Your Lost Deals Are Telling You Something

One of the easiest things to do in commercial real estate is forget about a deal as soon as it dies.

The tenant passed. The buyer went somewhere else. The landlord couldn't agree to the terms. Fine. There are always more prospects, more properties, and more deals to chase. But I think we're leaving valuable information behind when we treat every lost deal as nothing more than a loss.

A rejected deal can still tell you something about the market; the trick is figuring out whether you're looking at a one-off rejection or a pattern.

Imagine you own a shopping center and over the course of a year, ten different tenants look at one of your vacant spaces. You hear the same variation of "not quite right" several times, but everyone gives a slightly different reason. One tenant thinks the rent is too high. Another doesn't like the parking. Someone else needs better visibility from the road. Eventually, a few of those objections start repeating. At that point, you're not just collecting rejection emails, but also market intelligence.

Maybe the asking rent really is too high. Maybe the space is fundamentally difficult for the types of tenants you're targeting. Or maybe you've been marketing the property to the wrong category of tenant altogether. Those are very different problems, but you won't know which one you're dealing with if every rejection gets filed away as "they went somewhere else." This is especially useful because tenants don't always tell you what you want to hear.

A prospective tenant might politely say the space isn't a fit when the real issue is that their projected sales don't support the rent. Another might say they're putting their expansion on hold when they've actually found a better location across town. You can't necessarily take every explanation at face value, but if you hear similar objections from enough independent tenants, the pattern becomes much harder to ignore.

The same principle works on the development side.

Suppose you're trying to attract a particular type of tenant to a new project and keep hearing that the trade area isn't quite there yet. You could keep making the same pitch for another twelve months, or you could ask what those rejections are telling you about the project. Perhaps the tenant demand exists, but the timing is wrong. Perhaps the site needs another use to establish traffic first. Perhaps the tenant you're chasing isn't actually the right first tenant for the development.

This is one reason I think the process of tracking tenant demand is so important. It's not enough to know which tenants are looking for space today. Over time, you want to understand what they are looking for, where they are looking, what they're willing to pay, what causes them to walk away, and how those answers change.

That information starts becoming incredibly valuable when you have enough of it.

A landlord who loses one tenant might have a problem. A landlord who loses twenty tenants for the same reason has a dataset.

And that dataset can change the way they price a space, position a property, approach prospective tenants, or even think about the highest and best use of the real estate.

There is also a useful lesson here for tenant representatives and developers: don't just record where a deal landed. Record where it didn't land and why. The locations that consistently lose deals may reveal just as much about a market as the locations that consistently win them.

At Sytes, we're naturally focused on helping connect tenant demand with available real estate, but I think the bigger opportunity is understanding the demand itself. Every search, requirement, conversation, and ultimately every deal that doesn't happen adds another piece to the picture.

The best market intelligence isn't always found in the deals that closed, sometimes it's sitting in the pile of deals you lost.