy rates through targeted acquisition efforts |
| Building Improvements | Prioritize maintenance and energy efficiency | Boost tenant satisfaction and retention |
| Local Marketing | Strengthen Oklahoma-specific presence | Accelerate tenant acquisition |
| Flexible Leasing | Offer terms aligned with market demands | Improve occupancy rates |
| Proactive Management | Leverage data and maintain communication | Minimize tenant turnover |
Oklahoma City's commercial real estate market has shown resilience, with vacancy rates rising only 160 basis points since 2019, compared to a national increase of 460 basis points. Additionally, asking rents have climbed by $0.95 per square foot, rewarding properties that are competitively positioned.
For property managers, the key lies in cultivating a strong tenant management system and maintaining open lines of communication. Staying attuned to market trends and incorporating tenant feedback can help property owners maintain steady occupancy rates. By adopting these strategies, investors can secure long-term returns in Oklahoma's thriving commercial real estate market.
FAQs
What are the best ways for commercial property owners in Oklahoma City to attract tenants from booming sectors like aviation and clean energy?
To attract tenants from booming industries like aviation and clean energy, commercial property owners in Oklahoma City should adopt strategies tailored to these sectors. Begin by diving into industry trends and pinpointing key players. Oklahoma City is a well-established aerospace hub, home to over 290 companies and a workforce of more than 43,000 - making it a prime spot for aviation-focused businesses. The city also has a growing foothold in clean energy, creating opportunities to connect with companies in renewable energy and technology.
Collaborate with local economic development organizations to tap into valuable resources like market data, site selection support, and details about available incentives. Emphasize property features that resonate with these industries, such as easy access to transportation networks, energy-efficient building designs, or flexible lease terms tailored to their needs. By aligning your offerings with the specific requirements of these sectors, you can make your property a standout option for potential tenants.
What are the advantages of adding energy-efficient features to commercial properties, and how can they boost tenant satisfaction and retention?
Upgrading commercial properties with energy-efficient features brings a host of benefits that go beyond just cutting costs. For starters, these enhancements can lead to noticeable reductions in energy and utility bills, translating into significant long-term savings. Over time, these cost reductions can deliver a solid return on investment, making the upgrades a smart financial decision.
But the perks don’t stop there. Energy-efficient buildings tend to attract more tenants and can often justify higher rental rates. Features like better air quality and increased natural light create a healthier, more inviting space, boosting tenant satisfaction and even productivity. This, in turn, can lead to longer leases and fewer vacancies. By prioritizing sustainability, property owners not only improve their financial outlook but also position their properties as desirable and tenant-friendly.
What are the best ways to build strong tenant relationships and encourage long-term leases in commercial properties?
Building lasting relationships with tenants and encouraging them to stick around for the long haul requires a thoughtful, tenant-centered approach. Start by prioritizing clear and responsive communication - answer questions promptly, keep tenants updated on property changes, and address any concerns as soon as they arise. Regularly touching base with tenants not only shows that their input matters but also helps you catch and resolve any potential problems before they escalate.
Taking care of the property is just as important. Stay on top of repairs and maintenance, and consider occasional upgrades to keep the space appealing. A property that's well-maintained not only looks good but also makes tenants feel valued, which goes a long way in building loyalty.
You can also sweeten the deal by offering incentives like perks for renewing leases or providing flexible lease terms. Combine this with creating a safe and welcoming environment, and you'll have a recipe for happy tenants who are more likely to stick around.
