Landlords seldom want to hear about new vacancies at their properties. But when they do, they have a choice to make – wait with bated breath for one user to come along and occupy a large block; or opt for sometimes several smaller tenants to fill the same space.

That decision depends on the building’s class and location, the landlord’s balance sheet, and the image the property owner wants to convey with the building’s use.

Most landlords would prefer to have cash flowing in immediately, unless the transaction negatively affects the building’s value, according to industry professionals.

“We’re looking for anybody that is willing to pay the rent,” said Douglas Porter, president of the Begley Cos., which primarily offers space for manufacturing and distribution businesses, an industry hit hard by the recession. “It’s just brutal. You have to get some warm bodies. It’s a buyer’s market.”

Porter said his 10-building North Woburn Industrial Park, totaling some 600,000 square feet, is about 30 percent vacant and currently has vacant spaces ranging in size from 3,000 square feet to 50,000 square feet.

“We have some big holes right now that we’re a little worried about,” Porter said. “The startup [companies] are where we’re looking right now, as risky as it may be … The problem is the bigger tenants just aren’t around. I’d rather take four, 2,500-square-foot tenants than I would one 10,000-square-foot tenant right now. You can afford to lose one out of the four, but if you lose that one big one, it really hurts.”

Risk vs. Reputation

But that old-school approach of making cash flow the top priority is often countered by Class A office tower owners opting to hold out for a large, deep-pocketed tenant. Once a landlord takes on smaller tenants in a space, with each lease likely expiring at a different time, it excludes a property owner from having availability for a marquee, anchor tenant, according to Gregory Vasil, CEO of the Greater Boston Real Estate Board.

Willingness to subdivide large blocks of space to accommodate smaller tenants comes mostly from owners of less desirable Class B and C properties more anxious to fill empty space and generally more comfortable with smaller tenants, Vasil said.

Location is also a critical factor – as it always is in real estate. In downtown Boston, areas like Downtown Crossing and North Station are heavy on smaller users. But the Back Bay is populated by many big users in Class A trophy properties, with the clout to attract the big bucks.

“The less desirable buildings are more at the mercy of the market to fill the space,” Vasil said.

With rents low in many assets other than trophy properties, if a landlord locks in a five- or 10-year lease now, they could be undercutting their building’s value. But given the current landscape, many owners are more worried about filling their rent rolls than about increasing their asset’s value, according to Stephen Brodsky, chief operating officer for Synergy Investment and Development.

“Today’s environment is more about cash flow than about investment returns because rents are at a low level,” Brodsky said. “You’re just hoping to cover your expenses.”

If owners are locked-in at today’s rents, they could miss a potential upswing in prices in coming years as the economy recovers. That has led tenants to try inking agreements for longer periods now, while landlords are pushing for shorter terms, according to Brodsky.

“However, most tenants are making decisions purely based on their business and space needs, rather than the rental rate,” he added.

Planning For Tomorrow

Firms with rapid growth, like biotech startups, are “definitely” looking for shorter terms, because they often experience substantial growth in a short period of time, Brodsky said. About 10 percent of the tenants Synergy deals with are those types of startups looking for anywhere from 2,000 square feet to 15,000 square feet Brodsky said.

But biotech and other types of specialty tenants aren’t always a safe bet. Typically in the high-tech field, substantial additional funds must be spent to upgrade space to accommodate the company’s niche. According to Brodsky, many landlords are unwilling to commit to the extra spending.

“It really goes case by case and landlord by landlord, and where the space is in the building,” said Joe Sciolla, managing director for CresaPartners in Boston, regarding office towers. “The high-rise and penthouse floors have the lowest vacancy, and in some buildings those rents are increasing. The mid-rise and low floors have higher vacancy and rents are dead flat. Landlords are going to pretty motivated to take any size tenant in the mid and low rise portions of their building because over the next couple years those are going to be the toughest places to get leased.”

One firm is now gambling on a strong recovery in the local economy to create demand from smaller users. Nationwide office owner Equity Office Properties (EOP) is investing $7 million to build shell space prior to signing tenants in about 300,000 square feet it owns in Boston and the suburbs. Andrew Maher, managing director for EOP in Boston, said smaller tenants tend to need space sooner, so the firm wanted to compress the process to make its space enticing for smaller users.

“This is not a strategy typically used in Boston,” Maher said. “It’s a gamble. We’ll have market-ready, move-in condition space complete the end of this month.

For example, a recently finished, 18,000-square-foot floor at 100 High St. could potentially be subdivided down “to virtually any size,” Maher said.