Getting Negotiation Leverage in Commercial Real Estate Agency

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.

Commercial Real Estate Agents – Control Your Tenants for Better Leasing Results

In a commercial or retail property today, it is the tenants that provide the backbone and the stability to income and rental performance.  On that basis, you really do need to keep your tenants well in control given the prevailing market conditions and the current tenancy mix.

It is notable that a retail property can be highly volatile when it comes to tenant interaction and occupancy.  Essentially all retail tenants are essentially small business people that rely on the success of the property and the overall tenancy mix to provide an opportunity for sales growth.

The tenants in a retail property will usually talk between each other on a regular basis.  They therefore share information and perceptions relating to the property, the property manager, and the landlord.  I go back to the point, that you must not let your tenants get out of control.  Encourage good communications and build solid relationships with all of your tenants.

Here are some rules to apply to the tenant communication and connection process in commercial and retail property today:

  1. The tenant will be assessing their business performance continually during the year and the lease term.  This then says that you should meet with your tenants on a monthly basis.  This will help you when it comes to understanding shifts and changes relating to their business, customer base, or sales.  If you identify any problems early, you can make the necessary adjustments to occupancy or leasing strategy.
  2. In a large property, it is likely that you will have one or more anchor tenants as part of the tenancy mix.  The anchor tenants will usually be in occupancy for the long term with a lease document that extends over a number of years; in most cases the lease for an anchor tenant will be in excess of 10 years and will have options for lengthy renewal terms.  Stay close to your anchor tenants so that you can understand how they are integrating into the overall property and any associated specialty tenants.  The success of the anchor tenant will have some flow through to the specialty tenants.
  3. Most leases will have provisions for rent reviews and options as part of occupancy.  The critical dates that apply to those lease situations should be carefully watched.  Any rent review or lease renewal inside the next 12 months should be negotiated as early as possible.  This then will remove the volatility from the property for the landlord.
  4. Every meeting or conversation with a tenant should be documented as quickly as possible.  Whilst a simple situation or discussion today with a tenant may seem unimportant, it is quite common to have more complex issues arise in the future that started from some simple discussion or telephone conversation.

Get to know your tenants as part of the services that you provide for your client the landlord.  In this way you can help the client understand the predictable changes that you can see with the tenancy mix and the lease profiles.

How to Take Tenant Enquiries in Commercial Real Estate Agency Today

Leasing commercial real estate is something that can provide a good buffer of commission when sales listings and actual sales have slowed.  It is also the case that a successful lease transaction can lead to a future property management or sales opportunity.  This then says that all top commercial real estate agents should be prepared to lease ‘quality’ local property.

Notice that I said the word ‘quality’ when it comes to property selection.  Determine the property size and type that will give you the appropriate fee for a successful lease transaction.  Focus locally on quality, the good landlords, and the quality tenants.  A lease transaction can take a reasonable amount of time to initiate and complete.  On that basis you should only focus on the good deals and the good opportunities.  Let some other agent have the small things to lease that have minimal fee results.

Here are some tips for taking enquiries from tenants today when it comes to leasing new premises or relocating:

  1. Make sure that you’re talking to the decision maker when it comes to the particular tenant.  Get the contact details and the identity of the tenant sorted before you provide too much property information.
  2. Ask them about the property type that they are looking for when it comes to improvements, services and amenities, location, and permitted use.  Also find out about the required lease term, the rental budget, and property usage.
  3. The tenant’s staff and the customers interacting on the property will create certain challenges when it comes to improvements and location.  Car parking is a good example and case in point.
  4. There are big differences when it comes to leasing office, industrial, and retail property.  Create checklists for each so you can ask the relevant questions with potential tenants.
  5. Is the tenant coming to you today from another property location?  Are they new to leasing property locally?  If they know nothing about the local area, you will need to fill in the gaps when it comes to business demographics, transport, communication, local area profile, and property usage.
  6. If they are coming to you from another property location, they may have some timeframe to satisfy or a property disposal requirement.  Ask the right questions to get the complete picture.  You may even find another listing requirement with the property changeover.
  7. Has the tenant looked at other listings with other local property agents?  It is quite likely that they have seen other listings and may have current negotiations underway through other agents.  It is good to know if this is the case so you can adjust your strategy accordingly.

Don’t be too eager to take a tenant to a property.  Get all of the facts together prior to the inspection process so that you don’t waste your time with the incorrect strategies or listings.  Match the tenant to the property before you leave the office; qualify them.  If necessary take them to a number of properties to give them a comparison of current market conditions.

Get more tips like this in our Newsletter.

Retail Shop Leasing Success for Property Leasing Agents Today

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:

  1. 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.
  2. 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?
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.

Commercial Real Estate Agents – Leasing Tools that You Need Today

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. Take notes of all representations made and comments given in a leasing inspection.  Those comments could become critical in the ongoing lease negotiations.
  9. 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.

Top 10 Questions to Ask Tenants in Commercial Property Leasing

When tenants are on the lookout for a good commercial property to lease they will visit or call many local commercial real estate agents as part of the research process.  Rarely will the tenant work with just one agent.

So you have to get to the facts of their property need and what they are looking for.  You also should ask about where they have looked for premises elsewhere and who they are working with currently.  It is likely that they already have a significant amount of lease information about other properties available for renting locally; when you know what they have seen already, you will know how to pitch the available properties that you have on your books to lease.

Here are some questions to ask the tenants that are in the property market currently and looking for a property to lease:

  1. Who are you talking to?  If you are talking to a business based client, who is the decision maker and what is the contact detail for them?
  2. In what location do they require the property or premises?  That being the case, what have they looked at already and with whom?
  3. How big should the premises be?  You will need to define that area in types of buildings and or areas of the property.  For example office space, warehouse, showroom, car park, and hardstand.  Different rents would apply in each area and therefore will influence the overall total lease package.
  4. What improvements should feature in the property and in what way will they use those improvements?  Some of those improvements will be essential whilst others will be discretional.
  5. What is their rental budget for the premises?  The budget will give you a guide as to what they can inspect and what is beyond their budget.
  6. There are different types of leases and rentals available when it comes to renting an office, industrial, or retail property.  Some of your landlord clients will have already set their guidelines in that regard.  Match the tenant to the property type and the lease terms and conditions that suit their requirements.
  7. What is the timing of the property changeover?  That timing could shortlist some of the properties that you show the tenant.
  8. What will be the use of the premises?  It may be that the local property zoning will need to be reviewed to ensure that the expected or required property use is allowed in the area.
  9. Where are they coming from now and is that property leased?  You could get some reference from their previous landlord as part of the intended relocation.
  10. What other properties have they seen already locally?  What agents are they working with locally?  There is no point wasting too much time with tenants that have seen everything that is available for lease in the area.  Selectively show them properties that suit.  Be aware that they may have seen some properties with other agents prior to seeing you.

The more facts you can get from the tenant, the greater the chance that you can locate a property for them to lease.  Leasing property is a good part of the industry to tap into.  You will find lots of leads and commission opportunity if you ask the right questions.

Commercial Real Estate Agents – Property Sales and Leasing Strategies that Matter

The services we provide as the local commercial or retail real estate agency are quite specific and special.  The local property market will change throughout the year, as will the supply and demand for premises.  On that basis, we are the experts to help the clients that we serve.

Sales and leasing strategies for commercial and retail property will change throughout the year.  Each and every prospect should be entered into a database so that we can build on all future opportunity when the right property comes along.  Your diligence here will help your commission conversions and future listing opportunity.

Local property market information will come in many forms including prices, rentals, future developments, and the supply and demand for new space to occupy.  The clients that we serve cannot hope to cover those issues themselves.  That is where we step in as the experts and property strategists.

Top agents know how to package the negotiation for the best outcomes and results for the client.  These agents know what the market is doing, and how to package the right transaction for the clients that they serve.

Here are some tips to help you design your services for your local commercial and retail property clients.

  1. Local market information will vary throughout the year; you will see changing results in both sales and leasing activity.  This local market activity will be setting the necessary benchmarks and the market rentals or prices as the case may be.
  2. Local business sentiment, together with changes in the business community will have impact when it comes to property occupancy, sales, leasing, and rental returns.  It is our job to accumulate the necessary market knowledge and strategy to help the clients that we serve.  Optimising property occupancy and rental returns will help the eventual sales equation and resultant price.
  3. Rental strategy is quite specific to the location, the property type, and the intentions of the landlord.  In most cases, the rental should be set with the landlord prior to commencing any marketing effort relating to the particular property.  Standards and differences will apply when it comes to gross rental, net rental, incentives, rent reviews, and lease options.  We are the experts to help with these factors.
  4. Monitor the lease terms and conditions that apply to existing properties in the local area.  Business sentiment will have impact on existing negotiations and marketing strategies that you apply to each and every listing.  The supply and demand for local property will have immediate impact on the starting rental for any leases.  The same for pressures apply when it comes to the sale price.  On this basis, you need to know the differences between asking prices or rents, verses the facts and outcomes in finalised and completed transactions.
  5. Outgoings and operating costs will need to be recovered when it comes to lease occupancy.  The decisions you make here will have impact on the landlord and the rental structure of the lease document.  Local market standards, and the particular elements of the property may influence you when it comes to gross or net rental.  Importantly, the operating costs for the property should be recovered as part of the lease structure, so make the right decisions when it comes to rental type and outgoings recovery.
  6. Tenant mix strategy will shift and change throughout the year.  Tenancy mix decisions become important when you are working with a property containing multiple occupants in close proximity.  The duration of leases, and the proximity of those leases to other tenants need to be considered as part of each lease negotiation.
  7. The permitted use for each lease and tenant occupancy should be well considered and controlled.  Is quite important to ensure that the permitted use described in each lease that you negotiate is very specific and tight.  Too much latitude here  will allow the tenant to change the focus of the business and the offering to their customers.  This also has impact on any future lease assignment or subletting situation.  The permitted use will also have relevance to the tenancy mix strategy and any tenant retention plans that you implement.
  8. Vacancy and lease management should occur throughout the year.  Staying well ahead of any lease events and critical dates is quite important.  Prepare the landlord for any negotiations well in advance.  Have due regard for the local market conditions and the benchmarks established by other similar properties nearby.

It is easy to see why the services we provide as commercial real estate agents are regarded as specialised and unique.  That is why we charge a significant fee for service.  The clients that we serve can benefit significantly from the factors of our negotiation and finalised transactions.