Further to Steve's question regarding the Vacant building & a potential tenant has asked for a 10% discount.
How would I structure the discount?
I would offer the discount as a rent free period at the beginning of the lease, so that on paper the building is showing a rental return of the full rent amount. ie Say the rent is 60,000 a year, I would offer the $6,000 discount as 6 weeks rent free (actually $6923 discount) on the basis that they sign up for an extended lease period & provide a bank guarantee that they can pay the rent for the lease term.
Why? After the first 6 weeks the rent is being charged at $6,000 a week (not $5,400) so the value of the property is maintained, if you were to discount the rent you would be reducing the value of the property. By asking for a longer lease, with rent to increase annually with the CPI you are securing a long term tenant for a good return, which will add value.
That is very clever and a good way to preserve the value of your property whist also making it more attractive to potential tenants.
that's a great point