Vacancies up, rents down. Commercial leasing has been having issues for almost a decade. Years ago, many co-ops and condos relied on rental income to balance budgets, but rents today are not what they were many years ago. There are more vacancies, and buildings are having trouble bringing in quality tenants who are going to sign those five-, seven- and 10-year leases we used to see.
Three budget options. With a tighter rental market and lower rents, what are your options to create a balanced budget? In the short term you could tap into the reserve fund, using it as a float for a few months while you try to fill the vacant commercial space. But if you still haven’t found a tenant three, four, five months down the road, a temporary assessment is a reasonable next step. If you can’t find a tenant for an even longer term, it might be time to increase maintenance or common charges.
Case by case. The solution depends on the situation. You’ve got to balance the budget, so you’ve got to be realistic about how long you think the shortfall is going to last.