In commercial real estate brokerage you have one or two directions to take. You can let the property market come to you with any leads or opportunities, or you can go out there and find the new business that is available. The latter is preferable.
Get involved with connecting with new people every day. Put prospecting at the top of the list when it comes to new business activities in your daily diary. Don’t let any person or career pressure divert your activities away from new business prospecting.
A common problem
All too often you see brokers and agents avoid the requirements of new business generation. They soon lose market share and fail to convert commissions. Here are some facts to be remembered about commercial real estate brokerage:
- MOMENTUM: It takes about 3 to 6 months of dedicated prospecting activity to generate some listing churn and commission flow. Many agents and brokers struggle to maintain the required prospecting momentum and organisation. That can be an amazing opportunity for the small segment of people that can keep things under control.
- KEEP THINGS MOVING: When the new business starts to evolve, don’t stop prospecting. It is very easy to slip back into a situation where commissions and listings are hard to achieve. Avoid the peaks and troughs of the industry by continually prospecting regardless of the business that you are currently generating. Understand the lead times between prospecting, client contact, listing conversion, and negotiating. I go back to the point that a time frame of about 3 to 6 months exists in the industry as an average business cycle.
- CONTACT LIST: The database that you create is perhaps the most important business tool that you will use. Protect your database and its information. Keep in regular contact with all the people within the database so that you know when they move to a point of action or challenge when it comes to local property.
- IMPORTANT CONTACTS AND PEOPLE: The relationships that you strike with clients should be nurtured and encouraged in a relevant way. Provide local property information freely and directly to the clients and prospects that you have identified. Free local property information will always be of interest to property investors, business owners, and industry professionals.
So the secret here is to develop a proactive approach to commercial real estate brokerage. There are always plenty of opportunities to be found, nurtured, and converted.
Local property investors and business leaders are always on the lookout for assistance when it comes to leasing, sales, and property management activity. Get involved with the people in your property community and maintain ongoing relevant contact so that you can build your database and grow your market share.
You can get more proactive tips and ideas in commercial real estate brokerage right here in our eCourse.
When you know what is going on in the commercial real estate market, you can adjust your business efforts into the things that show opportunity. You can also avoid the parts of the property market that are slowing and time wasting.
The best property agents focus on the best parts of the market; that’s the rule. By monitoring a few categories of activity you can see your place and efforts in the bigger picture. If you are a sales agent, that process is really important.
Look for these things
Here are some property factors to chase and monitor in your local town or city:
- Signboard counts – It is a valuable process to add up all the signboards on properties locally on a monthly basis. Differentiate between ‘open’ and ‘exclusive’ listings when you do that as there is a real difference between each from a market share perspective.
- Internet listings – Go through the internet listings each month on the same basis as the signboards. Understand how many listings there are for each brokerage and agent. Soon you will know exactly who the top agent is for the area from an ‘exclusivity’ perspective.
- Vacancy factors – The level of vacant property locally will be a good ‘barometer’ of business sentiment. Understand what is happening in the local business community as that will impact property ownership and occupancy.
- Time on market – How long does it take to shift a listing with a sale? Some listings are better than others so you will need to differentiate on quality of property as you assess these numbers.
- Prices per unit of area – When something sells, understand the price from the perspective of property type, location, and unit of area. From those numbers you can compare transactions across your region. Soon you will see the active and popular locations for investment and business occupation.
- Enquiry rates – It is always good to know what people are looking for when it comes to local property. Are the levels of property enquiry going up or are they falling? You can also relate that question to property types and locations. When a person enquires about a property, find out how they located you and what they are looking for by way of property.
- Best marketing methods – Some marketing methods are more successful than others. When you do a monthly marketing assessment from inbound enquiry you can determine exactly how you should market new listings and for what reasons.
- Best methods of sale – Understand the best sale methods for attracting buyers and creating inspections. It is likely that any quality property should be directed to a time based sale method such as auction, or tender. Put a bit of ‘urgency’ in the method of sale so that the buyers that are interested actually have to make a decision and take action by a close off date.
Do there are some good things that you can do here with tracking sales activity locally in commercial real estate. When you know what is happening in the property market, you will be able to take action on the most rewarding parts of the property market.
In commercial real estate brokerage today you will frequently be negotiating with property owners, tenants, and business owners across a number of different strategies and property requirements. The best negotiation outcomes are achieved through skill development and will be a combination of a number of things including conversation, feedback, listening skills, and presentation.
Improve your negotiation and listening strategies
Over time you can improve your strategies with each element of commercial real estate negotiation, however you can fast track your negotiation skills through practice and personal development. Here are some ideas to help you with listening skills in any presentation, listing pitch, or negotiation:
- Choose the right place – wherever possible, choose the correct circumstances and the right place for the negotiation. Remove distractions from the process and the place. As a general rule, always negotiate directly one on one and in a face to face environment. Privacy is essential and confidentiality should be preserved. Get away from noisy situations, congestion, and other people. Choose the right place for the negotiation based on the parties and the property.
- Timing is important – whilst you may have a lot of things to say as part of the property negotiation, the timing of the process is very important given that you want other people to listen, interpret, and agree. If you believe the other person is under a degree of time pressure, then choose another time to extend the conversation into deeper issues and potential results. You want them to listen to you and absorb your recommendations in the right way. You want them to give you feedback as part of that process, and in moving towards a potential agreement.
- Look at the other person – as part of the property negotiation, presentation or discussion, ensure that you are completely committed visually to the other person, watching them as they talk and explain their position. Acknowledge what they’re saying, and restate any information that may require a further qualification or interpretation. You will also see elements of body language as they speak to help you fully interpret what they are saying.
- Control your emotions and feedback – don’t overreact emotionally as part of the property discussion and communication. Show your foremost respect of the other person and what they’re saying through controlled feedback and lower levels of emotion. You can be quite confident and involved in the property communication or negotiation, but you do not need to be emotional. Emotional involvement drives irrational comment. That can be a great danger in any property discussion and can be misinterpreted. Be patient and don’t interrupt when it comes to connecting with the other person.
Simple strategies like these can help you with client communications and property presentations. They can help you with lifting your conversions and negotiation results. Over time these factors can be practiced and improved.
On a final note, every commercial real estate negotiation should be documented with appropriate notes. Those notes can help you at a later time refer to the critical elements of the discussion and the outcomes.
Every quality listing in commercial real estate brokerage should be the subject of a comprehensive and specific marketing plan. When the elements of the property are matched to the levels of enquiry, the prevailing property market conditions, and the client, the marketing plan is likely to produce the better results from the selected target market.
Most high quality listings today are the subject of a competitive tender involving a number of brokerages and agents. You may only have a short period of time or one brief opportunity where you can present your promotional ideas and marketing strategies to your client.
Your presentation, the listing pitch and the marketing plan will need to be of exceptional quality and relevance to attract the interest of the client and convert the listing. It is very likely that the best agent will win the listing based on recommendations, commitment, and confidence.
The Best Way to Set Out Your Marketing Ideas
Here are the elements of a property marketing plan in commercial real estate brokerage. These ideas will help you prepare your professional marketing plan:
- The title page – give the property and identity through the use of a title. That title should be specific to the property and where possible incorporate the history of the property. It is quite likely that the local property owners and business proprietors recognise the property in a particular way. That image or recognition can be incorporated into your marketing plan.
- Use professional property photographs – the front of your proposal or marketing plan should feature a professional photograph. That strategy should continue through the document. Most clients will be drawn to the proposal that features the asset in a creative and professional way. Through your marketing submission, you can add a number of professional photographs taken at different times of day, of different parts of the property, and use photographs that enhance the strengths of the asset to the target market.
- An executive summary – at the front of the document, make sure that you are using an executive summary to pull in all the features of the asset and the intended marketing campaign. The executive summary should be no more than one page in length and feature a number of dot points as part of the layout. You want the executive summary to attract the interest of the client and refer them further into the document for greater detail.
- A table of contents – simplify your marketing proposal with a table of contents so that the client can refer to the correct parts of the document as part of the review.
- A preference for simplicity – keep your marketing document simple and informative. Avoid bulky submissions that complicate the marketing process. Help your clients see the promotional strategy to be used with the target market. The best way to do that is through the use of a Gantt chart displaying the different marketing strategies and the timing process to be applied.
- Property analysis and recommendations – show the client that you really understand the property and its position in the prevailing market conditions. Summarise the property as you see it today and provide details of comparable property market activity in the location. From that information you can make specific recommendations towards a target market, the enquiries, and the inspections.
- The marketing plan – from the target market, you can specifically apply strategy to the marketing plan when it comes to the choice of the right media, the timing, and the expenditure. Help the client see exactly how you will be spending the money and why that is so. Show the client that you are in control of the property marketing process and the feedback to be encouraged.
- Implementation and control – make it easy for the client to formulate a decision and move ahead with their marketing challenge. If there are any problems within the property that need resolving prior to promotion, provide specific solutions and ideas to help that occur. Make it easy for the client to see the best way forward with their property challenge based on the attributes of the asset and the local property market.
Taking all of these things into account, you can make your marketing proposal stand out as specific and special with any good quality commercial real estate listing. Make it easy for the client to select your services as the agent of choice in resolving their property challenge.
In commercial real estate brokerage leasing and sales you can find plenty of leads and opportunities when you target building occupants in a regular and ongoing way. Research your listing territory by building and then split those buildings up into tenants and businesses. Make direct contact.
Some business segments and industry types will be under pressures of change at different times during the year. Local economic circumstances and business sentiment will drive property change for some businesses and industry types.
The Canvassing Process
Assuming you can get this process underway, here are some concepts to feed into the commercial real estate canvassing process:
- Their business intentions – When you take and review all the tenants in a location, many will have future intentions to feed into their movement and growth plans. Customers and staff all place pressure on a business and with how things are done. In a manufacturing segment where industrial property is involved, property configuration and use also rises to the top of the ‘planning’ list. Most property decisions are made just before or after a change of financial year. If you stay in regular contact with business owners and leaders, they are likely to remember you when a property challenge or change arises.
- Factors of expansion and contraction – Some businesses need more or less space. Canvass your territory every day and look at how some businesses seem to be trading. If the property is of an industrial nature you can usually see pressures of change and occupation in and around the property. Observe what you can. Ask plenty of questions. Meet more local people.
- Relocation requirements – Some businesses need to be located close to transport, highways, raw materials, and customer markets. Find out how those factors integrate into your location and property types.
- Difficult landlords – Some landlords are notoriously challenging and unsupportive of tenant occupancy and comfort; those landlords can focus too much on rental returns and less on property performance. Over time that can lead to a general exodus of tenants from a property. Look for tenants that are disgruntled with the landlords in property ownership. Check out locations for distressed tenant mixes and properties with higher vacancy factors. There will be reasons for issues like that happening.
- Occupancy costs – Every tenant is concerned about paying rent and other occupancy costs. You should know what the rental averages are for a property and a lease by property type and location. If a property is aggressively rented, the vacancy factor is likely to climb over time. Distressed tenants are likely to move. That then is a leasing prospect and opportunity.
Look further into buildings, tenant lists, property occupancy, and business activity. You will always find leasing opportunities with tenants wanting to change location.
When it comes to vacancy leasing within an investment property, the fit out standards that you set and work to are very important. Those standards will help you when it comes to ongoing occupancy and property presentation. Over time a property controlled in that way will maintain its appearance and its leasing standards. That then helps with establishing and strengthening market rentals, and minimizing vacancies.
Poor Property Presentation
Most people can relate to and would have seen a property that is poorly presented and maintained. In any office building or retail shopping centre you can soon see where the maintenance is inadequate and where things are not being done. In many ‘owner managed’ properties that inadequacy can be a common problem. Many investment property owners are ‘too close’ to the decisions required of expenditure and maintenance. They can sometimes have differing priorities when it comes to property presentation compared to income paid and banked.
A well maintained property will attract tenants and achieve better levels of tenant retention. A property of that type will also see lower vacancy levels and stable market rentals. It directly follows that the appearance of the property and the maintenance program within is very important to help the investment improve over time.
Set Fitout Standards
Setting the correct fit out standards and policing those standards as part of the leasing process will help with overall property presentation and tenant retention. Here are some specific topics to focus on as part of that overall standards strategy:
- Shop fronts – When you are leasing a property with multiple tenants in occupancy, the shop fronts and the entrance ways to each and every tenancy should be carefully considered and controlled from a visual aspect. The shop fronts should be standardised to a particular design, size, and lay out. What you are trying to do here is maintain the appearance of the property.
- Marketing material and signage – Some tenants will try to ‘bend the rules’ when it comes to signage and marketing material. As part of the leasing process, the landlord and or the property manager should reserve the right to approve and control any signage within the property and on the premises for the duration of the lease.
- Air conditioning – Whilst the property may have central plant and machinery to supply air conditioning conditions, the tenant will need to tap into the plant capability and design. The tenants fit out should be adjusted to the air conditioning capability of the building. There are unfortunately plenty of cases where that strategy has been overlooked or not properly controlled, and the performance of the air conditioning within the building is thereby compromised.
- Lighting – You can specify the types of lighting and layout for a tenancy fitout. That then has benefits from the aspects of energy consumption, illumination, and presentation. You want a tenancy to look good, and lighting will have a lot to do with that.
- Electrical connections – There will be certain capabilities of energy supply to a property and a tenancy. Consumption monitoring is one factor to watch, but energy efficiency today is now a concern in property operational costs and outgoings.
- Standards and finishes – In any modern newly constructed investment property, the finishes and standards of fitout will be critical to overall wear and tear as well as appearance. Set the standards in consultation with the building architects.
- Entrance ways – The entrance to a tenant area and the entrance to a property are unique spaces requiring control. Entrance design and functionality should be balanced against safety and appearance. Locks, finishes, and size of entrances will all impact those decisions as well as existing building construction codes.
- Fire and safety – Fitout designs require the integration of special factors of fire and personal safety. Building codes apply. All tenant plans and approvals should be considered given the existing fire and safety codes for the property and the location.
- Floor coverings and wall treatments – Good quality floor coverings give longer serviceable life. The walls should also be painted with quality paints that give longer term protection and presentation to the property.
- Maintenance – How will the property and the premises be maintained? Who will pay for upkeep? The terms of the lease will need to set out who pays for regular property maintenance and how that is to be done.
These are some of the bigger issues to work through as part of fitout design, approval, and construction. Use a checklist to keep things under control.
When you are to lease a commercial property, the facts about the property and the leasing process should be at your fingertips. Tenants will ask you plenty of questions as part of the property inspection and enquiry process. Lack of information can slow down or derail a property lease negotiation.
You may only have one opportunity to convert your tenant to an inspection or a negotiation. So it is important to remember that preparation is the key to converting more leasing activity in a positive way. I like to do a lease orientation in preparation for that tenant attraction process.
Let’s face a few facts about property leasing:
- Every tenant will have different demands
- Every landlord will have specific ideas about rental, lease terms and conditions, and occupancy
- Some modern and new office or retail properties are very complex when it comes to lay out, fit out specifications, and the as built factors of design
- Property improvements, services, and amenities differ significantly from location to location
So there is plenty to think about here if you are the leasing agent. There are a lot of things to understand, look into, and review. Without capturing the interest of the tenant, they will quickly move on to another property inspection with another agent. You will only have one short opportunity to interest the tenant in the property and the vacancy.
Lease and Tenant Orientation
Here are some elements of lease orientation that I recommend you undertaken as part of every vacancy assessment and marketing process:
- Size – Understand the layout of the premises and the vacancy. The size and the configuration of the floor plate will be critical to tenancy design and business function. Some businesses require floor plates that offer flexibility in office configuration and departmental interaction.
- Tenancy use – Every vacancy should be assessed so that the ideal tenant profile and permitted use can be decided. The existing tenancy mix within the property may also have some relevance to the vacancy and the new tenant selection. Understand the pressures and the priorities that apply in choosing the right tenant with the correct business orientation.
- Access and security – Understand exactly how tenants will move to and through the property as part of their business operations. Security today is also a factor of concern for many businesses as they strive to service customers and protect staff. The tenancy itself may have proximity card access within a certain zones and certain floors. Advanced levels of security help when it comes to attracting corporate tenants today.
- Fit out standards – Within certain buildings there will be a need to establish and manage the standards of fit out construction. In that way you can preserve the quality of the property and the presentation to both tenants and customers.
- Rents and outgoings – Set some targets when it comes to market rental negotiation. As part of that, you will need to consider the incentives that apply in the leasing process for the location and the property type. Do a full market assessment of rental trends and opportunities as they exist within the property type. Advise the landlord accordingly, and set some flexible rental ranges that apply to any potential lease, the associated incentives, and the terms of lease occupancy.
- Strengths and weaknesses – Every property will have certain strengths and weaknesses to be understood and worked through. The strengths can give you significant points of difference when it comes to marketing, inspecting, and negotiating. The weaknesses on the other hand will need to be addressed prior to any lease inspection or lease enquiry.
So there are some good things to be understood and optimized as part of the lease orientation process. As the professional leasing expert, you can get these things under control at the earliest stages of lease marketing and thereby improve the levels of enquiry, and the negotiation outcomes.
In commercial real estate brokerage, your cold calling systems should be coordinated to a plan and a process. Over time you can then improve your actions as the plan requires.
Cold calling is a very specific process of agent actions tracked to results; monitor the things that you are doing and watch what is working for you. When you know that your telephone calls are getting meeting conversions, then you improve them further; if meetings are hard to achieve then skill enhancement is required.
What systems do you have?
So what are the key factors to help you in coordinating and improving your prospecting model and cold call activities? Try some of these:
- Why should someone listen to you? – There has to be a central message to your call process. Have a basic strategy to the call that is useful to the person you are calling. Don’t make calls based on your needs, but focus on them; talk about the other person’s property and how something you are offering will be of use. That could be a special report, perhaps an update on recent sales or leasing’s, or even a chart of property market trends that you can send them.
- Don’t push the other person – Too many agents push a conversation in cold calling. That generally doesn’t work. Polite professional telephone conversations get more results over time. The important thing is that you have something of relevance to talk about.
- Understand your ratios with call conversations and outbound prospecting – When you track your numbers you can see what outcomes you are getting, and if they are fruitful. Whilst everyone will have a different set of numbers to work at over time, those numbers should be improving; that is why you should be making regular cold calls and watching the ratios.
- Create a pipeline of contact – When you connect with a person across the telephone in a positive way, they should then advance up the pipeline of marketing and ongoing contact. Over a period of time you then connect with ever more people in a positive and relevant way.
You can take these simple strategies and merge them into your prospecting and cold calling model. Understand why someone should listen to you and provide relevance around that fact. Grow your skills in cold calling so that your results improve and grow over time. I go back to the point that you should track your ratios.