One of the significant problems in a commercial real estate team today is the lack of goals or the focus of individuals on previously set goals. Goals are commonly set by the team leader for both the team and the individuals on a yearly or quarterly basis. In many cases the personal goals are simply a ‘wish list’ that never really gets activated. At the end of 12 months, the goals have simply not been achieved and the salesperson has not changed their personal performance. So everyone heads ‘back to the drawing board’ to set new targets.
The reasons salespeople should be setting their personal goals is to give some firm targets to aim at and strive towards. Goals should never be a ‘wish list’ that is relegated to the bottom drawer of the desk and only to be taken out when questions are asked.
Commercial real estate sales and leasing is a result driven industry and career for those that are prepared to work hard. It is certainly not and industry for the feint hearted. Constant focus and continual action are critical parts of personal improvement and results.
Most salespeople and agents will understand the focus on listings and commissions; they will not however change their habits to generate more listings and commissions. That is the reason why so many salespeople struggle in difficult markets and move from agency to agency looking for the ‘pot of gold’ at the end of the rainbow. The answer ‘lies within’ as they say.
The real purpose of establishing goals is to set some clear perspective on where the salesperson can head if they take consistent and relevant action. Goal setting and goal management really does work providing you give it the due regard and focus that it requires.
Here are some rules to the process of goal setting in commercial real estate today:
- Understand your local property market and the possibilities that it provides. There is no point focusing in a market segment that has no future or opportunity. There should be plenty of listing opportunity available for your choice of property and choice of market. Get this information sorted and defined before you continue.
- Define your market geographically on a map. Set the boundaries that you want to work within based on the major highways and any of the main roads. Inside the relevant area you should have sufficient listing stock that is easily identifiable.
- After you have defined your market geographically, look at the history of the area relevant to the property type. Research the sales and leasing activity that has occurred over the last 5 to 10 years. That research will show you trends and opportunities for the future; it will also show you the players or property owners that are active at various times.
- Having satisfied the previous three points, it is now time to decide exactly what advantages you bring to the market in and with your property specialty. Why are you different? What can you do for your client that is relevant and important? Are you better than the other agents in the area, and if so why?
- Providing all of the above points are ‘in balance’ and suitably positive, you can now set some clear goals and targets. With due regard to the history of the area, you can set some targets around quality listing stock, exclusive listings, time on market, and commissions. Have a serious look at the quality of property that you can work with. Quality listings bring in better enquiry in any market; for this reason you need quality properties that are controlled by you or your agency on an exclusive listing.
- All of your goals should be quantifiable and easily tracked. Each few days and certainly at the end of each week you should be revisiting your goals to identify how you are progressing. In most cases many salespeople need to adjust as they proceed in their goal management plan. The road to success requires effort and change. Be flexible and be open to adjustment.
The process of goal management and goal targeting is one of the best ways to get salespeople on track. Expect the entire process to take personal effort and real focus. After approximately three or four weeks of hard work, the whole thing gets a lot easier and results start to come in. From that point onwards you know where you are heading and how it’s occurring.
In commercial property management, the process of income improvement is fundamental to the performance of the asset for a property investor. There are many ways the income for a property can be improved; the greater number of tenants in a property, the easier the process is. If you have a single tenant, then your options are limited.
When the property market is slow and tough, the income from the property is more important than ever before. The basic rule is to minimize the vacancies within the property and to optimise the occupancy given the available tenancy space.
Here are some further ideas for property managers to improve property income for the landlord.
- Selecting the right tenants for the property will always be an important factor in the leasing strategy overall and the property management process for the property. In an ideal world, you want tenants that can bring you both stability of occupancy and good business profile. High quality corporate tenants bring an identity to the property that may also attract other tenants to your other vacant tenancies if and when they arise in the same building.
- Rent review terms and conditions are created in and from the initial lease negotiation. To a degree, they will be shaped from the pressures of the particular lease negotiation. The lease negotiation will then be influenced by the prevailing market conditions. All of that being said, the rent review terms and conditions should be suitably shaped to improve the landlords position and rental income. Many agents and property managers choose to use or negotiate a rent review profile for a lease that is indexed to the growth in CPI. In most cases, this process only has benefit to the tenant given that the rent increases in a limited way. It is better to target rent reviews that are established to a more substantial rental increase for the landlord; that can be through a fixed percentage increase, or a fixed amount increase. Market rent reviews are also useful and worth considering, although it does depend on the property, the location, supply and demand of vacant space, and the prevailing market conditions. In the case of a property that is only average in location and presentation, it is better to choose less market rent reviews and more fixed increases. The income from the property is therefore more predictable.
- Options are useful when considering the leasing of a property. It is always wise to remember that lease options will tie the property up for a number of years beyond the initial term. Options for renewal can remove some elements of control from the landlord, and on that basis they should only be used where the landlord feels totally comfortable with the process of giving the tenant an option for a number of years. In older properties that face redundancy this can be an issue.
- Extra rental areas can occur in any building. They may be created for storage, signage, and the use of special areas in the common zone of the building. The extra rentals may be established on separate licence documentation.
- Vacant space optimisation should always be considered. A creative property manager or leasing manager will look at the variations of occupancy and how vacant space can be fully leased at a top rental. Other tenants in the property may be candidates for taking up vacant space if they need to expand.
- Tenant retention plans will help you keep the right tenants within the property. You will also help you identify those tenants that should be moved on at the end of lease occupancy and expiry.
A commercial or retail property today requires creative thinking when it comes to income optimisation. There is a fine balance between charging too much rental and charging the right rental. If the balance is not achieved, you can finish up with excessive vacancies within the property and a lack of potential tenant enquiry. This is where an experienced property manager or leasing manager can provide the knowledge and experience to a landlord. Watch the property market and the properties that you compete with; the tenants that are out there are doing the same thing.
In today’s marketplace the Real Estate Agent needs to be technologically supported as both an individual and an office. Good database software is the only way to support ongoing customer relationship management and control your accounting processes.
Whether your office is focusing on property Sales, Leasing, or Property Management, you will need database software to support your activities. If you diversify further into the disciplines of business sales or commercial, the needs of your database software will need to be further enhanced to satisfy the unique conditions and activities of those transaction types.
Before we go further with this topic, we will say that you need to be very comfortable with using computers as regular business tools for your business today. The more that you do this and the more effective you are at it will be critical to your future real estate success.
So what Database is Best?
Essentially there is an array of database software alternatives available. These can be generally acquired through retail outlets or by purchasing online. Most of these generically available products are very good software packages but have not been specially shaped for the Real Estate industry.
This then means that you must spend some time on the software to shape it to your particular needs. In most cases this will not be a problem for the person familiar with software technology and computers. If however this is an issue for you, then you’ll need to seek expert assistance from a consultant to install and shape the software for you.
A good choice of software for your database will save you time and help you keep on top of the opportunities. This means more clients and commission.
You will need software that tracks the prospect and the series of interactions that you have had with them. The software will, at the most basic end of the usage spectrum, also need to:
- Mail merge to letters and emails
- Integrate with ‘Microsoft Outlook’ or your email client
- Integrate with your mobile phone synchronization
- Create diary recalls of critical issues and the next contact event
- Contact detail
- Property detail
- Recording of all correspondence
- Allow you to classify the prospect to the type of property they want or have, and their capabilities and needs in that regard
- Allow you to make notes of conversations and meetings with the person
- Flag urgent and critical issues of response or opportunity
Commercial real estate is similar to other types of property in that you must logically and consistently work your territory. Your success in the process will give you greater listing opportunity and future deals. This will have immediate impact on your income and your success. This says that you must therefore be diligent and logical and how you approach territory management and control. We call the territory your ‘patch’. In controlling your territory, you must do so geographically street by street, so that you do not miss any properties or create any ‘black spots’ or ‘holes’ in your information. Many agents and salespeople have had situations where they have overlooked a simple small property in their canvassing processes only to find another agents board on the property offering it for sale or lease. Nothing can be more frustrating than seeing another agent’s signboard located inside your geographical area and a street that you canvassed last week.
Your Canvassing Object
In the territory that you work you will be optimising your commercial real estate awareness and knowledge of a number of property matters.
They are –
- Existing businesses
- Vacant land
- Redundant properties
- Development sites
- Property zoning areas and policies
- Owner occupiers of property
- Investor property owners of property
- Tenants occupying property
- Allied professional property related groups and people (solicitors, accountants, engineers, architects, quantity surveyors, valuers, town planners)
- Local Council Planning officers
The list is not finite, and can be improved to the specific nature of your region. To get thing started, firstly every major property in your territory must be high on the agenda for identifying ownership details and location. When you have this detail you move to more secondary property, and after this has been secured you will then get the detail of all remaining property through your region. It pays to get quickly active in the known property ‘hotspots’ such as industrial parks, and office business precincts, so that you can find to ‘hot’ listings before they go to other salespeople or agents.
Mapping and Planning
The best way to control your long term activities is to get a street map of the area and then work the geographic location in stages. Essentially you need to understand your area in great detail and have a solid awareness of the following matters –
- property ownership
- tenants and decision makers therein
- property zoning and potential changes there to
- property prices by property type and region
- property rental by property type and region
- property outgoings by property type and region
- lease detail and tenancy detail for all major and targeted properties
- a lease expiry profile for all major buildings and for the region
- regional business demographics
- regional population demographics
- regional economic demographics
- road changes and major traffic flows
- other competition properties and listings
- other agents in the area and their listings
- recent sales results in the area
- Details of properties that have been sold approximately three years ago and beyond, as these are the next properties that will enter the sales arena for disposal.
- Details of properties that have been leased approximately three years ago and beyond, as these are the next properties that will have a need for leasing services.
- Details of property owners that bought property about three years ago in the region as they are most likely to be sufficiently cashed up to acquire again soon.
This information will help you understand future opportunity and position your services such as sales, leasing, and property management.