Real Estate Property Asset Management Practice Test

When an industrial tenant signs a longer lease, the property owner may consider lowering the rent. This might occur as part of the negotiation to secure the long-term commitment from the tenant. A longer lease can provide stability and predictability in cash flow for the property owner, which may influence the decision to offer a reduced rate. By lowering the rent, the owner may make the property more attractive and competitive, facilitating tenant retention and minimizing potential vacancy periods.

In some scenarios, lowering the rent can be a strategic choice to ensure the tenant remains in the space long enough to justify the lower rent through stability and continuous occupancy. The long-term lease effectively locks in the tenant, which may lessen the risk of future vacancies, making it a calculated risk worth taking for the property owner.

In contrast, withdrawing concessions usually indicates moving towards a stricter lease arrangement and may be counterproductive if the intention is to maintain a good relationship with the tenant. Increasing the rent may deter the tenant, while amortizing the mortgage over a shorter term does not directly relate to the lease terms negotiated with the tenant.