When it comes to industrial and commercial real estate, the concept of tenant mix can be a true game-changer. If you own or manage a property, you’ve probably realized by now that having paying tenants isn’t enough. The combination of tenants—who they are, what they do, and how they interact—can make your property worth a lot more. But how do you actually craft a tenant mix that boosts property value? In this article, I’ll break down the essentials of tenant mix strategy and reveal some tricks that’ll help your property stand out.
Understanding tenant mix: the basics
To begin, let’s define what “tenant mix” is. Simply put, it’s the combination of businesses or organizations leasing space in a property. For example, in an industrial park, you may have logistics, light manufacturing and distribution all under one roof. In a commercial park, your tenants may include tech companies as well as service-oriented tenants. Having the right tenant mix means developing synergy between tenant businesses that are benefiting from being near each other rather than just being side by side.
So why is tenant mix so important? If a tenant mix of businesses work well together and possibly collaborate, you have a better long-term sustainable situation, with less vacancy and greater tenant lease renewals.
It’s not just about filling a building with tenants. It’s about creating an ecosystem that benefits everyone and ultimately increases the building’s revenue and valuation.
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Evaluating potential tenants
Not every potential tenant will fit into your vision for the property. Before signing the next lease, take stock of what your current lineup looks like. What kinds of operations do you already have? Are there obvious gaps or oversaturations? Sometimes, diversity is key—a logistics park with all third-party shipping companies might struggle when the market shifts, whereas a blend of shipping, storage, and assembly businesses creates flexibility and resilience.
Dig into each company’s financial health, growth prospects, and reputation. Are they expanding? Do they pay on time? Beyond finances, think about operational compatibility. Will a 24/7 distribution center get along with a 9-to-5 manufacturer? These details matter—they determine whether you’ll have harmony or headaches down the road.
You can also read: Optimize or relocate? How to decide what’s best for your company
Attracting high-value tenants
Curating a great tenant mix doesn’t happen by accident. Sometimes, you’ve got to make your property more attractive to the kinds of businesses you want. That could mean sprucing up shared spaces, adding amenities like secure loading docks, or offering flexible lease terms. Even simple investments like better lighting, signage, and access control can make a difference.
Network in your local business community and tailor your outreach. Find out what your ideal tenants value most—maybe it’s a certain floorplan, or proximity to major transportation routes. Sometimes, an owner’s openness to tenant improvements or custom build-outs will attract a premium tenant that others can’t land.
Keeping a pulse on the market
Markets evolve, and your tenant mix strategy should too. Regularly review your current tenant roster against broader trends in your region’s economy. Maybe e-commerce businesses are booming and need more warehouse space, or logistics tenants require extra square footage because of new trade routes. Stay flexible and don’t be afraid to pivot when a new opportunity appears—that’s how you keep your property competitive.
Finally, talk to your tenants! The best insights sometimes come from casual conversations. Are they planning to expand, downsize, or diversify their services? These chats can tip you off to upcoming vacancies or opportunities for cross-promotion between tenants—another way to boost everyone’s value (including yours).
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