5 Types of Landlord in Commercial Real Estate
harkins / October 5, 2016
In commercial real estate, there are five main types of landlords. Each type of landlord has a different portfolio, different expectations, and different goals. The size and needs of your business will determine which type of landlord is best for you to rent from.
Mom and Pop Landlord
Mom and pop landlords are small-time landlords with small portfolios. The property they own is their primary investment and they are typically looking for tenant that they know will treat the place well. These types of landlords are very straightforward and easy going. They are best suited for small businesses that have simple needs.
Family investors are generational and developed their portfolio over a number of years. They get very involved in the leasing and management of their properties, operating their business with a personal touch. They would rather rent to stable tenants than those that may be able to pay the highest rent. This type of landlord is best suited for small to mid-sized businesses that need a landlord that is willing to build space as they grow and are able to accommodate their growth needs.
Management companies don’t actually own the property that they’re leasing but manage the property for the owner that hires them. These companies typically have a large portfolio featuring a wide variety of properties to meet any business’s needs. These landlords less flexible with their lease terms and are best suited for businesses that have established credit and specific requirements and operating rules.
Real Estate Developers
Real estate developers acquire and develop office, residential, hotel, retail, and mixed-use properties. They usually manage Class A buildings that have some of the best amenities possible. These buildings typically have well maintained common areas and large lobbies with high level security measures. These landlords look to generate the highest amount of rent possible in order to maximize their property value, often limiting their locations to major markets like New York, Los Angeles, Chicago, and Houston. These landlords are best for companies that are in need of premium space.
Institutional investors are professionals at managing money and invest in various asset classes which include funds and real estate investment trusts (REITs). While REITs are used to invest exclusively in real estate properties, funds are often used to diversify their portfolio. Most of the assets they use are Class B+ or Class A buildings and generate a strong cash flow.
There are five different types of landlords that you may come across when you rent commercial real estate. Depending on your business’s size and needs, one of these five landlords will fit your company better than the rest. If you’re looking to rent commercial real estate, the professionals at Harkins Commercials can help.
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