Back in the early ‘80s, a small company that deals in aircraft parts was the first tenant in the first commercial building my dad built. It wasn’t long after they moved into that 5,000 square-foot space that the building department came down on them for installing a pre-fab two-story racking system without a permit.
Dad wanted to help this tenant, so he put me on the job to get things straightened out.
The racking system came from a company in Germany. I had to find someone who could read the specs, and then I managed the project to make sure the two levels, the stairs, and the electrical all met code. In the end, we satisfied the occupational license people, and the tenant went on to incredible success and growth.
I’ve learned through the years that taking care of tenants is the best way to earn their loyalty. The aircraft parts company is a perfect example. I invested a little time and effort into that project. But the ROI is a 35-year relationship with the tenant and a personal role in the evolution of their business.
The son of the company’s founder now runs the business, and I’m still doing what I can to help him grow. As a matter of fact, the business outgrew its original 5,000 square feet, and we are working to get them into an adjacent 5,000 feet so they can double their footprint.
It took me a long time to realize it, but owning commercial real estate makes me more than just a landlord. When I work with business owners to help them achieve their goals, it’s like I’m running my own version of a business incubator.
That’s one of the reasons I “accidentally” became the co-founder of a startup company in late 2017. I was looking for a simple app that would help me keep track of leases and free up my time to focus on the bigger picture.
When I couldn’t find what I wanted, I started talking to my friend Taj Adhav about what it would take to build a solution. Taj has been part of a few technology startups, including one that sold to Google. So we combined his startup background with my real estate expertise and then put together a team of really smart people to launch Leasecake.
Now I’m not just a co-founder of the company – but I also use the technology every day to help run my commercial buildings. Because the more information I have in the palm of my hand, the more I can do to make life easier for tenants.
Turning Tenants into Landlords
We do a lot of hand-holding for tenants, especially when it comes to things such as build-outs. I help people when they want to add more office space or expand into additional square footage. It all ties back to what I said earlier about taking care of these businesses and doing whatever I can to help them grow.
Even if that means losing one as a tenant.
A lot of businesses lease space with the thought that it’ll be a short-term thing for a few years until they buy a building. But for them to find an existing building and come up with the down payment – well that’s just about impossible when all the cash is tied up in inventory.
But now and then, one of these growing companies manages to make it work. One tenant came to me about 15 years ago and said he figured out that he could swing buying his own building.
He’d been a tenant for about five years, and I hated to see him go. But I liked the guy and wanted to help him succeed, so I shared a lot of knowledge and walked him through the process.
I’m a real estate broker, so I helped this tenant buy a lot in a 30-acre park I was developing that was zoned for what he wanted to do. I worked on the site plan and mapped out his building. When he met with the contractor, I sat in those meetings and offered tips on what he needed to do and what to avoid.
The guy’s plan was to build a 20,000-square-foot building. He wanted to use half of it for his business, and rent out two 5,000-foot bays on the other side. He didn’t know how much to charge tenants or anything like that. So I shared rents with him, gave him my lease form – and got him set up to be a landlord.
To me, that seemed like the right thing to do. I had years of experience to draw from and all my dad’s history. When I can use that to help a tenant grow, then it just makes sense. Every business owner dreams of growth and expansion. Being part of making those dreams come true is one of the best parts of my job.
We’re All In This Together
In this business, it’s not always possible to perform due diligence the way big companies do. Usually all I have to go on is a feeling and a handshake.
Luckily, it pretty much always works out.
I’m willing to take a risk on the guy who’s been making widgets out of his garage and wants to go to the next level. I’ve worked deals where I dropped the rent by 50 percent for six months just to help someone get into the right space to grow their business. Then I’ll step it up to the street rate after six months.
It truly is a case-by-case basis. Sometimes I might have someone in a space at six bucks a foot for a long time even though the street rate has gone up to 10 bucks. Well, I’m not suddenly going to bump up that tenant by four dollars. I’m not even going to escalate the rent by 10 percent. That might put him out of business.
And I have to sleep at night.
When the downturn happened in 2008 and 2009, probably half my tenants called and said they wanted to talk about adjusting the rent.
So I worked with them.
Now look, I don’t want to sound like I’m Jimmy Stewart in “It’s a Wonderful Life.” Sure I want to be fair and help people. But it goes both ways. I also knew something was better than nothing during the financial crisis. If I lost a tenant back then, there was no way someone new was going to take that space. So I met with each of those folks and came up with a deal that worked for both sides.
We created a lot of loyalty during that time.
My recipe for success in commercial real estate is to be fiscally responsible, treat people right, and be prepared to jump in and do whatever it takes to get things done.
That might sound a little old-fashioned. But it worked for my dad, it’s been working for me, and it’s what I recommend to anyone else getting into the business.
Jim Bankston owns and operates commercial real estate properties in the Orlando area. He also is the president and co-founder of Leasecake, an online platform that makes lease management simple, secure, and satisfying.