Brokerage activities in commercial real estate can be enhanced greatly by planning set targets for growth, and in taking specific actions at a team and personal level. To get anywhere in sales or leasing it is wise to put in place those systems early in any brokerage career or in the establishment of a new real estate office.
Plans can be implemented across client activity, marketing, and listings. Each week or month the set plans and trends can be assessed for progress. They say that any agent or broker that is not working to a plan is wasting their own time if not that of the brokerage; the observation is very real and correct.
Know Your Property Market
Here are some tips to setting the right type of plans and progressing comprehensively as a real estate agent in your location:
- Competitors: Understand all of the competitors in your location for both property speciality and market share. Check out all of the listings that they may have on the market today. Understand if the time on market factor with each and every listing seems to be short or long when it comes to the properties they are marketing and promoting today. Determine who out of all the agents in the location seems to be the most successful in achieving results and for what reasons. Can you approach the property marketing process with greater momentum or effectiveness?
- Commission strategies: When it comes to a sale or a leasing appointment, there will be averages in the location that apply to the commission calculation. Some property owners will have certain expectations on the commission to be paid for any sale or lease. Whilst you should not be the cheapest agent or broker in the location, the commission rate that you charge should be correct and within the averages for the amount of work to be applied. It directly follows that you should show the client how you will be tapping into the local property market and resolving their current challenge relating to property; that is where the commission equation for the work applied becomes very important. Most clients will be prepared to pay a reasonable commission for a top service; your listing presentation needs to comprehensively cover that concept; differentiate between your services applied to open verses exclusive listings. Any client making a listing decision based entirely on discounted commission is not the client that you neither require nor should act for.
- Points of difference: To compete aggressively in any commercial property marketplace, it is necessary for you to provide a significant and real point of difference to your clients from their perspective. Your point of difference has to attract their attention and help them resolve the sale or lease challenge that they currently have. What can you do that is significantly better or different than that of your competitors? What processor or strategy can give you the competitive edge in today’s property market locally? You will need to do a full market assessment to understand the strengths and weaknesses of every agent or broker and how you can move into that market.
These three simple points of strategic planning will help you understand the factors of the commercial property marketplace that will be challenging or full of opportunity. From that point of understanding you can make some decisions and start to implement your business plan in commercial real estate brokerage. One final comment should be made here and remembered; any plan that you create today in commercial property should be tracked and adjusted over time. Things do change over time and you need to see that requirement when it happens; be flexible and adjust.
There will be shifts and changes in the commercial real estate market throughout the year. Your plan and approach relating to listings, clients, negotiations, and market share should be adjusted accordingly. When you have a strategic plan that is well under way, you can track the results and see the changes that are required as the market matures and changes.
Throughout the year the commercial real estate market will change and fluctuate with prices, rents, and levels of enquiry. The clients that you act for may not understand the true pressures of the property market and the changes that are underway.
It is your job to help your clients make wise property decisions taking into account the key performance indicators relevant to their property listing. Some clients will take more convincing than others.
So What is the Property Market Doing?
Market evidence will be a key component of any property or listing presentation to a client or prospective client. The active sales and leasing transactions through the region will show trends when it comes to prices, rents, incentives, time on market, rates of inquiry and marketing. There will also be achieved and identifiable differences between high quality listings, and average or lower quality properties. Differentiate the changes in the property market so that you can show the client where their property sits in comparison to others.
Key Performance Indicators in the Commercial Property Market
Here are some essential key performance indicators and factors to consider that will help you in conditioning your clients thinking and decision processes:
- The rates of inquiry – Throughout every calendar year there will be plenty of changes occurring in the level of inquiry coming to you or into your office across sales and leasing. The buyers and the tenants that you are working with will have certain demands when it comes to property choice and location. They will also have predetermined ideas when it comes to price and rental rates. On that basis you can see the importance of tracking the levels of inquiry applying to each listing type and location. Understand what the buyers and the tenants are looking for when it comes to commercial property today.
- Higher quality listings – Some properties will be very desirable and achieve greater levels of inquiry, inspections, and negotiations or offers. Understand why one property would be more desirable than another. The same comparison applies to precincts and locations locally. When you list a high quality property, the inquiries will fly in to you from the very start of the campaign. Some local property precincts will be highly desirable from a buyer or tenant perspective, and you will need to determine the differences between those precincts in both price and rent. When you list a property that could be regarded as high quality, it is necessary that you carefully consider the marketing process and the best method of sale or lease as the case may be. In the end result the marketing of a high quality property will always provide you with plenty of qualified leads and contacts for future opportunity. That is where the use of your database will become a key factor of support in any property marketing campaign.
- The best method of sale or lease – Choose the correct method of sale or lease that will attract the best levels of inquiry. Adjust your listing pitch or presentation accordingly. The choice that you make here can also impact the marketing strategy that you structure for the campaign. Understand the differences between specific property marketing and generic marketing; match those differences to be target market relative to the listing. The generic marketing process only applies to open listings, and any result that you achieve with an open listing is a process of luck more than anything else. Help the client understand the direct strategies that you will deploy when it comes to their property listed exclusively. The marketing process for any property today is not an experiment and should not be regarded the way by the client. Help them make the right choices when it comes to the correct method of sale or lease and the associated marketing campaign. Always seek vendor paid marketing funds as part of the property promotion process on exclusive basis.
These items are perhaps the three most important factors of commercial property performance and marketing for your location. With each and every listing presentation that you make to a client or a prospective client, be prepared to explain the important facts of the location and listing today relating to the current levels of enquiry.
In any retail property or shopping centre a specific tenant mix strategy is essential to encourage sales and trade for the tenants, whilst also underpinning retail property performance for the landlord. The retail plan or strategy helps with key issues such as lease negotiation, tenant selection, retail tenant clustering, and occupancy targets.
Any retail property should have a tenant mix plan as part of the annual property performance scheme. Something has to draw customers to the property in an ongoing way. That is where the plan and the mix become important in the leasing process.
The Base Strategy
So, in doing this a number of things come together to make things work successfully for both the tenants and the landlord. You could say that a successful retail property is a product of a finely balance landlord priorities, tenant placement, and tenant occupancy relationship; the retail leasing strategy is at the centre of all of that.
So what are the elements of a tenant plan for the landlords that you work with? How does the mix become important in the performance of the shopping centre in your location? The suggestion here is that all the tenants and leases within a property should be looked at in a ‘global’ fashion and compared to property market conditions and opportunities.
The Vacancy Factors?
If a vacancy exists in the property, then the ideal tenant to fill the vacancy should be located into the cluster of other tenants within that property precinct. That is why you do a mix review to answer questions like these below:
- What are customers looking for in the property?
- How many tenants do you have in each of the retail segments? (e.g. fashion, food, sports, travel, etc.)
- Given the retail segments in the property, what are the most successful and why is that?
- Understanding the sales numbers from the property, what are the successful rental generators by tenant type?
- What will be the ideal lease duration in that location?
- What market rents should you ask for the target tenant type and location?
When you know the answers to these questions then you can move ahead into the specific decisions impacting the lease negotiation in any shop vacancy that you may have. You can then improve the retail tenant mix. Those questions to put you on track would include:
- LEASE DURATIONS: Given the other tenants in the vacancy proximity, what will be the lease duration and expiry date that will not overlap or complicate other vacancies in the same general area of the property?
- RENTAL ESCALATIONS AND OPTIONS: What will be the standards of rent reviews and lease options to be set in seeking a new tenant? In most cases you will want these issues to favour the landlord and their investment targets.
- THE BEST RENTAL TYPE: Will you need a net or gross rent for the location? Your decision will impact incentives and outgoings recoveries for leasing the space.
- TENANT MARKETING STRATEGY: How will you market the space? Your targeted group of tenants will require a specific marketing approach; generally that will be a mixture of direct mail, cold calling, door knocking, and industry publications. You can also talk to other tenants in the property in case a clear match of new tenant can be encouraged through existing contacts.
So there are some things that can be done here with any single vacancy in a retail property. The tenant mix becomes an important factor in property performance and optimisation.
Do you know what targets and goals are all about? In commercial real estate brokerage the targets and goals that you set should energise you to take even more action and refine your processes for better results.
Why is that? It takes time for an agent to establish market share and listing dominance; the only way that consolidation of market share will happen quickly is through taking ever more action on the things that matter. Understanding the important things to work on can be a bit daunting initially but soon you recognise your individual strengths and weaknesses as an agent and then you can work with them.
Progress Every Day
When you track your targets you can see how you are progressing each day and each week. At the end of each month your key performance indicators in listings, commissions, and time on market can be assessed for progress.
So there are ‘big targets’ and ‘little targets’ to work to in commercial real estate brokerage. The little targets feed the bigger ones, and everything is based on action every day.
Don’t Make This Mistake
A real estate broker recently said to me that he was struggling with routine and doing the things that really mattered to his business. When he started each working day he was letting the pressures of clients and listings dictate what he was to do first up in the day. That then meant over time that he was overlooking any factors of growth and new business creation. Inevitably he was struggling with new business and any exclusive listings were few and far between.
Energise Your Real Estate Business
So let’s set some rules for energising your real estate business:
- A full one third of every working day should be set aside for new business generation. That ratio is non-negotiable; it simply must happen.
- The morning first thing when you get to the office is the best time to do some cold calls and telephone contact to prospects.
- Track the calls that you make outbound in number so that you can understand progress in connections and conversations.
- When a telephone call converts to a meeting, understand why that is so and attend the meeting with a reason or target in mind. Perhaps that target may be to win a listing or stay in touch with that person for the longer term when they need professional real estate help.
- Don’t chase after unqualified prospects or any listings that are of low quality. Ask all the relevant questions possible to get to the real reasons that you can help someone with investment, tenant mix, property performance, or locating new property locations. If you are in any doubt about a client or a listing, it is better to move on and let someone else waste their time.
Progress is everything in commercial real estate brokerage. Any top agent will tell you that they are very selective on what they do and who they talk to every day. They closely control their time and tasks. Can you do the same?
Need help in commercial real estate brokerage prospecting? You can get many more tips in our e-course right here.