In commercial real estate agency you will get enquiries for properties coming to you each and every day. Some of those enquiries will be genuine whilst others will be phoney. With practice you can pick the phoney ones quite easily.
The golden rule in taking telephone enquiries for your listings is that you do not give out information without the full details of the person who has contacted you. You should also limit the information that you give over the telephone, so that you can encourage a meeting and fuller property detail later.
Some of the people in our industry are not particularly ethical or honest. Anything you say can be used later to some advantage; limit what you say on the telephone. Meet the people first.
So why would someone make a phoney property enquiry? Here are some of the common reasons:
- The most common problem is with other agents checking out the listing and the property details.
- Adjoining owners wanting to know more about the property just to compare it to their property.
- Other property owners wanting to get details so they can put their property on the market at more favourable terms and conditions.
- Business owners or tenants wanting property details so they can negotiate with the property owner direct at a better deal.
From this short list it is easy to see why exclusive listings in our industry are so important. With exclusive listings you can control the enquiry, the client, the property, and the negotiation. If by contrast you have an open listing, most control is gone. With an open listing you are relying on the ethics and honesty of the client; you are also relying on the strength of you agency agreement. If your agency agreement has ‘holes in it’, expect the client to find them and perhaps avoid paying commission.
So what do you do when someone makes a telephone enquiry about a listing? In simple terms you ask questions and note the answers. You never know when those answers will be required to take matters further. Here are some ideas to use in taking enquiries:
- If the person has a number displayed on your telephone as they speak to you, write the number down.
- Get a name and a telephone number from the person at the start of the conversation.
- Ask them how they found out about you and the property.
- Find out what they are looking for and if they are coming to you from another local property.
- Within reason, limit what you tell them about the property, so you can encourage a meeting on site or in your office.
- If the property and its detail are sensitive, tell the person that you will require a confidentiality agreement to be signed before much more detail is given.
- Get an email address so you can send them a brochure.
- Ask the person if they will allow you to keep their details in the database for ongoing contact.
- Get a meeting established.
Keep control of the conversation and your listing. If the other person is not free and open with you, limit what you say and provide across the telephone. Keep records of all telephone enquiries and use them in conversation with the client as a market update and part of marketing feedback.
Many property investors are attracted to investing in industrial property because it is easy to understand. The tenant, the lease, and the property are quite straight forward from an investment perspective.
It is also worth noting that many commercial real estate agents ‘cut their teeth’ in the industry by working firstly on industrial property sales and leasing. The basic nature of the property is easy for them to grasp and negotiate on.
Some commercial agents will like the industrial property type so much that they may stay with the segment of the market and become true ‘specialists’ in an area. If that is the case they will usually rise to the higher end of industrial property sales and leasing in both size and value. There are plenty of large companies and industries looking for specialised assets for the business growth of their company.
So here are a few more observations about industrial property today:
- Take care when it comes to industrial properties that are created for a specific industrial use and tenant. They will generally have a high liquidity factor and be hard to move when the property is to be sold.
- Special purpose or single purpose industrial properties will be difficult to lease (or sell). As a case or example in point, large cold storage industrial properties are so specialised that an investor would (or should) want a high yield and long lease with a ‘blue chip’ tenant before the property was considered a wise purchase.
- This property type is usually the first to be impacted when the national economy and business sentiment is under pressure. That being said, industrial property is usually the first to respond when the economy is improving.
- The premises and buildings are easy to manage. The leases are basic and straight forward in most circumstances.
- The rental structures in industrial premises are usually a type of net rent. The tenant will usually pay most if not all outgoings.
- Capital expenditure in an industrial property will be impacted by property use. The property owner should get a depreciation schedule of all capital items so they can plan the larger expenditure of capital items that may arise in the future.
- The zoning of the property and premises will have direct impact on use and therefore tenant occupation. Ensure that the zoning offers sufficient flexibility for property occupancy and returns.
- Industrial premises are frequently a single tenant and single occupancy issue. The facts are easy to understand and tenant mix is not a problem as it would be by comparison in a retail property.
When you look at overall property performance, consider the growth potential in rental as well as the growth in capital appreciation. The two factors are not always linked and may be impacted by locational factors.
When a commercial property manager takes on a new lease and property to manage, I usually tell them to spend a good deal of time reading the leases before they form an opinion about the property and the tenant mix.
The fact of the matter is that any and all leases in the one property will be different from each other. Critical dates, definitions, and terms and conditions will all have an impact on the way things are done. If there is to be a lease default by the tenant, the first place to go for information is the lease.
Here are some of the main factors to look for when it comes to handling a dispute and default with a tenant.
- The definition of lease default will be in the lease and it will go on to say exactly when and how you (as the landlord’s property manager) can take action to remedy the breach or default.
- As to when you can take action will be important, as it will have bearing on legal relationships between the parties.
- Look out for the relative legislation or laws that can also impact the lease, the tenant, or the landlord. Sometimes laws will interact with the lease documentation and the default event.
- Who can take action and how will vary depending on the lease. Read it to know what can occur.
- Time for the default notices to be served will be set out in the lease clauses. There may also be factors of ‘time is of the essence’ when it comes to notices between the parties. When in doubt get a good solicitor to advise you based on the existing lease between the parties.
- In most cases the tenant should be given a reasonable chance to remedy the breach. Legal precedents may have an impact on what time frame is acceptable for the remedy to occur.
So all of these are very good reasons to read the lease comprehensively when you first take on a new commercial property or property management client.
When something goes wrong in a property, the first place to go is the lease. Read what it has to say; invariably the answer needed will likely be in the lease.
You can get more tips for commercial real estate managers and agents in our Newsletter right here.
A retail shopping center is a business within itself. It is a cash flow produced from the tenancy mix and the customers to the property. The shopping center manager and or shopping center leasing manager should be well versed when it comes to optimizing the performance of the property.
A successful shopping center is a fine balance or equation when it comes to the following issues:
- The rental for the property produced from the existing leases
- The minimization of vacancies across the property given the existing tenancy mix
- Market rent reviews that are negotiated as part of ongoing occupancy
- Lease renewals with the high value tenants that you have chosen within the mix
- Stabilization of anchor tenants and their interaction with other tenants across the property
- The renovation and refurbishment strategies that apply to the common areas, tenancies, and exterior building.
With a focus on the last point in this list, you can easily be seen that renovation and refurbishment is a critical component of retail property performance. The wear and tear factor that applies to a retail shopping center is much higher than a commercial or office building. This then says that the shopping center needs to be carefully managed when it comes to appearance, renovation, and the overall shopping experience.
People shop for just two or three reasons. Those reasons are:
- Requirements for their necessities of food, convenience, and clothing
- A feel good experience when it comes to buying the discretionary items of life
- Goods and services required to replace worn out items
A shopping center therefore has to have a mixture of tenants that satisfy all three needs. The tenancy mix within a retail property is therefore critical to ongoing customer interest. A retail property without customers will die very quickly.
Taking all of these things into account, the renovation strategy that you adopt for the Retail Property should be woven into the intentions of the tenancy mix, lease renewals, new tenants, and customer spending patterns. Here are some rules to the process:
- There will be better times of the year to renovate the property. Understand the patterns of the shopper as they apply to shopping throughout the year. These patterns will help you understand the best times to undertake renovation. It may be that renovation is only partially undertaken in different zones of the property as the year progresses.
- Prior to any renovation commencing, communicate the fact to the broader customer community and tenants. Let them know what is going on. Send flyers through the tenant customer sales activity, as well as the local mailing distribution lists.
- The renovation of the tenancy should be well publicized and well marketed. If you know the replacement tenant to move into the renovated area, put that information on to the surrounding billboards and protective hoardings.
- As part of refurbishment, you may wish to change the size of tenancies and or the type of tenancies. This therefore becomes part of the overall business plan for the property. Plan the clustering is of tenants around particular zones and traffic areas. Take special care when it comes to the entrance ways to the property given the image that renovation and refurbishment can have at the entrance way.
- It is normal for a landlord to justify the renovation of a property based on increased return. That return will normally come from an improvement in market rental. Market rental will only increase if you create more tenancies, renovate on a rising market, or bring new tenancies into the property that are of high quality and cash flow. Be very careful when it comes to the expectations of tenant and income profiles over the coming financial period after innovation. Many a landlord has made a mistake when it comes to income expectations.
All of this then says that the renovation or refurbishment can occur providing you balance the tenants, customers, leases, and seasonal sale patterns to the renovation requirement. Plan the process, and everything should do quite well.
You can get more tips like this in our Newsletter.
It is a common event that some agents will be hard pressed for commercial real estate listings during a working year. The problem develops when you are not prospecting correctly or enough.
The knee-jerk reaction is to go and get more listings and most particularly anything that you can find. That is a big error; quality is the key to the process. If you want to be a top agent, you must have quality stock. Don’t waste your time on low quality listings.
Here are some tips to help you with your listings and the prospecting process for them:
- It doesn’t really matter that you have only a few listings. What matters is the quality of those listings. Quality can be many things but it usually relates to price, rent, location, availability, and improvements.
- I have seen many if not most top agents earn more money from fewer transactions each year. This means that they are very selective to what they work on and when.
- Look at the cycle of the property market in your area. Most markets will have a pattern to them. Commercial and retail real estate will usually cycle in and out of the market every 5 to 7 years. This is because the property investor or property owner needs to change. This then says that you should identify those properties that were bought about 4 years ago. They will be the next properties to come back into the market.
- Every time a competing agent puts a signboard on a listed property, use that listing as the chance to talk to nearby businesses and property owners. Those nearby people may be seeking to compete with the other agents listing. You are best placed to help them.
- The property market today will have trends when it comes to property choice. As you advertise and promote more local property you will soon see what properties are desirable. Selective prospecting will then be a priority.
Many times I have had agents ask me about best ways to get the details of property owners and make contact with them. There are no easy short cuts to the process. The best way to prospect is to consistently make it a part of your daily diary. Two or three hours are what is required. When you devote the time you will get momentum and that will eventually bring results your way.
You can get more tips for listing commercial real estate in our commercial real estate agent newsletter right here.
Today your efforts as a top commercial real estate agent just have to grab the attention of the market. You must prospect with system and effort. In this way you can build more opportunity around you in listings and clients.
There is no point in being the best local agent if the market knows nothing about you. You might be the specialist that everyone needs today, but the message has to get out to the people that need you. Your personal marketing plan has to do this. It is an ongoing process and effort, but the rewards are there for the agents that work hard at it.
Here are some prospecting tools and systems that will help you in commercial and retail real estate agency today.
- Previous sales in the area are a great source of opportunity today. What you do here is to go back in time to about 3 years ago. Look for the sales and lease deals beyond that point. They are going to be (on average) the next transactions to come into the market. Commercial real estate is built on a cycle of ownership and leasing. Work out what the cycle of time is and prospect in front of the cycle.
- Other agent’s boards give you the opportunity to talk to local property owners in the immediate vicinity of that board. They may like to compete with the current listing. They are more likely to do that with a competing agent such as you.
- Your signboards will build profile across the market. Make sure that your name and contact details are on as many boards as possible. Ensure that all your exclusive listings have special signboards of high quality. Standard signboards should only be used on open listings.
- Business owners locally know more about the area than you do. Get to talk to them and see what their property needs are. Ask them about the business and property changes locally.
- For sale by owners are always targets for us. In most cases these owners should be left to struggle for some time until they feel the pressure of the market. The fact of the matter is that most buyers and tenants would prefer to deal with an agent as part of any negotiation on a property.
- Cold calling and door knocking is a daily requirement in our industry. Make sure that you devote 3 hours to the process every day. I will say that many agents hate it for a variety of reasons; this makes it better for the people that can do it.
- Use a good database software program to capture your contact activity and plan your email newsletters and ongoing call contact.
All of this takes systems on the part of the salesperson. When you get these things under control, the property market starts to open up for you.
As a commercial real estate agent today, you need to grab your share of the commercial real estate market and optimize it for listing and commission opportunity. The business is out there for those that work hard.
It is no secret that the competition with the other agents that you are up against will be significant and fierce. That being said, you need some solid processes to consolidate the market around you and provide you with quality leads and listings.
Here are some facts that you need to be aware of when it comes to working in commercial real estate agency today and building your market share around the competing agents.
- There are always plenty of people to talk to on a daily basis that need your services. Systems and discipline are part of the process when it comes to connecting with your local property market, and growing the database. Devote at least 2 or 3 hours each day to connecting with new people in your local area.
- It is very difficult to capture a share of the marketplace when you don’t specialize in a property type and location. There are far too many agents that are generic when it comes to property specialty and location; they will take on anything as a listing, and usually do only an average job with it. That is not how top agents perform; they develop a specialty relative to the location and the quality of property that they can relate to. They then build their brand around that specialty. That being said, you must ensure that your special property type has sufficient activity and listing opportunity over the long term for you to earn the commission that you require.
- It is a known fact that most (80%) salespeople in any industry are fairly average when it comes to performance and systemization. Commercial real estate is no different. That creates a massive opportunity for those commercial salespeople that are striving to rise to the top of the industry. Expect hard work as you proceed through the industry, and systemize what you do.
- When you look at your location and daily tasks, there will be two or three things that are really important to helping you build your client base and listing opportunity. Those two or three things should be done every day. Nothing should interfere with those key tasks to help you improve your market share. Most agents in the industry struggle through a series of peaks and valleys relating to performance, and that is simply because they have no sustained and consistent personal marketing system to stick to.
- Your local area and your property type will have special facts to understand and monitor. They will usually be rentals, prices, tenancy mix, inspections and negotiation processes, methods of marketing, prospecting, time on market, and methods of sale or lease. Each of these factors requires special attention. An average approach produces average results. There are far too many average agents in the industry.
Choose to develop the right processes to take your position at the head of the market. There is plenty of room for more agents at the top of the industry.
You can get more tips on this in our Newsletter for Commercial Real Estate Agents right here.
In commercial real estate agency it is very much the case that the day will take over your diary unless you take control. People will impose on your time and things then will go absolutely nowhere.
If you are like me, you will hate people wasting your time. In our industry time is money and we need to remember that. In an average day lots of people will want a slice of your time. How about this list for starters?
- Existing clients with their listings
- New clients wanting to list their property
- Team leaders wanting to talk about the weeks results
- The boss (for all sorts of reasons)
- Tenants looking for property
- Buyers wanting to inspect your listings
- Telephone enquiries
- Administrative people needing help getting your marketing campaigns underway
So, all of this says that we need to set some solid rules that will not be broken or changed. We must control our time as it is the main thing that we can control in commercial real estate agency.
Systems can set you free to get on with your business. When business runs smoothly then you find the clients and the listings that you need.
Every system in commercial real estate is essentially made up of subsets or systems for key things. Each part of the process can be refined and improved. I have had systems for all of the following:
- Prospecting systems so I can keep focused on the right properties and clients that will need my services one day. Every good commercial agent should have a pipeline of some type.
- Presentation processes so that every property that I pitch for is a deliberate pitch that is well controlled to a solid approach that I know works. Confidence here is the key.
- Listing systems for each property type such as office, industrial, and retail property. I would also have systems for sales, leasing, and property management. Retail shopping centres are quite different and feature with their own systems that are unique to retail.
- Inspecting a property is quite special and having a process for that is wise. A checklist to help you ask the right questions and look at the right things in the property will always be of benefit. The inspection system should take into account the property type and the location; that is why you need checklists for this.
- Marketing processes for the listings that we work on should not be generic or ordinary. The fact of the matter is that each property should be uniquely promoted to a plan; this assumes that it is an exclusive listing and you have vendor paid marketing funds paid in advance.
- Negotiations and communications with clients should be documented. It is common that things will get delayed or changed when you are negotiating with a client on a sale or a lease. When you have the supporting documentation and notes, nothing can go wrong.
If you are finding that things are out of control and you are struggling as an agent, take a look at your systems in commercial and retail real estate agency. Build some processes and controls that help you move forward.
So many salespeople in commercial real estate struggle with getting things done. Each day many pressures and client challenges will shift your focus (or try to). Before the end of the day you will feel that nothing of importance has happened. Here are some tips from our Commercial Real Estate Newsletter.
There is a saying that ‘a person that feels in control will get a lot more done’. Feeling in control is just a mindset; however it helps a lot when you are a commercial real estate salesperson that is responsible for earning a good income (or trying to).
When you look at your job, career, and real estate agency, you can see lots of tasks that if well done, can help you get good results. Here are some key systems that you can optimise and improve on.
- Develop a marketing information packet that you can send via mail or email very quickly to a client, property owner, investor, tenant, or business owner about the alternatives and services that you can offer them. The marketing packet should be specific to sales, leasing, and property management. Retail information packets will be different and much more unique than the others.
- Have a pre-listing or pre-presentation kit ready that you can send to clients a day or two before you meet with them to talk about their property. The kit should contain market facts, examples of advertising, and samples of brochures, strategies of promotion for sales, leasing, or property management.
- Create procedures for canvassing and prospecting so that each day you can repeat processes that will help take you forward in your property market. Don’t reinvent new systems; just repeat the ones that work for you.
- Your database should be well controlled. I am a great believer that a database is a personal process that cannot be passed on to others. In only this way will you take ownership of what you need to do and that will ensure that the information is correct.
- Client contact systems will always be of benefit. It is a fact that more listings will put you under pressure. Open listings are a waste of time, but exclusive listings and their clients need to be well serviced. In most cases, commercial real estate agents can only handle up to 20 exclusive listings at any one time. Beyond that point you will be out of control and stress will take over.
Look at the things that you should be doing every day. Learn to delegate mundane ordinary tasks to the administrative staff that support you. If you do not have the benefit of administration support then, the only way forward is to systemise everything that you do.
In commercial real estate agency today, in any given year, you will be seeking new staff to employ and also evaluating their relevance to the agency. To assist in the process, you should have an evaluation system that allows you to understand the candidate, and the value that they can bring to your agency.
For this reason you should create a checklist to be used in an employment interview. It should also be said that you should have two or three interviews with the ‘short listed’ candidate to ensure that all of your observations are understood and confirmed. In each meeting bring a further person from your existing staff into the interview so that they may give you extra comments and observations from the meeting.
Here are some evaluation processes and questions that can help your employment interview in commercial real estate today.
- Get detail from the candidate as to what they have done in the industry and where that occurred. Check out the information they provide to you. Ultimately you need to know that the candidate is suitably skilled and professional in their business activities.
- Talk to previous employers to understand the way in which the candidate operates at a professional and business level. In most cases you should be talking to two separate employers.
- Get details of the successes that the person has achieved and can prove to you are relevant to your industry and location today. The role of an agent or salesperson in commercial real estate today is quite complex. They are required to undertake specific tasks related to prospecting, presenting and pitching, inspecting, qualifying, negotiating, and documentation. Each facet of the job has specific disciplines. Make sure that your candidate qualifies in all respects.
- Always talk to referees provided by the person. Those referees should be unrelated and preferably from a business environment and workplace. Get to the real truth of employment.
- If you don’t feel 100% regards a particular person in the interview, then there is something that is wrong and you simply need more time to understand what that is. It is better to take time in your decision than to step into a new employment arrangement was someone that is not totally correct for the role.
- Today a salesperson or an agent in commercial real estate must bring considerable technology and computer skills to the task. They must be prepared to undertake personal administrative work using computers and technology. Ensure that the person is comfortable with this process and can prove to you that they understand computer usage and also software applications.
- Your sales team will be supported by administrative staff. That administrative process and backup will differ based on how you want to run the agency. It should be said that the administrative process and backup system will cost money and that cost recovery should occur from commissions and or a particular desk fee that applies to each agent and salesperson.
Here are some questions that you can put to the person under interview circumstances.
- What is the most frustrating thing about commercial real estate today and how would you handle that?
- How do you handle the paperwork part of the business and what systems do you use to support that?
- What do you enjoy about the commercial real estate business today?
- Why do you want to be employed in commercial real estate and most particularly in this agency?
- What do you know about our business? They should be able to show that they have researched your business prior to the interview.
- How do you prospect for new business, and what are your processes and systems of support?
- Tell me about the database and the customer base that you established in your previous place of employment.
- What do you believe are your most relevant skills that you bring to this agency?
- Tell me how you work within a team, and how you would improve the team and its interaction with you.
- If you could describe yourself in two or three sentences, what would that be?
- What are your most significant challenges as a professional salesperson? How would you improve on these challenges to resolve them and build your future business?
- Where do you see your career heading in commercial real estate today and over the next five years?
- Why should I employ you?
- What do you know about commercial real estate? Tell me more about that.
So these are very tough questions for some people to address. That being said, commercial real estate is a tough industry and requires tough people that can handle difficult questions. Formulate a questionnaire based on these questions and others that can help you fully qualify the candidate for employment in your agency.
Get more tips on employing Commercial Real Estate Agents in our Newsletter right here.