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 Property Agents – Tips for Researching Your Commercial Real Estate Market

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. Do a signboards count all the listings currently available for sale or for lease.  This should again be on an agency and salesperson basis.
  8. Assess the factors of time on market when it comes to those properties that remain outstanding, unsold, or vacant.
  9. 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.

Gain the Edge in Commercial Real Estate Agency – Start Strong

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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.