Why Commercial Landlords Require a Landlord Deck and What to Include
When applying for a commercial lease, potential landlords often require a brief business plan presentation known as a landlord deck. The landlord deck will be submitted with the lease application and is similar to a pitch deck in that it is an abbreviated version of your business plan, typically presented in slide format. In order to create a landlord deck that improves your odds of lease approval, it is important to understand why landlords require it and what needs to be included.
Why a Landlord Deck is Required
There are three main reasons that a commercial landlord requires information about your business:
1. To fully understand the purpose and commercial activity – Landlords want to know that their property is being used appropriately and this starts by understanding what your business does and how the land or building will be utilized. It also allows them to ensure your business will not interfere with any existing tenants or other property owners, individuals, or activities in the area.
2. To confirm the business can pay the rent – As with any rental or lease arrangement, landlords need to ensure that they will get paid. If your business has already been in operations, in addition to the landlord deck, they will also check your business credit. They may also view your personal credit, especially if the business is new.
3. To ensure other terms of the lease can be met – Unlike residential lease terms, which tend to be for a year, commercial leases are typically for longer durations–usually 5 to 10 years or longer. In addition to feeling confident that you can pay the rent, landlords want to know that you are likely to stay for the duration of the lease. In order to protect themselves, they will often impose steep penalties if a lease is broken early.
What to Include and Why It Matters
Every landlord deck will be a little different but they should all include these fundamental elements.
- Business Description – A brief overview of the business, including what it does, how it does it, and size.
- Industry & Market Analysis – An overview of the size as well as trends in the overall industry and specific market. This gives landlords peace of mind that there is an appetite for your product(s) or service(s). This should also include information on relevant competitors.
- Marketing Plan – Your business can’t succeed if you can’t reach customers, so landlords like to see that you have a reasonable plan to attract initial (if applicable) and continued business.
- Management Profiles – Background and information on top management. The best business plan in the world won’t be successful if it’s not executed properly, so landlords want to know the business is in good hands. This also gives them an indication of the people they, or their representatives or employees, may deal with.
- Floor Plans/Use of Funds – Commercial spaces are rarely turnkey. They often require remodeling (a.k.a. leasehold improvements) to some extent in order to be functional for the new business. Landlords need to know how you intend to materially change the space as well as how you will invest your funds to do so.
- Financial Projections – This is arguably the most important part of the deck. If your business has already been in operation, you will include prior actual financial results. The actuals, if they exist, along with industry and market analysis, will help project future financial performance. This is one of the most relevant determining factors in whether landlords believe your business is likely to afford rent and stay in business for the duration of the lease.