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Avoid Dangerous Clients in Commercial Real Estate Agency

Are there dangerous clients in commercial real estate?  Absolutely; yes is the answer.  You will come across them all the time.  You must protect yourself from these clients that are out to manipulate the deal for themselves without true transparency.

Ethics in our industry is really important.  Poor quality clients can derail your listing integrity and commissions.  So the message is that you should keep to the rules in the industry that protect your actions and listing activities.  Clients that are less than honest can destroy your business in many different ways.

So here are some signs to look for when it comes to client selection and communication:

  1. Watch out for the clients that will not sign an agency appointment ‘until you find a buyer or tenant’.  The request happens all the time in our industry but you cannot and should not act outside of the laws of commercial real estate agency in your location.  You are bound to act legally and with integrity; if the client wants you to ‘bend the rules’, they are not a client to have and you simply cannot trust them.  In those circumstances walk away from the deal or the listing.   Let some other agent waste their own time and risk legal action.  It is not fun when legal claims are made against you.
  2. Some clients work with many agents.  Now this is just fine if all relationships are ethical and legal, but your listing and negotiation information should be protected by a valid appointment to act and an established client and agent relationship.  If you suspect that the client is sharing your ‘market intelligence’ with other agents, you could have a problem.
  3. If your client avoids giving you an exclusive listing, it can be a sign that you really do not have their commitment and trust.  They could also be working with many other agents at this very moment in trying to sell or lease the property.  Ask the questions and get to the real facts of the matter.
  4. A reluctance to give you full access to the property or comprehensive property detail is a sign that something is going on.  A similar problem is evident with the client not disclosing tenant and income detail for the property.  If the client is not being open and honest, step back from the deal until you know all the facts.  Get copy of all current property related documentation before you go to the market, negotiate, or talk to other people.  Understand the facts that are before you.
  5. Failing to put things in writing can be a big problem in our industry.  Many conversations across the telephone happen every day.  Always keep your notes of client and customer conversations and instructions.  Evidence the matter back to the other party in an email or similar written or electronic form.

Lastly something should be said regards confidentiality.  Know who your client is and what their instructions are.  Keep client agent discussions and instructions confidential.  Disclosure of privileged information can get you into a lot of trouble.

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Hard to Beat Tenant Mix Strategies in Retail Property Today

In retail property and shopping centres you really do need to know your tenant mix and its volatility.  A good tenant mix and tenant retention plan will help strengthen your property income, market rental, and capital value of the property.

So if you as a specialist real estate agent take on a leasing appointment or property management appointment to improve the tenant mix in a property, there are some things to consider; you do this as part of the services and processes that you put in place.

Here are some strategies to handle the tenant issues in a retail property:

  1. Review all your leases at the very start. You must know where all the income and tenant weaknesses are or could be.  What you are looking for initially is rent reviews (current and coming up), options for renewal, lease expires, refurbishment requirements, and permitted uses.  Many of these things will involve critical dates in one form or another.  Get those critical dates locked into an action plan and talk to the landlord accordingly.
  2. Assess the market rental that applies to the property today and how that compares to the prevailing market conditions and other properties that are comparable.
  3. Assess the outgoings for the property and do an expenditure assessment of the property for this budget year.  Your tenant rental structure will need to provide strategies in setting the right rents.
  4. Anchor tenants and specialty tenants in the property should all be looked at. Some tenants will be more essential to the property than others.  These decisions will be set in your retention plan.  Any leases that are coming to an end with redundant tenants will require a replacement program to support and protect the tenant changeover.
  5. Customer needs can be assessed with a regular customer survey.  Each quarter in the shopping centre you can survey both the customers and the tenants as to what they are wanting in the property and are seeing with shopping needs.
  6. Review competing properties so you know the current vacancy factor and how it relates to your property.  Age and location of competing properties will also impact your assessment.
  7. Sales numbers across all tenancies will help you decide just who is successful in trading and who is not.
  8. Seasonal marketing for the tenants will change as will the customer door counts across the selling week and season.  Understand the patterns of trade as they apply to the tenant type and the location.

You could say that tenant retention and tenant mix strategies are the more specialised part of the property and agency industry.  That being said there is some good commissions and money to be had by property specialists that really know their market and can provide a comprehensive service to clients.