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How to do a Commercial Property Leasing Inspection

When inspecting commercial property with a prospective tenant you will need to give the person concerned a package of information that outlines the property detail. The contents and comprehensiveness of the presentation packet will assist you greatly in converting the deal to a successful lease. So let’s give some thought to the contents of that ‘packet’. We have put these separate matters in a logical order that is common in the market place.

  • Covering letter – This needs to summarise all previous conversations that you have had with the decision maker. It will thank them for letting you serve them with their leasing needs and it will then detail your understanding of the occupancy needs. From that point you can overview the properties that you are to take them to and let them inspect. Your reasons for showing them these particular properties should also be given.
  • Map of the area and greater region – Maps are always of high value in the inspection process. You need to give maps of the immediate region of each of the relative properties to be inspected and also a map of the greater region showing transport corridors and key points of business geography such as city centres, main roads, and railheads or airports.
  • Locate the properties – On your regional maps ensure that you highlight the location of the properties that you are showing. Some prospective tenants do not know where they are in relation to other parts of the town or community.
  • Property review information sheet – As the name suggests every property must have a property information sheet that is carefully constructed with key property information. Given that properties can be of different types such as office, retail, or industrial, the property information sheet will be adjusted with the relevance to suit. This will include:
  • Buildings name
  • Address
  • Area detail (site and tenancy)
  • Asking rental (for the specific space plus any supplementary rentals such as signage, car parking, storage)
  • Outgoings applicable to the deal
  • Asking lease term
  • Map of the property or tenancy
  • Photographs of the property inside and out
  • Floor plans of the space available for lease
  • Details of council zoning that effects building usage
  • Building detail to suit property type (floor loadings, height of warehouse, span detail in warehouse etc)
  • Car parking detail and access points (plus a plan of the car park)
  • Access detail and transport systems or corridors nearby
  • Improvements provided in the premises for the occupants (carpets, walls, floors, fitout configuration, electrical supply, air conditioning layout)
  • Services in the property (power, water, communications, lighting, air-conditioning, cleaning)
  • Amenities provided for occupants (car parking, showers, tearooms, toilets, common areas)
  • History brief of the property (this is general information on the age, architects, engineers)
  • Demographic overview of the region
  • Profile of neighbouring properties
  • Sample draft lease document – This is not always provided at the first leasing inspection with the tenant, but it is helpful to be able to go through the general terms of the lease with the prospective tenant. This says that you must feel comfortable with knowing how to quickly scan through a lease and look for key issues to answer simple and focused questions from the tenant. Detailed lease questions are best referred on to the solicitor acting for the landlord.
  • Inspection tools of trade – In any inspection you should carry the essential tools of trade to deal with any simple questions. These tools should be in your motor vehicle and easily accessible.
  • Measuring tape (up to 10 meters)
  • Measuring wheel (for large distances)
  • Laser pointer (to illustrate points of interest in the inspection)
  • Laser measuring device to measure rooms and internal space or height (you can get these from any large hardware store)
  • Camera (to record matters of interest or questions from the tenant)
  • Note pad
  • Mobile phone (so you can call the office or the landlord if needed)
  • Compass
  • Dictaphone for general notes during inspection

 

GOLDEN RULE: In any inspection of a property should you have any doubts or questions in your own mind regards a request for information from the tenant, do not ‘guess’ your response. Always suggest that you will get the full and correct answer that the tenant needs, and that you will come back later that day in writing with the relevant information. Legal action is not uncommon in the industry for things that have been said without due care.

BUSINESS COURTESY: After all leasing inspections are undertaken send a simple letter or email to the prospective tenant to thank them for their interest and suggest that you will be happy to help them with any further questions that arise. Also drop a note off to the landlord summarising the inspection and the outcome to date.

RECORDS: Keep separate written notes after all inspections with each potential tenant; it is surprising how this helps when you have premises that are attracting great interest from the market. Whilst it should go without saying, all prospective tenants must get entered into the office database after the inspection so that you can optimise the enquiry on other premises if necessary. Most tenants look around the market for only a short time (less than 2 months) and then make a new occupancy decision.

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How to Do a Commercial Property Management Proposal

In commercial and retail real estate, it is common to be asked to do a property management proposal to manage a property that has just been sold or leased. That is usually the best time to secure a new management. The owner of the property at that time is normally quite receptive to discussing property management strategies and services. Most property landlords do not have either the experience or the expertise to manage their property comprehensively. They have not got the latest tools and the systems to correctly manage the cash flow in keeping with the tenant mix and the lease profiles. When you have a number of tenants in the building, the entire management process becomes more complex and time consuming.

Managing a property is not simply just a matter of collecting rent and negotiating leases. There are many strategies and systems to be applied across the property for the long term. In this way the rental and the tenancy mix can be structured or improved. A property management proposal should be prepared with due relevance to the property function and requirements. That says that every proposal should be based on the needs of the client and the challenges of the property. Here are some factors to build into your proposal structure:

  • The time involved in managing a property will vary substantially based on the needs of the client and the challenges of the property. When setting a new fee for a new client, it is wise to consider the number of hours required each week to perform the expected tasks of management. When you relate this time factor to your operational costs of the division, you will soon see the breakeven point in the fee structure. Far too many agents simply set a fee based on known cash flow without the regard for expected time input.
  • The tenant mix for the property will have both challenges and opportunities. The challenges will be in upcoming vacancies and the repositioning of sitting tenants. That is where lease management becomes really important to the property process. Opportunities will always exist in renegotiating leases with the sitting tenants to improve occupancy and potentially the market rental. Fees should be established in your proposal to cover the renegotiation activities with existing tenants.
  • Be quite clear when it comes to the reporting processes to be provided to the landlord. Some landlords can be overly demanding when it comes to the weekly and monthly property reports. If a higher reporting requirement exists, then the fee structure for the property management service should be appropriately set.

It is interesting to note that a quality property management service will only occur if you have good people within your division. That is managers with the experience and the maturity to negotiate leases, optimise income, and manage expenditure activity. Property managers of this type can be hard to find and usually demand a reasonable salary base. That being said, they will always produce better quality work across the portfolio for the clients and the agency principal. To establish and run a professional commercial property management division, you need good people; there are no short cuts.

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Cold Calling Tips for Commercial Agents and Realtors Today

When you work in commercial real estate agency, the prospecting process should be part of every working day. Cold calling is a central component of that prospecting activity. When you make the calls professionally and directly each and every day, you will produce more opportunity faster for yourself. That being said, the calling process requires diligence and personal persistence.

To get the cold call process underway within your daily agency business activities, it is wise to consider and control the following issues.

  1. Define your property market geographically so you know exactly where you need to be directing your calls. The best way to do this is on a simple map of the local region. Choose the roads and the boundaries that capture the best segments of the business and property community.
  2. Within your defined territory, determine the types of properties that you will be acting on. Typically they will be Office Property, Industrial Property, or Retail Property. Each classification of property has specific attributes that need to be understood. This is where your personal market knowledge becomes very important as you consolidate and grow your market share. You cannot be an expert across the entire property market and every property type. For this reason you need to specialise.
  3. Once you have defined your property market and property type, it is essential to study the properties that are currently available for sale or lease within that area. When you start cold calling, you will find that information of value. Some business owners and property owners will test you out regards existing listings near to them and the existing property market activity.
  4. When you decide to start making calls into your property market, you will need lists of businesses and property owners to direct those calls to. The research side of the prospecting process continues each and every day and should be merged into your diary process. Finding property owners can be a slow process however it needs to be done. Finding business owners is a lot easier and can occur from use of the business telephone book. Either way you will find the right people to talk to through consistent research.
  5. You should be prepared for two or three weeks of hard work in your call prospecting before you see significant opportunity evolving. However, the process does work and simply needs to occur each and every day. When you stop the calls cycle, you fall backwards in your momentum and consistency.
  6. To help your momentum and your call process, develop a very simple script to support your initial dialogue when you make the calls. The cold call should be a conversation and not a sales pitch. Your target from the calling process should be to create meetings with people who have an interest in local property matters.
  7. Build your database from the results of your calls. This is a personal process and should occur at the end of the day when time is less critical.

 

You can generate a lot of new business from the contact calling process. It is a personal discipline that requires practice and focus. Should you choose to develop this skill, new listings and commissions will be far easier to achieve.

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Professional Top Commercial Agents

Commercial real estate sales and leasing is a very competitive industry and the large amounts of money both in commission and in property prices make the ‘players’ of the industry compete in ways that can seem aggressive and pushy. This aggressive and pushy focus does not win you market share or better deals in the long term as the real focus should be your absolute professionalism. You must be the best in your market and people need to know that you are. Being the best in your industry does not mean ‘aggression’, but rather ‘relevance’. The more ‘relevant’ that you are, the more business you will attract. Its a simple rule but it brings major results.

Now is a good time to ask yourself how professional you think that you are now or you can be this year in commercial real estate. So what does professional mean for the commercial real estate market in your area? Would you use yourself to market and sell property locally based on your skills and knowledge? If the answer in ‘no’, then ‘We have a problem Houston’.

Getting Professional with the Right People

Let’s create some rules for you on this. Getting up close and professional with the sellers, their ideas and their motivation is critical in the prospecting, listing and closing process of commercial property.

  • Information must be a daily process for you in your commercial real estate business. All the information gained every day about and in the market should be captured and included on an appropriate series of detailed forms that are relevant to the property types and your market.
  • When you capture data for a property, make sure that the client sees your diligence in the information gathering and analysis process. Use your professional processes obviously and in full view of the people that matter.
  • Record your property information and market intelligence as both hard copy and later as part of a computerised listing data bank. The more you know about your market and can easily draw on later, the more business you will find and attract in the long term.
  • If you do not have the advantage of a specialised commercial property software solution for collating your data then use a simple spreadsheet. The process is easy and effective and you can use it anywhere and at anytime.
  • Spreadsheets can be sorted and manipulated to give you the sales and leasing information that you need conveniently and concisely. You can even do this in front of the client as a point of difference in your discussions.
  • Computer and software literacy in the industry is now the ‘norm’ and not the ‘exception’. At the basic minimum today, you should be very conversant in using commonly available software such as ‘MS Word, Excel, Publisher, Outlook, Adobe Acrobat PDF, and Access’. We put ‘Access’ on this list as it is a very powerful and flexible database tool that is so versatile and talks to all other major Microsoft programs.
  • If you have some spare money in setting up or growing your commercial real estate business and want to get a database program to collate and control your customer relationships, then try the commonly available ‘Goldmine’ or ‘ACT’. They are well proven globally and cost effective for the individual. You can trial these programs from the web for 30 days to see that they suit your needs.

So let’s now move on to the keys to effective relationships in commercial real estate.

Relationship Building

Here are six simple ways that you can start to build your relationships consistently and professionally in commercial property sales and leasing.

  1. Property is very much a person-to-person business. Whilst your clients or prospects may be attracted in the first instance by your firm’s name, advertising etc., eventually people trust and deal with people (not firms, or organisations). Consequently, your personality, approach and attitude are very important to your success. You are ‘in-charge’ of these factors and only you can do something with them.
  2. You should not attempt to adopt artificial characteristics or mannerisms that do not come to you naturally. If you are in any way ‘artificial’, the client will see that you are not being yourself and will see weakness in your processes. Nevertheless, you must be able to provide your client with the QUALITY SERVICE that he or she demands, hence adjustment of your skills and actions may be necessary. Clients in commercial real estate will typically be astute business people who are used to dealing with specialist professionals and will accept nothing less. To help with this aspect you can and should adopt a daily practice process of the critical skills of communication and market knowledge that you need to draw on frequently with the properties in your market. This will help fast track your success in listings and deal conversions.
  3. What, then, does your Commercial and Industrial client demand? Clearly, he or she wants someone with expert knowledge. Firstly the whole basis of the client retaining you is that you possess a level of expertise and skill that the client has not got himself, and that these aspects are significantly better than your competitors. Secondly, the client will seek a friendly, confident, businesslike approach from an agent who appears well organised, successful, and well presented. They want someone who is creative and enthusiastic, willing to LISTEN to the client’s requirements and, most important of all, to instigate timely ACTION to fulfil them. Sometimes in this process it helps to think of the things that you would expect of an agent if you were a client. The client has to have confidence in you to help them. It is not all about price and commission; it is about your ability and relevance to achieve the result that the client wants. If you lack in ability and relevance in your market segment then start to practice and improve your weakest points as they alone will hold you back and hinder your conversions.
  4. In Commercial and Industrial Property Marketing, never be pressured into making rash statements or opinions. The sector is complex and the vendor will respect you taking a little more time to research the particular property and to prepare a comprehensive marketing submission prior to securing a listing. If in doubt on any property proposal or related question, do not answer or respond immediately, but rather seek the extra time to get the right detail that you need.
  5. Proposals and submissions should include fully detailed relevant matters and recommendations. That will include things such as marketing proposals and strategies, timing, market conditions and opportunities, advertising budget, commission, anticipated market value, and target market. The submission should, without padding, reinforce your ability to carry out the work and facilitate action that will secure the listing for you. A key component of the proposal process is identifying and then handling the worries and concerns of the client. If you do this in the proposal or submission to the client then you will be all that much closer to closing the listing.
  6. Submissions and Proposals to the client must be completed in a timely fashion and then followed up regularly and professionally until a decision is made. Once the listing is secured, it is then essential for all later contact, negotiations, and final agreements to be supported and documented clearly and correctly. This extends throughout the marketing period, the inspection process, the negotiation, and the contact or lease. When you do this correctly you build a high level of trust with the client and this is invaluable when it comes to the actual deal, the future and other transactions with the same people.

All of the above matters are not difficult but they do demand attention and diligence. The rest is up to you.

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Tips for Auctioning a Commercial Property Today

City buildings on river

Even when the commercial property market is slow and difficult, there are certain advantages in the auction process that should not be overlooked or underestimated. The greatest advantage for all concerned is that the auction process gives momentum to the serious buyers that are available today and those that are looking for property to purchase.

Even in the toughest of property markets, there will always be buyers available for most quality properties. The auctioning of a property is a very focused method of sale; it is implemented over a period of 6 to 8 weeks. During that time the appointed salesperson, the agency, and the client all have a vested interest to implement the strategy required to create buyer interest.

If the client is serious about taking their quality property to the market, then an auction process is worthwhile considering. The property may sell on the day or it may sell soon thereafter. Importantly the salesperson in the auction process has done the necessary work to flush out a few potential buyers that will be lodging offers as appropriate.

series of charts in commercial real estate presentations
Commercial Property Presentation Strategies

 

 

Realistic Auction Clients

The client or owner of the property that is to be auctioned has to be realistic regards expected current market prices; that conditioning or information process is really the job of the salesperson to provide and implement. The client needs to be fully informed regards the factors of the local property market as they apply to the property type and the method of sale.

 

Unconditional Contract of Sale

Another clear advantage of the auction process is that the resultant contract is normally unconditional and will proceed to a precise and timely settlement. The factors and delays of due diligence and subject to clauses that you see in normal contracts do not normally apply in auctions between the time of sale and settlement. That being said, the client must ensure that all relevant facts and property details are accurate and correct prior to the auction marketing and inspection process. The bidders on the auction day need to be fully informed about the property prior to the placing of their bids.

 

Auction Success Rates

The auction success rates will vary from time to time in your local area based on the amount of enquiry and the number of people that attend the property auction on the day. That being said, every property that is taken to auction has to be taken through a serious amount of marketing and deliberate attention to detail so that the correct amount of enquiry can be generated. Here are some clear strategies and tips that can apply to the auction of listing and marketing process.

  1. The auction method of sale is a timed strategy designed to flush out the buyers in the market. Genuine buyers always exist for a quality property; you just need to find them.
  2. The momentum of an auction should be timed across a period of 6 to 8 weeks. Most of the marketing campaign should be expended in the first half of that time period.
  3. Create a quality information memorandum relative to the property prior to the commencement marketing. When people make enquiries, and they are suitably qualified, you need to be sending out the information memorandum quickly and efficiently.
  4. Depending on the property, there may be a need for confidentiality relating to the information memorandum that you are to issue. This is normally the case when you’re dealing with larger properties with extensive tenancy details and matters relating to financial performance. On that basis, you may need a confidentiality agreement to be signed prior to providing the information memorandum and inspecting the property with qualified prospects.
  5. Design a comprehensive marketing campaign that is targeted to a specific target audience and regional location. Most purchasers of commercial property today come from the same general region and the key asset under promotion.  Get to know all of the local people in your property market that could be active.
  6. Check out the prices for similar properties in the region over the last two years. Identify any competing properties that will be on the market at the same time as your subject property.
  7. Get all the necessary reports and documentation together that support the function of the property, the improvements, the tenancy mix, and the property ownership. All of this should be done prior to any marketing commencing. Remove any hurdles or problems as part of this preparation process.

In any commercial or retail property market and at any time, the auction process is worthwhile considering as an alternative method of marketing. If that is to be the choice applicable to the subject property then the property owner, the agency, and the salesperson need to establish a firm mutual strategy of auction marketing, inspection, and promotion to get the correct message of the property out to the targeted audience. If the client wants a timely result in selling their property then the auction process is worth considering.

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Advertising Strategies in Commercial Real Estate

city scene at sunrise

Advertising and marketing is the only way of getting many people interested in a commercial property in a short period of time. The more that people know about the property, the greater the chances of someone liking it, and wanting to buy. When you can get people to like a property, the higher the asking price can be, and the greater the potential for genuine enquiry.

Although some Commercial Real Estate companies pay for the advertising themselves (and the vendor gets what he or she pays for; little or no advertising and poor results).

Anyone could put their property to auction for a free market valuation, with an impossible reserve price and no intention of selling.

real estate prospecting
Commercial real estate prospecting system for agents and brokers

 

Getting the Marketing Message Right

Selling a commercial property is a business transaction and a joint effort. A vendor who spends money to make money is a genuine seller. The newspapers get the advertising money, in return for which the vendor receives AGENT SERVICE, EXPERTISE, LOYALTY AND BEST EFFORTS.

If a commercial real estate auction company paid for the cost of advertising for each property on their books, (say 200 properties) their classified and display advertising costs would be over $50,000 per month!  They would quickly go out of business.

 

Know Your Marketing Requirements

In choosing an advertising budget, the vendor should carefully consider what the advertising is required to achieve. The more advertising that can be done the better for the client; more people will know of the property and its availability.  Give the client some marketing campaign choices as you pitch for the listing and ask for vendor paid marketing funds.  When you take the comprehensive approach, it is hard for a client to ignore the marketing story and the need for them to commit to the promotional campaign.

THE CHIEF CONCERN OF A VENDOR SHOULD BE TO FIND A SOLUTION TO THE PROBLEM OF HOW TO GET FULL EXPOSURE IN ORDER TO ACHIEVE THE MAXIMUM PRICE FOR THE PROPERTY.

Individual advertising budgets in Commercial Real Estate are tailored for each property. Agent’s commission, legal fees and advertising costs are often paid for in just one higher bid at auction. (As a guideline, adequate advertising costs should be approximately 1% of the value of the commercial property being offered for sale).

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Market Knowledge Tips for Commercial Real Estate Agents

city buildings on harbour

In commercial and retail property sales, as a commercial realtor or agent, it is essential for you to understand the trends of the local market and sustain the right type of market knowledge.  This information will help you greatly when it comes to the listing and presentation stages of interacting with the client.

Most clients would like to think that they know a lot about the property market, and most particularly their property, however, the truth of the matter is that they are sadly lacking when it comes to true market awareness.

real estate prospecting
Commercial real estate prospecting system for agents and brokers

 

 

Be Market Fact Informative

On that basis, we should take the client through an informative presentation that helps them understand just what is going on in the property market today.  Here are some guidelines for that.

  1. Existing listings on the market now in the local area will have an impact on the particular property being listed.  Look for those other listings in the local zone or precinct that are comparable to your listing and priced to sell quickly.  The question will be just how long those properties have been on the market and why they may not have sold yet.  Those questions will give you some trending factors for your listing.
  2. Prices being asked will vary from property to property.  In some cases, the type of enquiry in the market today will have limits on the amount of money that can be spent.  As the price of a property goes up or is in the higher price range, the levels of qualified and valid enquiry fall away.
  3. Prices achieved in an actual sale should be tracked.  It is sometimes hard to get the sale results from a particular property however over a few months the word will get out and you will know the difference between the original asking price and achieved sale price.
  4. Time on the market will extend when the market is slow or the property is unusual.  Look for those factors at the time of listing.  The client will need to be briefed and primed for the slow sales cycle.  That being said, there are always ways to shorten the time on the market.
  5. Where the enquiry for the property comes from during the year will vary.  Sometimes the enquiry will be local, whilst at other times you can look at a broader market for the potential property buyers.  These facts will impact your marketing recommendations and decisions.
  6. What are the people or buyers looking for when it comes to particular properties today?  Older properties may be challenged by technology and the services and amenities that are available in the listing.
  7. What is the target market for the property?  On that basis, the question should be asked as to how the property should be featured in any marketing activities.  You are the expert so your opinion and expertise can solve that question.
  8. Tell the client of the best method of sale to suit the market and the property today.  The client wants results and the best method of sale will have an impact on the type and volume of enquiry that you get.

All of these factors will help you in showing the client the best way forward.  When you list a property for sale, the client’s decision to list should not be based on the discounts that any agent offers; but rather the combination of strategies that evolve from all of the above.  That is the making of a top agent today.