As part of your commercial real estate activity, you should research your property market at least quarterly and preferably monthly. On that basis you can project what sale and leasing activity is currently underway and what will occur over the coming foreseeable future. Essentially you are looking for listing opportunity, growth of commission, and new business. You are also looking to reduce any threats from industry downturn or change.
It really doesn’t matter whether you are working as an individual sales agent, or as part of a commercial real estate team. The same rules and processes apply when it comes to researching your market. You need to know what’s going on and you do need to set some specific strategies in place to help you capture the right levels of new business.
Here are some ideas to merge into your commercial real estate market research. After gathering the information, you can apply the findings to your personal business plan.
- Determine the geographic zone where you will get most of your new business from. That will be an area where you can focus almost all of your marketing and prospecting. It can also be an area which allows you to survey and research current activity. This then becomes your primary area of focus that should produce 75% of your listing and commission income opportunity. The other 25% of business will come from outside of the zone, or alternatively referral and repeat business.
- Given that you know where the business is now going to be coming from, determine the best customer demographics set that will apply to your prospecting model. Normally you will be focusing on local business proprietors, property investors, and industry professionals. On a street by street and property by property basis, it is necessary to research these people and make the direct contact. The direct contact will involve cold calling, door knocking, and direct mail.
- Research the history of sales and leasing activity in your local area. The critical zone of activity will be over the last five years. Create a graph from the numbers that you identify. Look for the peaks and troughs when it comes to seasonal sales and leasing activity. Determine if there are any opportunities and changes on the horizon.
- Review the supply and demand projections for commercial, industrial, and retail property in your target area over the coming three years. As part of that process you can visit the local planning office and regularly update yourself with changes to the development plan and or new projects coming up. Look for those changes that could impact the market. Seize on the opportunities early before other agents find them.
- Do a competitor analysis throughout your region. Some agencies will be better than others when it comes to results and market share.. Some agents will be more effective than others. Look for the differences with the successful people, and then determine how they have achieved their market share and dominance. Successful agents leave clues as to process and system. This can be replicated.
- Do an Internet advertising count of all the listings currently available for sale or for lease with your competitors. This should be on an agency and or salesperson basis.
- Do a signboards count all the listings currently available for sale or for lease. This should again be on an agency and salesperson basis.
- Assess the factors of time on market when it comes to those properties that remain outstanding, unsold, or vacant.
- Look at the factors of marketing that apply to current listings in your local area. Look at the differences across all agencies in marketing when it comes to open listings and exclusive listings. Can you do anything more effectively and differently than the other agents?
Given your local property market, and property specialty, you may very well be able to add something to the list. You can now see the importance of understanding what is going on currently in your local area and how it can impact your future promotional activity.
In commercial real estate today, you must get the pricing and marketing strategy right when it comes to listing the property. Competing properties and economic pressures mean that the rates of enquiry for the average property are less. We as agents must do more with less when it comes to attracting enquiry and converting offers on a property. As part of that process, our clients should be realistic when it comes to listing and marketing their property.
As a general rule, highly priced listings with clients that are beyond the reality current market conditions should be declined. Let some other agent struggle with the listing.
So the pricing of a property is really important. The client will have their own impression of what the property is worth however it is likely to be inflated and not aligned to the market conditions. Here are some rules to help you with the pricing and marketing of your listings.
- All of your listings should be exclusive listings. Open listings are a waste of time as you cannot control the enquiry and stock. Only take on open listings if you want to have the property on your books; in other words you believe you can take some prospects to the property.
- The property type and the market will have some impact on how long you should take on an exclusive listing. Generally speaking, an exclusive listing should be for between 4 and 6 months. If you have not sold or leased it by then, it is likely to be a ‘dead listing’ that should be taken off the market for some time to ‘freshen up’.
- Check out the competing properties in your area before you quote prices on a property to be listed. Understand why those properties are on the market and why they have not sold or leased yet. Do not repeat the mistakes of those other listings.
- New property developments will have an impact on the supply and demand for property locally. The zoning of the property will also have a factor to consider on the listing price structure. Study these factors and determine how they impact your property and the client.
- Review the improvements in the property, together with the services and amenities provided. Are they of relevance to the market today, or do they require upgrade? Degraded or poorly maintained properties should be carefully considered prior to the start of any marketing campaign.
- The price of a property will be impacted by the method of sale, so chose the method of sale that buyers will react to in a positive way. The first 6 weeks of a marketing campaign are really important and you must optimise your enquiry chances.
Look at all of these things together with the factors of location for each listing. The location could have a major impact on your property marketing campaign and pricing structure. A successful property sale is the result of careful planning and the right decisions.
When it comes to selling and leasing commercial property today, it is really important that you understand the factors relating to competing properties in your local area.
Prices and rents for commercial and retail property will change throughout the year. They will also change by location and property type. Assessing the changes will allow you to be accurate and relevant when it comes to each and every particular property listing or presentation.
It is interesting to observe the inflated motivations and intentions of clients when it comes to setting prices and setting rentals in the sale or lease of any property. Most clients have a very good understanding of the price or rent that they require, with very little understanding of the actual results in the market today. This then says that every property listing should be well considered and negotiated between the agency and the client so that the property can be successfully marketed. You do not wish to waste your time now do you?
Top agents will avoid unrealistically priced properties and those clients that seem reluctant to accept the prevailing the factors of the local property market. Let’s face it; there are plenty of other listings out there to focus on.
Some agents will still however take on a property listing that is overpriced, expecting that they can condition the client over time to the true market conditions. They may also use a time based method of sale such as auction or tender to achieve that outcome. The strategy does work, providing you are well skilled in the client conditioning process.
Here are some factors to help you with local property market conditions and prepare yourself for future listing situations with clients.
- Look for similar property types in the local area. Gather information regards those properties when it comes to marketing strategies, prices or rentals, and time on market. It can also be that the agents involved with those other listings are not servicing or marketing the properties well. You will need to form an opinion that is relevant and accurate. Look at all the competing properties locally and inspect them in some basic form prior to using them as evidence with your client.
- Understand the differences between properties when it comes to improvements. Also consider the locational factors, and the size of the properties in question. Can one property be considered more attractive than another, and for what reason? Will that have an impact on property marketing, potential enquiry, price, or rental?
- Assess the time on market for each property type in your territory. The time on market will be impacted by current property enquiry and the supply and demand for premises. Future developments will have impact on existing properties locally. The local business sentiment will also have relevance to the time on market.
A successful property listing will generally be created providing you understand the prevailing market conditions, and can convince the client of those factors. It takes practice, however the client conditioning process will help you in establishing well priced listings that will attract enquiry. That’s what commercial and retail real estate is all about