In commercial real estate agency each day, we are negotiating with many people across a number of challenging situations. Our ability to negotiate is a key part of growing market share and improving our commission opportunities. This then says that we should practice our dialogue and a negotiation skills at every opportunity.
A good negotiator in commercial real estate is one that understands the circumstances, the market, the documentary processes, and the intentions of the parties. It is sometimes a difficult equation to bring together. The clients that we serve expect their agents to be experienced and experts when it comes to the negotiation process.
So what are the negotiation stages and situations that we strike? Here are some of the main ones:
- The cold calling process is really a negotiation to establish a meeting with a new person. Your dialogue needs to be exemplary when it comes to communicating and connecting across the telephone. It is a specific skill that requires regular ongoing practice. In this way you can build connections with fresh prospects for your pipeline of new business.
- A cold call can also be something that applies to dropping into a local business to introduce yourself as a property specialist. The dialogue in that situation is totally different to the telephone process. This strategy can also reap significant rewards through practice.
- A sales pitch or presentation with a new prospective client is a negotiation to achieve a listing. That listing will involve a marketing package, marketing strategy, and listing process. It is interesting to note that the top agents within the market are very good at converting a new property to an exclusive listing. Those more ordinary agents in the market usually take the lesser alternative of an open listing. Unfortunately the ordinary agents struggle with market share as a result of this, and have little control over the deal that could possibly evolve. The message here is quite clear. If you want to convert more exclusive listings to grow your market share, then you need to refine your sales pitch and presentation process. A role playing strategy in your sales team meetings will help. Personal daily practice will also be necessary.
- When you find a suitable tenant for a buyer for a property, another negotiation stage will evolve between the parties. It is wise to remember the requirements and intentions of your client as the negotiation proceeds. Every stage of a negotiation should be carefully checked and documented. When you get to the final stages of offer and acceptance, the agreement document between the parties should be legally accurate, comprehensive, and correct. Some property transactions can be quite complex and for that reason you will need outside assistance to formulate the final document from the offer and acceptance situation.
Given these very common negotiation situations, you can see why dialogue improvement will help you strengthen your market share and commission opportunity in commercial real estate agency. Practice is required.
The retail shop leasing process is quite specific and special. It requires property agents that are very familiar with the retail industry and shopping center dynamics.
It is no secret that the retail shop industry is changing due to the impact of the Internet and the current economic circumstances globally. That being said, the retail shop industry doesn’t disappear it just changes. We are best placed has specialized leasing agents to help tenants and landlords move through the process of change when it comes to shopping centers and specialist retail properties.
Here are some tips to help you with creating your retail tenant mix and plans for shopping center leasing optimization:
- Check out all of the other competing properties in the local area. They will have factors associated with vacancy, tenant movement, and tenant success. Make a list of their tenants for direct contact and cold calling. Some of those tenants will be more successful than others. It is those tenants that you should encourage to move to your property.
- Look at the other competing properties with regards to property improvements, customer access, and customer profile. Also look at the factors of car parking, public transport, and property size. Are there any weaknesses in these factors that can be optimized in your property?
- The franchise groups in the local area will always be a good opportunity for tenant enquiry and new leases. It is simply a matter of understanding the properties that they are looking for. It is likely that they will have specific lease terms and conditions that apply to any premises that they negotiate on. You will need to brief your landlord on the standard terms and conditions that the franchisor requires. The franchise agreement needs to integrate with the lease of the premises. Your landlord needs to understand that fact so that the business can operate within the branding and business agreement requirements of the franchise group.
- With any larger retail property, it pays to stay ahead of any lease issues. They include rent reviews, options, and lease expires. Look at all of these events at least 12 months in advance. This then allows you to plan the interaction with the tenant given the conditions of the local property market.
- If you want to be a retail leasing expert, grow your knowledge with regard to business viability and different business types. Some businesses have different requirements as to cash flow and occupancy costs. If those requirements are exceeded, it is likely that you will have an unsuccessful and volatile tenant. Ultimately that will mean a new vacancy.
- With your existing tenancy mix, consider the factors of expansion and contraction as they apply to each particular tenant. Help the existing good tenants within the property to adjust the leasing needs and remain in occupancy.
- The anchor tenants in a retail property are very important to the overall success of sales, specialty tenants, customer visits, and market rental. Stay close to the anchor tenants as part of an ongoing lease strategy.
- Retail leasing and shopping center performance are quite unique strategies to be developed for each landlord and property location. It is not unusual to have a business plan developed for each medium to large property. In that plan you will have income profiles, expenditure management, maintenance plans, tenancy strategies, tenant retention solutions, and reporting requirements.
Retail shop leasing is perhaps one of the most interesting and rewarding segments of the property market today. That being said, it does require people that understand retail business and property viability.
In commercial or retail property leasing, it is important that you are prepared for the property inspections that you take with prospects. You only have a short time to create the interest of the tenant prospect and move them to a lease offer.
Here are some tips from our Newsletter.
So what is the focus of the leasing inspection? It should be to create the interest of the tenant and remove any questions that they may have regards the property. To do this you have to be prepared.
Here are some leasing tools that you can use as part of the leasing inspection of vacant premises:
- Be aware of the competing properties in the local area. The prospective tenant is bound to have seen those properties with other agents or at least be aware of the space availability and the asking rent. You will have to know the differences in properties and why one rent is more relevant than another.
- The asking rents for your property should be in parity to the market rents locally for properties of similar type. Have you checked that out? Is your asking rent within the reality of the current market rents? How will you pitch the rent requirement to the tenant when they challenge you? How can you sell that rent package? You will need to have your answers ready.
- Take some measurement tools to the property. That will usually be a laser measurement tool to calculate distances, plus a measurement ‘wheel’ that you can use to walk around the property. It is important that you do not certify areas and distances as you are not a surveyor, however you can give approximations to the tenant so they know approximately what factors exist in the property.
- Always have a camera with you to take photos of relevant parts of the property. It is remarkable where those photos will come in handy in later conversation with tenants.
- Take a list of services and amenities in the property, together with fixed improvements that may be relevant and important to tenants in occupation. Some tenants are very interested in communications and power capability in the premises. Ensure that you have the information at your fingertips.
- When it comes to inspecting office premises, the tenants like to know about the finishes that are required in any fitout changes. If your property is a modern property with quality finishes, there will be some guidelines to apply here when it comes to negotiating tenant fitout design and standards. Get details of these things from the property manager or landlord.
- The plans for the property will show as built factors relating to structure, electrical, air conditioning, hydraulic, and lighting. The plans will also show you where the riser is in the building for the tenant to tap into the property services.
- Take notes of all representations made and comments given in a leasing inspection. Those comments could become critical in the ongoing lease negotiations.
- Lastly you should have a reasonable knowledge of the outgoings to be paid by the tenant in the property. Those outgoings will be impacted by the type of lease to be used. Those outgoings should be in parity with other properties of similar size and type in the local area.
When you are fully prepared, the leasing process and inspection becomes much easier. Top leasing agents are always prepared to give the right information in the property leasing inspection.
You can get more tips like this in our Newsletter.
In commercial and retail property today, a tenant retention plan should be part of the services provided by specialist commercial leasing agents and property managers. The retention plan can be a value-add service for the clients that we work for.
It is no secret that the commercial and retail property investment market is under some strain. That is all due to the pressures on the local business community. This will change and improve over time. Up until then, we need to approach the property market with system and focus to help the clients that we work for. The tenant retention plan is one way of doing that.
That’s presume you have a good property to work with and the client to assist when it comes to tenant retention. Here are some tips to help you build the program and the system of retention.
- Review the property comprehensively to determine which tenants are more important to the future of the property. Those high priority tenants should receive special treatment when it comes to lease renegotiation and occupancy. The other tenants in the property may be retained although some form of priority needs to be determined.
- Review all the leases relative to all tenancies. Those leases will contain critical dates and terms and conditions that will have impact on the property function and tenancy mix. Ensure that those dates and factors are allowed for when it comes to tenant negotiation and tenant planning.
- Keep in close contact with all tenants within the building to ensure that any needs of expansion or contraction are fully understood. If you do not do this, it is quite likely that the tenant will look elsewhere to other agencies for assistance and relocation. Before long you will have a vacancy to deal with which could have been avoided?
- To formulate a good retention plan, you need a strategy of rental and lease documentation. The rents for the property can be either gross or net and should be determined based on the trends of the local property industry and the age of the property. The rents should assist the landlord to recover property operational costs (also known as outgoings). Any rent reviews applied to the leases will be based on the rental type and lease term. Strategy is everything with rental choices, so make sure you have the right information to help you with the correct rental choices.
- Lease incentives will vary throughout the year from property to property and with relevance to any new property developments coming up. Incentives will potentially attract your tenants to move elsewhere. For this very reason, your client, the property owner, needs to be quite flexible when it comes to the setting of lease incentives for existing sitting tenants. Failure to provide an incentive to a sitting tenant may very well see them move elsewhere. The cost of a vacancy in a property is significant and most inconvenient at most times.
- As part of the retention plan, review the local area with due regard for competing properties. They will have an impact on your tenancy mix and also market rental. Some of those competing properties will be influencing your tenants to move elsewhere. Be careful and respectful of these competing properties.
So these are some tips and ideas that can apply to the tenant retention program. As a specialized leasing agent, you can establish some real strategy here to help the landlord with their property momentum and property focus. When the property market is slow or tough, the value of a retention program is high. You simply need to structure your fee for service into the appropriate appointment to act.
Finding tenants for your vacant buildings can be a real challenge. The fact of the matter is that most new tenants will come from the businesses in your local area. On that basis the direct personal approach to businesses tends to work more than anything else.
To be successful in commercial real estate leasing it is best to focus on the local business community and the movements that come from there. The best marketing approach for any vacant tenancy or leasing project should be biased towards the local area. This then says that the best marketing campaign can be structured around some of the following local strategies:
- Determine the ideal target market that best suits the property
- Get a signboard on to the property as soon as possible
- Personally canvass it of the businesses in the immediate location
- Circulate simple brochures into the business postal delivery service
- Review your database for any previous leasing enquiries that may not have been satisfied
- Identify the best buildings in the general precinct that may have tenant volatility. Approach the tenants in the building to see if they are looking to move.
The leasing process will always be far more successful when you orientate it towards local businesses and local properties. Your database should contain several hundred local businesses and decision makers for those businesses.
Approaching local businesses
When it comes to the occupancy of a property, local businesses tend to maintain a local focus so that they do not lose their customer base in any property changeover. The fact of the matter is that they want comfortable occupancy at a reasonable rental.
In approaching the local businesses, the following questions and strategies will help you in gathering the right facts and building on the correct opportunities.
- Are they a tenant in occupancy or do they own the property?
- If they are the tenant, ask them some questions regarding the current lease. Most particularly the expiry date of the lease will be of great value to you, and any renewal intentions that they may have.
- Are they under any pressure to expand or contract leased area at the moment? Some businesses simply outgrow their property for one reason or another.
- What can the tenants tell you about their landlord? The detail that you get here could be useful in the future when it comes to looking for commercial properties to sell.
- What does the local business owner think about the local area from a leasing and business angle? Are they aware of any businesses that may be seeking change?
Simple questions like these can help you build a great database of future opportunity in leasing premises locally. Take action today and get out into the local business community. Make them part of your prospecting model.
In today’s property market, your current tenants in your tenancy mix are important to the future of the property. When you create a tenant retention plan, you can optimise the income potential for the property. That being said, a tenant retention program should be part of a professional property management and leasing service provided to landlords by agents. Good commercial property agencies provide this specialised service.
It should be said that tenant retention is not just about lifting the rent for the landlord; in fact, that is probably the wrong strategy to adopt in your plan. It is better to have a few priorities in balance so your retention plan forms a key part of the business plan for the property.
In particular, a good retention plan should include the following as goals:
- Stabilise and minimise the vacancy factor
- Create a group of prospective tenants for the vacancies in the property if and when they arise
- Support the tenant mix so that tenants can occupy in comfort and build their businesses
- Control occupancy costs for the landlord and the tenants within realistic benchmarks
- Underpin the market rental for the property which in turn can support sustained property values for the landlord
- Allow for tenant movements and property refurbishment strategies in parts of the property as planned at the beginning of the business or financial year
- Help keep tenants in occupancy for the long term and in balance with the landlords investment requirements
It should be said that a retention plan is highly important in retail property given that the stability of the tenant mix is required to keep customers coming to the property on a regular basis. Any vacancy in a property is quickly seen and will detract from the image that a successful retail property needs to set.
So how can you establish a plan of this type? Here are a few ideas to help you get started:
- Understand the supply and demand for tenancy space in the local area today. As part of that process get to know what new property developments are coming up that will impact the available space ratio.
- Consider your property as it is today and determine what refurbishment and relocation issues should be merged into your retention plan.
- Split your tenancies into high value tenants and low value tenants when it comes to the future of the property. Some of your tenants you cannot do without and everything must be done to encourage them to stay in a property.
- Anchor tenants will normally be secured on long leases. The instability or change of an anchor tenant can impact all speciality tenants in a major way. Find out when the anchor tenant lease expires and just what the anchor tenant thinks about the property today. Do they intend to stay in the property? When does their lease expire? Can they do more to work in with the other tenants in the specialty areas?
- What levels of trade exist in the retail property and what tenant types are more successful than others? This information will help you find new tenants that suit the customer needs in the property shopping centre or retail property.
- Is your property servicing a particular need? In retail property this could mean ‘convenience’ or ‘destination’ shopping. When you know what works in a property, you can do something more with it.
- Common area use will have impact on special property precincts such as ‘food courts’ and just how customers move through the property. Take a survey of those factors and form and opinion as to how successful they are now. Changes may be required to help in tenant sales and retention.
- Look at all the leases in the property and identify any leases that have market rent reviews, options, or expiry dates in the next 2 years. Those tenants or leases will be a major focus of your retention plan.
You can add to this list based on your property and the overall location. Importantly you should create a tenant retention plan that can help improve the performance of any property in any market. That is why you were engaged by the client in the first place; correct?