Key Performance Indicators in Commercial Real Estate Leasing

The commercial real estate leasing market will change throughout the year based on business activity and sentiment.  For this reason you do need to set some performance indicators that will help you understand where the market is changing and what tenants are looking for.

A successful commercial real estate leasing executive will support the property management division and the sales division within the same business.  There should be a strong integration between the leasing activities of your top leasing people and the other divisions of your business.

Every property type is unique and special when it comes to leasing.  Special skills are required when it comes to the differences of property types including industrial, office, and retail property.  Specialization on the part of each individual leasing executive will help attract the clients to use your agency services.

Top leasing agents provide specialist leasing services and are known for that skill.  They help clients with strategies including the following:

  • Vacancy management
  • Tenant sourcing and selection
  • Lease terms and conditions
  • Tenant retention
  • Outgoings recoveries
  • Vacancy minimization
  • Project leasing
  • Renovation and relocation strategies
  • Tenant mix and tenant clustering
  • Rental strategies and rental types

So an expert leasing operative should understand all of these factors and provide specific solutions to the clients that they serve.  There is no point wasting this knowledge on a small and below average property; aim for the top of the market and the quality properties that need top servicing.

Some top agents choose to work with leasing understanding the opportunities that they will get in sales at a later time.  The strategy is wise and does have rewards over the long term.  The landlords of today with a leasing requirement will be the property owners of tomorrow seeking to sell their asset at a reasonable price.  That being said, the strategy behind every lease should be an enhancement to the physical function and sales opportunity for each property.

An average and generic lease will do nothing for the future sale of the property.  True commercial and retail leasing specialists really do understand how to structure a lease and make it attractive to the future of the property and of benefit to the property owner.

Leasing specialists should look to the market regularly to understand the opportunities coming from the business community and the property investment community.  These are the indicators to monitor:

  1. The supply and demand as it impacts particular property types
  2. The levels of market rental that are being achieved across the various categories of properties
  3. The time on market applying to vacancies locally
  4. The lease standards that are expected on the part of landlords when it comes to a new lease structure
  5. The incentives that are in the market today to attract new tenants
  6. New property developments that could have an impact on existing occupancy rates and tenant movement
  7. Vacancy rates that exist now in the market and the trend upward or downward
  8. Business sentiment as it relates to property occupancy costs and relocations
  9. The improvements, services, and amenities that tenants are looking for in a new lease

These indicators will help you with identifying and tracking future leasing opportunities.  Get to know all the businesses in your local area and you will soon see the relocation opportunities and leasing fees that exist.

Commercial Real Estate Agents – Turn Market Problems into Opportunities

In commercial real estate today many agents will say that the property market has changed, and indeed it has.  The fact of the matter is that it is always changing and we as agents must live with that change.  If we want to earn good commissions and find more listings, we have to use that property market change change and do something productive with it.

In any working year and selling season you will find common fluctuations in all of the following:

  1. Lack of tenants to fill the existing vacancies
  2. Slow deals and decisions when it comes to property sales or leases
  3. Lack of buyers coming to you from the marketing efforts and advertising
  4. No developments coming up to put more space into the market
  5. High vacancy factors in existing properties
  6. Low grade stock and nothing of quality available to rent or buy
  7. Too many properties on the market in either sales or leasing

The real issue here is that these things happen all the time.  If any of these things are frustrating you now in your commercial real estate agency, then have a good look at your prospecting efforts and just how many people you talk to every day.  It is quite likely that you have a poor or non-existent prospecting model.

Most agents that struggle with the changes in the property market are those that do not have a solid database of qualified prospects and contacts.  Those agents live from day to day on the results that they get from ever new listing and the advertising that follows.  They lack new people and established contacts to talk to.  They generally have not created the pipeline of contact that is so important in our industry.

It is a fact that the cycle of property activity in commercial real estate is quite long.  It can be months if not years for some of our prospects to take action or deal with a property matter.  Your success in the industry will be strengthened by the number of people that you know and the frequency of direct contact that you make with them.

When you look at a list like that mentioned above, you can turn every market ‘negative’ into a ‘positive’.  For example:

  1. You can specialize in finding tenants when they are few and not overly active.
  2. You can improve your negotiation and marketing skills to put urgency into the average property transaction.
  3. You can get to know lots of local business owners and property investors so you have people to talk to when a quality listing comes onto the market.
  4. You can become a specialist in selling or leasing a good property ‘off market’ when other agents are struggling with the traditional way of finding buyers and tenants.

You can turn every negative market situation into a positive one if you work at it as a specialized commercial real estate agent.

Big Tips in Tenant Mix Analysis for Commercial Real Estate Agents

When it comes to leasing and managing a retail property today, the tenant mix strategy and analysis process becomes critical to rental stability and minimising the vacancy factor in the property.  Given that this property market is under some pressure currently, you as the leasing manager or property manager need to protect your tenancy mix and the income that comes from it.

A good tenancy mix will reflect in the stability and growth of trade for the smaller tenants in the retail property or shopping centre.  That being said, you still need to have the right tenants in the property that satisfy the needs of customers.

Here are some ideas to help you with improving the tenancy profile across your property.

  1. Maintain close business relationships with all of your tenants.  When it comes to managing or leasing a retail property, you should be meeting your tenants quite regularly; that will usually be two or three times a month.  Retail tenants are quite volatile and will react quickly if sales are down or the property is performing poorly.
  2. Understand the leases as they relate to each tenancy.  That will include rent reviews, lease expiry dates, lease renewal options, make good provisions, outgoings recovery, and other critical terms and conditions.  Make sure that all of these issues are correctly captured into a diary based software program that can tell you well in advance of the actions that you need to take.  As a general rule, any issues that are to occur inside the next 12 months should be commence early.  In this way you will be well prepared for protracted and slow negotiations if they are to occur.
  3. Understand what the customers are looking for when it comes to visiting your property.  The best way to do this is through some survey process on the property over a period of two weeks each quarter.  You will then get a reasonable idea of shopping needs, and customer requirements.  You will also identify the weaknesses in the property that can be addressed before they have impact on sales.  It is a fact that retail shopping patterns are changing, however they will not disappear.  You simply need to adjust your tenancy mix over time to suit the requirements of today’s trends in retail marketing.
  4. Develop a series of clusters within your tenancy mix.  These clusters should be comprised of specially selected tenants that complement the retail offering of each tenant nearby.  A customer can then move from one shop to another as they purchase goods.  You can also choose tenancies for your cluster that retain the customer’s interest in the property and the location.  A coffee type tenant in a cluster will extend the shopping potential of the customer in the cluster zone.
  5. Within the property you are likely to have one or more anchor tenants.  They should have been chosen for their relevancy to the surrounding customer demographic.  You can then position the specialty tenants and the clusters based on the location of the anchor tenants.
  6. It is interesting to note the different shopping habits between males and females.  Generally speaking the shopping patterns of females is far more complex to that of males.  A female spend far more time in the property moving from shop to shop and looking at many different things.  A male will generally go to the property to purchase one or two things and then leave.

It is a fact that customers expect a vibrant property when they visit.  This will include presentation, other customers, and great tenants.  For all of these reasons, you will need to balance your tenancy mix accordingly.

Commercial Real Estate Agents – Commercial Property Marketing Tips for You Today

When it comes to marketing a commercial property for sale or lease, you can improve the results that you get through some simple steps and strategies.  Gone are the days of generic marketing.  Every advertising dollar needs to be optimised.  Property enquiry just has to be created for the best possible result.

Here are some tips that can be applied to the property marketing process in your area and by property type.

  1. Review all competing properties before you form an opinion on price, rent, or marketing method.  There is no point in repeating problems or errors that others are making in property marketing.  Check out those other properties for price, rent, and enquiry.  Your marketing strategy needs to be better so decide what ‘better’ means from your new listing perspective.
  2. The first 3 weeks of your marketing effort are really important, so decide what will be done in that period of time and monitor the results.  Use a ‘Gantt’ chart to establish your processes for the client.  The chart will help them see what you will be doing and when.
  3. Keep the client fully briefed through each part of the marketing effort.  You should have vendor paid funds for that property promotion, so spend the money as part of an agreed marketing and advertising effort.
  4. Every enquiry that you get should be qualified and then put into your database.  Over time that database will be a key component of your business processes and networking.
  5. The internet is a really important part of every marketing effort today.  Search out the ‘keywords’ on the search engines that are being used for property enquiry today.
  6. Local businesses should feature in the early stages of the campaign.  A quality listing is a great excuse to talk to the local business people and see what they know or may be looking for when it comes to a property move or upgrade.
  7. A good signboard will help the property effort.  Get the signboard onto the property as early as possible.  When that occurs, talk the nearby property owners and investors.  You will get a lot of market intelligence that way.
  8. A ‘high end’ property advertising campaign is something that builds brand and identity.  Tops agents use ‘high end’ campaigns to create enquiry from the local and regional area.  This then says that all of your campaigns will strengthen your identity as a good agent if you let the marketing set a solid benchmark of quality and relevance.  ‘Ordinary’ is not a good word when it comes to property marketing.

Commercial real estate is a people based business.  When you really understand that fact, you will know what you should do every day as part of building your momentum in property marketing.

Commercial Real Estate Agents – Lease Renegotiations are Fee Opportunities

In commercial real estate today, there are some significant opportunities for lease renegotiation.  Some tenants would seize the opportunity for a rental reduction or lease adjustment in exchange for some benefits back to the landlord.  This then says that you can through this process stabilise the tenancy mix, and rebalance the property for the longer lease term.

When the business community is under some pressure in regards to trade or occupancy, the lowering of the rental over the short term is a satisfactory exchange for other lease terms and conditions that will have benefit for the landlord.  The pressures on tenants and businesses today will not remain so forever.  A lower rental for 12 months can give you tenant stability through difficult times, whilst preparing the property for greater capital gain or future sale.  This is what lease strategy is all about and these are the ideas that we can give our clients to help them with tenant and lease optimisation.

Lease renegotiation opportunities are normally structured into a tenant retention plan.  That tenant retention plan would identify the tenants that are critical to the future of the property, and then seek to retain these tenants for the long term.  Things should be done to assist them to remain in occupancy conveniently and economically.  The landlord therefore benefits by tenant and rental stability.  There is however the need to achieve a tradeoff and benefit for the landlord if you are to give the tenant a benefit today.

Here are some ideas that can apply to the landlord benefit process.  This is assuming that you achieve or provide an adjusted lower rental for the tenants in occupancy.

  1. Get the tenant to exercise their option in the property early.  By exercising the option, the landlord knows that the tenant will remain in occupancy for the longer term.  That is the base benefit.
  2. You can adjust the terms of the existing lease so that the prevailing make good conditions are more beneficial to the landlord at the end of the lease term.  You can obligate the tenant to undertake further renovation works if they choose to leave the premises at the end of lease.  This then prepares the premises for alternative occupancy with a new tenant, at a lower cost to the landlord.
  3. Any lower rental today, can prepare the tenant for a higher rental at some stage in the future.  This assumes that the business can be seen to be successful in coming years and months.  The lower rental today provides the tenant with breathing space for generating income and repositioning their business. Over time they can likely achieve a better ability to pay the rent.
  4. Any longer lease term provided to the tenant today should include a renovation requirement.  They can be obligated to renovate the premises in a particular way at a certain time.  Normally leased premises require renovation every five years.  That renovation can include painting, carpeting, and cosmetic upgrades.  A suitable agreement can be struck with the tenant and appropriately documented as part of an agreement for a lower rental today.

It is in property markets like this where we can be assisting the landlords to reposition their property and stabilize the tenancy mix.  That is the high value of experience and knowledge in commercial and retail real estate that we can apply to help our clients at this time.

 

Commercial Property Agents – Prosposal and Presentation Strategies You Must Use

In commercial real estate, it is frequently necessary to create and submit proposals for the sale and lease of properties.  Every property owner or potential client will have special needs and conditions to feed into the proposal structure.  That being said, the proposal to sell or lease a commercial property should be quite specific and not generic.

Generic proposals are no more than an advertising document.  They rarely win the business.  Clients and property owners today require proposals that are quite specific to the trends of the current market and the needs of the particular property.  Your competitors will be on the mark to attract the business, so your proposal must be very good in all respects.

Top commercial agents prepare proposals that are unique and special when it comes to resolving the particular property challenge of the client.  Here are some tips to help the process.

  1. At the front of every proposal document, there should be an executive summary that clearly brings all the critical elements together in one short page of dot points.  Simplicity is the key to converting any proposal to a successful transaction or listing appointment.
  2. In most cases, a proposal to sell or lease a commercial or retail property should be relatively short and specific.  Bulky documents are to be discouraged.  In the case of ordinary properties, most proposals will only need to be about 15 to 20 pages in length.  That being said, it is interesting to note that many agents will create bulky documents of double that size simply to talk about generic property trends and their relevance as a local agent.  The key to winning any proposal is to be specific in what you say and give solutions based with clear recommendations.  At every opportunity, talk about the property and the solutions that are available.
  3. The proposal should specifically talk to the local property market today and the trends that are clear and apparent.  Tell the client how those trends will have impact on the property marketing process and negotiation.  This will have significant benefit at a later time when any potential prospect has been identified and commences negotiation on the property.
  4. In every proposal document, it is wise to clearly restate the client’s requirements of sale or lease so that any misunderstandings are removed from the presentation or pitch.  This then aligns the agent to the intentions of the client and the requirements of the property.  Clarity is important.
  5. The target market for the property should be defined and quantified.  That target market will be the focus of the marketing campaign to be described in the document.  The particular target market should be summarised in both the levels of current enquiry and types of enquiry.  The particular property will have property improvements that may suit the marketing campaign and the target market.  Those improvements should be featured as part of the marketing campaign.
  6. The marketing campaign that is documented in the proposal should have two or three alternatives and budgets.  That will allow the client to formulate a decision based on expenditure and the recommendations of the agent.  Invariably when the client has a choice regards marketing costs, they will usually choose the middle ground in each case.
  7. Every proposal to sell or lease a commercial or retail property should have a fee base that is competitive but not discounted.  When it comes to selling or leasing commercial property, fees should be one of the last considerations when it comes to choice of agency.  An experienced and qualified agent will add far more value to the sale or lease process than any discount that is offered as part of the proposal or sales pitch process.  Top agents sell their skills and relevance as specialists to solve the concerns of the client.  When this is done well, the requirements for any discount are well forgotten by the client.
  8. In some respects, and with certain large or special properties, it will be necessary to clearly define the experience of selected staff in the marketing of the property.  This becomes quite important when you consider marketing larger and complex investment properties.  Top agents have more experience and will usually feed that experience into every proposal document.
  9. As part of every proposal, it is wise to give the client some graphical display relating to the time line of sale or lease.  There are many stages to move through before the property will achieve a successful outcome.  Many clients do not understand those stages and the importance of them.  When undertaken correctly, this graph or graphical display can show the client the clear relevance of your people and your agency in solving of the property pain.

So these are some of the main items that can apply in the creation of a proposal to sell or lease a commercial or retail property.  You can add to these items based on locational factors and particular important issues attributable to the property.

Technology Tips for Commercial Real Estate Agents Today

Technology in commercial real estate today can be an advantage but also a weakness.  There are so many tools for us to use and yet so many of them are poorly used.  Any real estate agency can then be improved if technology is correctly applied across the business.  Gone are the days of the commercial real estate salesperson keeping their records and contacts in the back of their diary.

Typically the technology systems and tools available to us today will include:

  • Mobile telephones
  • SMS Technology
  • Cloud based database systems
  • Email auto responders
  • Electronic newsletters
  • Social media
  • Websites

So the list can go on and will change from time to time as new technology is developed and implemented.  It is important that the tools we use are not a cheap substitute for a face to face connection and meeting.

Commercial real estate sales and leasing is really built around personal relationships and ongoing contact with sellers, buyers, tenants, and landlords.  Rarely will you win a new business opportunity with someone that you have not met before.

So how do you find these prospects in your local area?  Diligent hard work and good research tools will get you there.  That being said, there is no easy shortcut when it comes to building your list of prospects and clients.  Identify the key people in your marketplace and the important properties of good quality.  When you list and sell and lease quality listings, the enquiry will come to you in a major way.  That is how top agents build their market share and consistently maintain that level over time; they start from a base of quality listings on an exclusive basis.

So let’s go back to the issue of technology.  It is remarkable how so many salespeople overlook the diligence and accuracy required for the maintenance of a database.  There is no point in having a database unless the information is up to date and well maintained.  Consider the following questions:

  1. Who will be entering the data into the database at the end of each day?
  2. How will the data be reviewed and upgraded?
  3. Who will be extracting the leads and opportunities from the database over time?
  4. Who will get the benefit of the lead or the opportunity from the database?
  5. Who are owns the information inside the database?  This is particularly relevant when it comes to the termination of employment of particular salespeople.

A good database system that is accurate and up to date will allow you to record the necessary telephone numbers and E mail contacts for all qualified prospects.  Someone in your office will need to check the integrity of that information over time and keep it up to date.  It is very common to come across a real estate agency with a huge number of contacts that are really so old that they are irrelevant.  It is quite effective to have one central person placed in charge of the database implementation system.  Salespeople should be filling the system at the end of each day with the results from each and every telephone call and meeting.  In this way the customer base for the business will grow and the potential market year similarly.

When a CRM System or database is well maintained, you can integrate into it layers of different contact including e-mail, newsletters, auto responders, social media, and website feeds.  That being said, shortcuts should not be taken when it comes to making the ordinary telephone calls, prospecting, and face to face meetings.  Nothing will replace the advantage of getting together with the client and building a relationship over time.

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