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Doing Your Market Research in Commercial Real Estate Brokerage

Relevant market data in commercial real estate can help you with property presentations, prospecting activities, and negotiations.  As the real estate agent or broker in your local area property knowledge and information will help you close more listings and facilitate more transactions.

Whilst most clients think that they own a high quality property commanding a good price or rental, the facts of the matter can be far from the truth.  Local property market information will help you position the client’s property for better levels of enquiry and negotiation.

Here are some facts that will help you stay ahead of local property market activity:

  1. Track the number of sales occurring in the local area by property type.  Focus on the local area and your property specialty.  Determine the averages that apply to sale prices per square metre or per square foot.  That information will be helpful when it comes to pricing other listings.
  2. Watch the trends that apply to leasing and renting commercial and retail property.  Industrial property may also feature as part of that analysis.  Leasing strategies and rental levels provide the basis for property investment today.  The ratios between net rent and property value provide a yield or capitalization factor.  That number will change throughout the year based on the supply and demand locally and within property types.  Oversupply will typically see prices fall against rental income.  That will improve the yield ratio to encourage any sale.  In undersupply situation, prices typically rise against passing income and rental.  That then produces a lower yield for the property investor.  It directly follows that you should track supply and demand factors that exist within your property type and within your town or city.
  3. Market rentals will shift and change throughout the year.  Over an extended period of time you will soon see patterns to any rental growth and leasing incentives.  In any oversupply of vacant space you will see that the incentive levels will grow to attract more tenants to a property.  The levels of incentive will conversely fall away as the vacancy levels decrease in the local area.  Look at the patterns that apply to market rent within the property type and your specialty.  Understand the reasons why tenants lease a property today locally.
  4. There will be changes to the business community regionally and locally.  Those changes will have impact on business sentiment and occupancy costs.  Some segments of the business community will be more active and successful when it comes to levels of trade and sales.  When you can identify a successful business segment, focus your prospecting efforts within that segment and with those businesses.  Any successful business over time will require relocation or expansion to other property.  Get to know the local business owners for this very reason.
  5. New property developments come and go from the market.  The ratio between supply and demand, together with the availability of vacant land locally will activate some property developers to consider new projects.  A property developer will only consider a new project or building construction when they can see that the demand exceeds future supply.  They will also look for reasonable levels of profit from the project based on expectations of rental and price.

So you can see the reason why it is necessary to stay ahead of market activity in commercial and retail real estate.  Property trends in rentals and prices will help you see new business leads and clients to serve.  One other key factor to remember in gathering property information is that of specialization.  As an individual agent you cannot serve every market and every type of client.  Specialize personally within a segment of property and within a location so that you can become a top agent.

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Mastering the Commercial Real Estate Listing Presentation

In commercial real estate brokerage the listing presentation is likely to be the best and only opportunity you will have to impress the client with your professional real estate services.  Most listing presentations today are highly competitive involving a number of agents.

Any high quality property is likely to be offered to the market only after the client has completed a series of competitive agency presentations.  It directly follows that every agent or broker should be well skilled in explaining the listing strategy and marketing process that they can bring to the listing.

The marketing package presented to the client should be creative and competitive first and foremost.  Whilst all of this may seem logical, many agents struggle with creativity and direct marketing; they thereby do not stand out as the ‘agent of choice’.

In a competitive listing situation the client needs to understand which agent offers the best marketing solutions, and just how they will attract the target market.  How does your presentation rank in comparison to other agents?

To improve your chances as an agent in winning the listing, here are valuable some tips to help the process.

  1. Meet the client at the property so that you can review on site issues and identify the strengths and weaknesses of the property.  The strengths can be merged into the campaign and the weaknesses can be dealt with as the case may be.
  2. Show the client how you will move prospective buyers or tenants through the property and explain the strategy of the process.  This simple strategy shows the client that you really understand how to feature the property.
  3. If the property is of some quality, establish a display board within the premises where photographs and marketing material can be placed to refer to as part of the inspection process.  The area in which the board is placed should be well lit and strategic for featuring the best parts of the property.
  4. If the property is large, arrange for a portfolio of professionally taken photographs to be used in any property discussion or on site presentation.  You can also carry the photographs in your laptop or smart phone for ease of access.
  5. Show the client how you will use your marketing material to feature and help the inspection process.  You should have some samples of brochures and flyers from other successful campaigns to explain the opportunity.
  6. Put together some local business information to help a prospective buyer or tenant see the benefit of locating in the area.  Statistics on business growth, business types, transport and local infrastructure will be of use.

So the message here is precise.  If you want to win a property listing, make sure that you are fully prepared for the presentation to be made to the client.  Make your message clear and unique; stand out as the agent of choice to show how you can reach the target market of buyers or tenants.  Prove that you have done so in other similar situations.  Confidence and local property market information will help you do that.