In commercial real estate brokerage, there will always be plenty of new business to convert locally when it comes to upcoming and current property development approvals. Part of your prospecting model as a broker or agent should incorporate that focus on new developments, incorporating a real strategy and approach to the right people.
(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)
What’s coming up?
When you tap into a new or upcoming local property development, the business that you achieve can be ongoing and the listings can be numerous. A property development can incorporate a number of stages and premises to be marketed. That being said the ‘front end’ work to a property development can be extensive and take time, so be prepared for that ‘down time’. It is the longer term and bigger focus on the development outcome that is important; understand just how many listings and or commissions will come from the final project when it is active. Is the project for you?
As a base strategy to get this concept underway, you will need to regularly visit the local planning office to understand where current and new property developments are being considered and will be located. You can then inspect the property location and approach the property owner and or developer accordingly. Get in early on any upcoming property development.
Local Planning Office
Visit the local planning office at least once per month to review the minutes of the planning committee or planning approvals board. Understand how planning approvals are processed in your town or city, how long they take, and how the approvals documentation can lead you towards future listing opportunity.
Relevance is the key to converting leads and opportunities from and with property developers. A property developer will be inclined to use the services of the top agent who can prove that they dominate the market segment, and achieve the best results in a timely way. Is that you? How can you display that?
Here are some ideas to help. Remember the motivations behind any new property development and consider the following factors:
- Time on market will be a factor of concern for any property developer. They will need to know how the time on market can be shortened whilst they are still achieving the best levels of enquiry for the new property development and or premises. Show them how you will do that.
- Vacant land in the local area will always be a good source of property development opportunities providing there is a relevant demand in the local area and the zoning for the property is suitable. Merge vacant land ownerships into your prospecting model. Determine how long it takes to create a new property development, what could be involved, and how you can help the process and outcome for your investors and or developer clients.
- Redundancy in local investment properties will happen at any time in any city or town. Some properties reach the end of their serviceable use, and you can work with that. Businesses tend to move away from the older properties over time, and you can work with that. Those older properties can become renovation opportunities or redevelopment sites. Tap into the redundancy issues in your location.
- Change of use and zoning use will occur locally. Look for the decisions and the changes of property zoning as they apply in your town or city. A change of property zoning will usually create future property churn be it as a sale or leasing opportunity.
- Business migration and change are factors that we can always tap into. Look for the segments of the business community that are under pressure and change. Pressure factors can include business growth, expansion, contraction, or relocation. Connect with the local business community to understand where those opportunities will be occurring next and what those businesses will need to do.
- Property developers can be matched to local investors. You can be the creator of future of development business and property opportunity. You can find the parcel of land, the appropriate developer, and the business investor to take this project forward. Any new property development and redevelopment change will usually take two or three years to complete. You can be the catalyst of matching the three main elements to create that project opportunity. Work with the local property investors to understand where they are focusing and what they are looking for. Find investors (with the funds backing) that can work with those property developers and then locate the parcel of land to suit.
You can attract property development business in commercial real estate brokerage. Understand what is happening locally and then drill into the market segment. Talk to the right people to open up the enquiry and leads for new property projects.
(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)
The clients that we work with in commercial property management expect experience and confidence in the managers that they use. Those clients like to know that the person chosen to manage their property can handle the variables of income, expenditure, tenant mix, and lease negotiations.
So why worry too much? The experience and confidence in any property manager will be important to the client service process and also to the brokerage fees charged for services rendered.
Inexperience is Dangerous
An inexperienced property manager can be a costly and concerning problem in property performance for any investor. Invariably that is the time when errors and omissions occur with the critical factors and tenancy activities.
So the property manager needs the confidence, knowledge, and experience to know how to look for upcoming concerning issues in the leases and with occupancy, and how to position the property for better results in investment outcomes.
Every landlord and property owner will have certain unique targets to merge into that property performance equation, so the balance becomes a bit tricky. That is where the right property manager for the asset and the client should be considered.
The complexity of many office and retail properties requires specific experience and knowledge to help the property stay on track from an investment perspective. Errors or omissions create problems with any property and its performance.
Critical Confidence Factors
Here are some ideas to help you with this. Any property manager should be specifically familiar with the following topics as they apply to the location, the client, and the property type:
- Income – The levels of income in any property will be impacted by local vacancy factors, current market rentals, and business sentiment. If a property is to grow its income base with rentals that are market aligned, the property manager really does need to have advanced skills with tenant management and property leasing. Remembering that many leases exist for a number of years, the property manager is the person responsible for qualifying the tenant, then establishing and growing the cash flow.
- Expenditure – Rarely will property expenditure decline and that is why a specific budget is required to keep property expenditure under control. Energy costs, operational costs, and property usage place pressures on expenditure each year. Operational costs within most properties are escalating. There are seasonal factors to look into as well including climate conditions, and the associated energy consumptions.
- Tenant placements – When you have a number of tenants within the same Investment Property, you will have challenges when it comes to positioning, occupancy, and property use. Some tenants have an impact on other tenants around them. As part of any lease negotiation, specifically choose the right tenants for the right location and then control them within the existing lease documentation. Understand the businesses in each case and the types of people that will be accessing the tenant and or the property. What pressures will happen as a direct result of tenant existence and occupation? You may need to put certain controls within the lease document to keep things on track within the tenancy mix.
- Lease negotiations – Every lease negotiation should be looked at in balance allowing for current market conditions, vacancy levels, market rentals, and the locations of other tenants within the property. Some leases will come to an end within the same property at a particular point in time. Most owners cannot afford to have escalating vacancy factors across a large percentage of the property. Negotiate your leases so that the cash flow of rental is not overly impacted by lease expiry dates.
- Vacancy strategies – Like it or not vacancies will happen in any property. The impact of those vacancies can be lessened through finding new tenants, moving tenants around, and modifying the property use.
- Maintenance strategies and costs – During the year things will happen in any managed property. You will have maintenance issues occurring for all types of reasons, and some of those repairs will be timed whilst others will be unexpected. You need response systems for all levels of maintenance including emergency responses.
Are you ready to improve your confidence and knowledge in commercial property management? A successful property management division in any brokerage will bring many advantages to the business over time.
You can get more commercial property management tips in our Snapshot eCourse right here.
Every quality listing in commercial real estate brokerage should be the subject of a comprehensive and specific marketing plan. When the elements of the property are matched to the levels of enquiry, the prevailing property market conditions, and the client, the marketing plan is likely to produce the better results from the selected target market.
Most high quality listings today are the subject of a competitive tender involving a number of brokerages and agents. You may only have a short period of time or one brief opportunity where you can present your promotional ideas and marketing strategies to your client.
Your presentation, the listing pitch and the marketing plan will need to be of exceptional quality and relevance to attract the interest of the client and convert the listing. It is very likely that the best agent will win the listing based on recommendations, commitment, and confidence.
The Best Way to Set Out Your Marketing Ideas
Here are the elements of a property marketing plan in commercial real estate brokerage. These ideas will help you prepare your professional marketing plan:
- The title page – give the property and identity through the use of a title. That title should be specific to the property and where possible incorporate the history of the property. It is quite likely that the local property owners and business proprietors recognise the property in a particular way. That image or recognition can be incorporated into your marketing plan.
- Use professional property photographs – the front of your proposal or marketing plan should feature a professional photograph. That strategy should continue through the document. Most clients will be drawn to the proposal that features the asset in a creative and professional way. Through your marketing submission, you can add a number of professional photographs taken at different times of day, of different parts of the property, and use photographs that enhance the strengths of the asset to the target market.
- An executive summary – at the front of the document, make sure that you are using an executive summary to pull in all the features of the asset and the intended marketing campaign. The executive summary should be no more than one page in length and feature a number of dot points as part of the layout. You want the executive summary to attract the interest of the client and refer them further into the document for greater detail.
- A table of contents – simplify your marketing proposal with a table of contents so that the client can refer to the correct parts of the document as part of the review.
- A preference for simplicity – keep your marketing document simple and informative. Avoid bulky submissions that complicate the marketing process. Help your clients see the promotional strategy to be used with the target market. The best way to do that is through the use of a Gantt chart displaying the different marketing strategies and the timing process to be applied.
- Property analysis and recommendations – show the client that you really understand the property and its position in the prevailing market conditions. Summarise the property as you see it today and provide details of comparable property market activity in the location. From that information you can make specific recommendations towards a target market, the enquiries, and the inspections.
- The marketing plan – from the target market, you can specifically apply strategy to the marketing plan when it comes to the choice of the right media, the timing, and the expenditure. Help the client see exactly how you will be spending the money and why that is so. Show the client that you are in control of the property marketing process and the feedback to be encouraged.
- Implementation and control – make it easy for the client to formulate a decision and move ahead with their marketing challenge. If there are any problems within the property that need resolving prior to promotion, provide specific solutions and ideas to help that occur. Make it easy for the client to see the best way forward with their property challenge based on the attributes of the asset and the local property market.
Taking all of these things into account, you can make your marketing proposal stand out as specific and special with any good quality commercial real estate listing. Make it easy for the client to select your services as the agent of choice in resolving their property challenge.
In commercial real estate agency and brokerage you need personal goals and targets. They show you the ultimate path to better clients and market share.
All of that sounds logical, and yet so many agents give ‘lip service’ to the process and never really get it going. They let the days and weeks pass without much focus. They let the business ‘happen’ rather than ‘directing’ it. Over time this then means less listings and volatile commissions.
Let’s say something very positive here from the outset. The commercial real estate industry is one of the most rewarding industries you can work in. It does however require complete focus and directed action. Those that don’t do that really do struggle. Struggle then creates stress and a downward cycle of business. You don’t need the pressure!
If you want to dominate your territory, town or city as a ‘top agent’, then goals and targets are required. You can then set action plans and implement them every day. That’s how you build market share and attract more listings your way.
Here are some goal creation considerations for agents and brokers:
- Look at the growth of property activity in your local area. How has it changed? What are the predictions for the future? Are you able to tap into the growth segments? What knowledge will you need to get into those segments of the market? Positioning and targeting are critical issues in our industry.
- Assess your competition when it comes to local sales, leasing, and property management appointments. How and why have they won that business? Are they dominating their market for some reason? Can you replicate their actions? Can you be better? Stand out as the better alternative in real estate agency.
- What marketing systems are being used locally with new and top quality listings? Are the other agents marketing listings differently in any way? Can you create a better marketing process in sales or leasing? It is best to be different and direct when it comes to property marketing today. Every property that you take to the market today has to stand out as a quality well marketed listing. Put yourself and your listings into the process. Stand out as a top agent that gets involved. Take your exclusive listings to the market personally.
- What are the growth considerations in the local business community and the population demographic? How can you work with that?
Given all of the above, take those facts and shape them into your prospecting and action model. Set the right targets with exclusive listings, commissions, inspections, and clients. You hold the keys for any success in your market. Get active. It’s a personal thing.
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 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:
- The supply and demand as it impacts particular property types
- The levels of market rental that are being achieved across the various categories of properties
- The time on market applying to vacancies locally
- The lease standards that are expected on the part of landlords when it comes to a new lease structure
- The incentives that are in the market today to attract new tenants
- New property developments that could have an impact on existing occupancy rates and tenant movement
- Vacancy rates that exist now in the market and the trend upward or downward
- Business sentiment as it relates to property occupancy costs and relocations
- 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.
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.
When you work in commercial real estate agency, you should start your day strongly and with focus. Get as much done as you can before other disruptions start to take over (and they will).
It is a fact that things in commercial real estate agency will happen daily that you do not expect. That being said, there are still key things that you need to do every day to improve your market share and client connections. If you overlook these things, you will soon have less commission coming in and you will also be missing on the quality listing stock.
So to start strong every day, you need a plan and a process. Action is everything in our industry and directed action can allow you to form habits. It is the habits that will take you forward as a professional in our industry.
Here are some ideas to help you with effectiveness and focus as a commercial real estate agent.
- It is easier to control the start of the day than it is to control the whole day. If you can control 1/3 your day, you can be quite successful and effective as an agent. Plan your activities so that your working day can and will be under your control from 7 am. to 11 am. Don’t let others change or modify your diary before 11 am.
- Prospect every morning from 8 am to 10 am. Get your outbound cold calls done then. That one single process will be critical to your market share. It is interesting to note that most top agents do this. Struggling agents overlook the process or avoid it.
- Talk to your clients from 10 am to 11 am. After 11 am the pressures of the day can take over so get to your important clients on key issues early. You can do the same thing at the end of the day and in the evening.
- Look after your database yourself. Only you have the information that should go into it, and only you are going to benefit from it being correctly used. If you go into your database every day you can shape the information and use it to your advantage. Ongoing contact and trust in our industry is a really big thing.
- As you move through the day and the week, track your numbers and ratios relating to calls out, meetings, presentations, listings, inspections, and deals closed. You should also track your exclusive listings as they will do more for your market share than open listings.
So you can see that the key thing here is control. When you are in control you can get more of the right things done. That is how you move up in the industry.
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.