Asset managers, property managers, and brokers are often involved in the leasing process at the same time. This can delay processes and lead to vacancies—experts explain what structures are necessary for successful leasing.
Professional rental management is crucial to the economic success of real estate. Sufficient and reliable cash flow in the form of rent is a prerequisite for financing. Commercial real estate projects usually do not get off the ground without a high pre-letting rate, and even in rental apartment projects, forward deals without pre-letting are no longer in demand.
Asset managers, property managers, and external brokers are involved in the leasing process. If their roles are not clearly defined, this can lead to delayed leasing processes, inconsistent market approach, and vacancies. Four real estate experts discussed the structures required for successful property leasing in an online panel hosted by Rueckerconsult.
According to the panel, unclear communication and decision-making structures are a key cause of many conflicts. Too many contact persons, parallel coordination, and a lack of centralized external communication often lead to misunderstandings and delays. Successful leasing projects are characterized by clearly defined roles, fixed contact persons, and coordinated decision-making processes.
"Each party involved needs a fixed contact person so that the flow of information does not come to a standstill," explained Martin Schubert, Head of Letting Management Berlin at HIH Real Estate. If there are several contact persons on one side, this can be fatal: not everyone always knows exactly what is going on, and decisions often have to be made on the basis of incomplete information.
While asset managers define the strategic guidelines, property managers and brokers are operational letting specialists. Fund and investment managers or the owners themselves are often also involved.
"If there is a lack of clear responsibilities and common goals, conflicts can arise – for example, between rapid full letting and long-term sustainable leases," said Schubert. It is particularly important to establish agreement on responsibilities and objectives with all parties involved at the outset of a leasing project. This includes, among other things, determining rent price ranges, terms, investment frameworks, and the handling of incentives such as rent-free periods or fit-out subsidies.
According to Jürgen Hau, managing director of Industria Immobilien, the desire for quick leasing in new buildings is often not feasible and not always sensible. "First of all, you don't usually sign a lease with the first interested party immediately after a viewing." Especially in cities that are not prime locations, the leasing effort is much higher. This is also a question of tenant creditworthiness.
"We are commissioned with the initial letting of large new construction projects. Here, we often have to let between 100 and 400 units at once," says Sascha Nöske, CEO of Strategis. It is important to be quick, because the client's requirement is that there should be no remaining vacancies by the time construction is completed. The higher-priced rental segment has similarities with the sale of condominiums.
According to Nöske, asymmetric leasing must be avoided in new residential construction. This occurs when the rental prices within a larger residential project are not differentiated enough according to the actual qualities of the individual units. The attractive apartments are rented out quickly – but at too low a unit price. "The result is a property that is only partially rented out, with the second half of the units only able to be placed at a discount. The planned profit margin then never materializes," explained the Strategis CEO.
According to experts, the goals for residential and commercial rentals are comparable despite different structures: high rental income, low vacancy rates. While the small-scale residential segment is easier to scale in terms of rentals, commercial rentals are more strongly influenced by individual user requirements, space concepts, and long-term strategic considerations. Living in metropolitan areas has been a landlord's market for years, while the commercial sector is transforming into a tenant's market – with significantly longer marketing times.
"Our work has become much more consultation-intensive," reported Stephan Wege, Head of Office Letting NRW at the real estate agency Colliers. In the past, it was mainly about pure marketing. "Now we see ourselves more as a sparring partner for the owner," said Wege. It is increasingly a matter of jointly developing strategies, weighing risks, and identifying scenarios. Landlord representation, where owners or asset managers are represented strategically and operationally throughout the entire leasing process, is increasingly in demand.
HIH Real Estate leasing manager Schubert added: "The toughest competition for new leases is the leasing of existing commercial properties." Although existing leases do not generate large rent increases, there are no brokerage fees or incentives, and the risk of vacancy and renovation times are lower.
Sustainability remains a major issue in rental management. "ESG is at the top of the agenda for large corporations and is here to stay," says Colliers expert Wege with certainty. "The issue of green leases plays a major role for large corporations. For smaller companies, it is more of a secondary concern. There, the focus is on ancillary costs or, for example, e-charging stations."
When Industria purchases and places projects, ESG is always an issue. According to Managing Director Hau, the tension then lies in energy purchasing, "because that's how you can make the second rent as attractive as possible." This is a top priority for tenants.
In the residential sector, on the other hand, stable and affordable ancillary costs are becoming increasingly important, according to the panelists. Digital rental processes, structured data rooms, and transparent documentation are becoming standard—also to ensure speed and quality in a highly competitive market.
