In commercial real estate brokerage, you will have plenty of challenges when it comes to finding quality listings and good clients. In most locations, towns and cities, the competition is fierce when it comes to commercial real estate agents. On that basis you really do need to have an effective prospecting model to implement at an individual level.
It should be said that most brokers and agents don’t do this very well. On that basis the opportunities are significant if you can create and stick to a good prospecting model. Create a habit around prospecting.
Here are some proven and highly effective prospecting and networking tips when it comes to agents or brokers winning new clients in commercial real estate today. Compare these to your current strategies:
- Stick to a defined area when it comes to targeting properties and clients. On a street by street basis you can move through the region and research the necessary property ownership details and business proprietors. Don’t spread yourself too thinly when it comes to large areas and diverse property types. Specialization will help you with finding listings and growing property knowledge.
- Devote 3 hours per day to the prospecting process. The cold calling process should occur first thing every morning prior to any meetings or property inspections. Make a priority to get your cold calls done prior to 11 am. Your meetings and property inspections can occur after that time.
- Split your prospecting time into two distinct segments. The first segment will be those people that you have spoken to before. Regular contact here will allow you to tap into the opportunity when those people are ready to make a sale or a lease transaction. The second group that you should speak to will be those that are totally new to your database. Feed your database with fresh contacts and opportunities with new people.
- Track the results that you get from all of your prospecting activities. Understand how your ratios are improving between outbound calls, meetings created, presentations made, and listings converted.
- Understand the differences between open and exclusive listings. As a general priority, you should be targeting exclusive listings at every opportunity. On that basis, track the numbers of listings in each case. Show the client the differences in time on market when it comes to open listings and exclusive listings.
- Any property that is converted to a listing should be packaged for the current market conditions. As you get results and feedback from inspections, you can make clear recommendations to the client regards pricing and marketing. Over a period of weeks, the repackaging of a listing can increase inspection and negotiation opportunity.
So there are some very definite things that can be done to improve your listing conversions and commission opportunities. The secret to making all of this work is to create a personal system of prospecting that you stick to every day. Refine your activities to the current market conditions, and soon you will see the conversions you require.
As a general rule in commercial real estate brokerage, every proposal that you put together should be benefit focused on the client. Show the client exactly how they will benefit from using your comprehensive services as a marketing specialist.
Use a Gantt chart to show the client the stages of listing, marketing, inspecting, and negotiating. This illustrative charting method is very effective when it comes to helping the client through a comprehensive and complex marketing process. It can also be a major point of difference in your proposal layout.
In today’s property market, the generic listing and marketing approach really doesn’t work. The competition in the marketplace is significant from other listings, and the experience and expertise of your competing agents and brokers will also place pressures on your listing conversions. Give the client some real reasons to choose you as the top agent of choice to solve their property pain.
It is worthwhile remembering that the client doesn’t want to be an experiment in marketing. They want their property to achieve the best levels of enquiry in the most effective and direct way. You hold the keys to the process and your proposal will need to clearly outline the strategies and recommendations.
Here are some tips to help you with constructing and submitting a proposal to sell or lease a commercial property today:
- Stand out as uniquely qualified to handle the property type in the town or city. You will need some testimonials and market evidence to help the client understand those situations and recommendations.
- Review the property for the strengths and weaknesses that will have an impact on the marketing campaign. The weaknesses may need to be addressed prior to the commencement of promotion. The strengths can be helpful when it comes to advertising layout and points of attraction.
- Determine the target market that will have a keen interest in the property type. Build your marketing campaign around the target market using specific points of difference and promotional processes that clearly tap into the target audience. Help the client understand those strategies and the reasons you are making the recommendations.
- Show the client how they will clearly benefit from utilizing your brokerage services and market coverage. Use your database as a point of difference when it comes to creating enquiry and spreading the message about the property. Create a shortlist of buyers or tenants as the case may be from the database; tell the client how you will be connecting into the short list of qualified parties as a priority as soon as the property is released to the market.
The focus of your proposal should be to attract the correct level of inquiry and generate inspections as soon as possible. When you get the inspections underway, you have something to work with and can then give the client feedback from those inspections.
There are two types of marketing plans in commercial real estate. There is the one that applies to ‘open listings’, and then there is the one that applies to ‘exclusive listings’. There is a radical difference between the two.
An ‘open listing’ is a process of luck, so get away from listing in this way whenever you can. You have no control over your client, the property, or the parties to the deal. I would go so far as to say that you cannot trust a client in an open listing situation; they are likely to be talking to other agents constantly and comparing your offers or inspection results. If you want to dominate your market as an agent, get away from ‘open’ listings as soon as you can.
Only an exclusive listing process will give you the best solution for promoting and marketing a quality commercial, industrial or retail property. The time and effort required in matching a property to its target market requires the commitment of the client to one agent for a reasonable period of time; usually 4 months. The selected agent can then dedicate the right focus into finding the best people to talk to and setting the momentum to inspections and offers.
Here are some marketing tips to help you in establishing a quality promotional campaign with an exclusive listing:
- From the full inspection of the property you will understand the best target market that you should be tapping into with the marketing. Give the client a complete understanding of what that market is looking for and how you can work with that.
- Determine the features of the property that can help you with the momentum in promotion. Build a story and a pitch for all your advertising using the property features. Select the 5 property features that are of the greatest interest to the target market. Use those as dot points in all you advertising. When you change from advert to advert in different publications, create different messages. This is most important on the internet so the search engines give your advert broader appeal.
- Use keywords for your advertising based on the internet search terms. You can get this information from a ‘keyword’ search on the major search engines.
- Build a headline and sub headline for the property using words that sell. You can see good examples of that with magazines and other property adverts. The history of the property may be relevant to the local area and on that basis can be used in the marketing to real effect.
- Match your marketing recommendations to the target market so the client can really see that you understand how to solve their property problem. Be very specific at a personal level to help the client see how you will take the property to the market.
- Always give your client 3 alternatives of marketing so they have a set of promotional choices to consider.
Successful marketing campaigns in commercial real estate agency are built from specific focus and speciality. The ‘generic’ promotional process in property today does not work.
In commercial real estate agency, the sales pitch and presentation process is something that will hopefully occur quite frequently for you. On that basis you need to be ready to present your ideas and strategies at any time and on short notice. You never know when a client or prospect will want to talk to you about the market or the listing alternatives available when it comes to commercial real estate sales or leasing.
As a general rule, every agent should carry a complete and comprehensive marketing folder at all times with examples of property marketing solutions; those solutions should apply to leasing, sales, and property management.
Watch your competitors
In most property presentations situations today, you will be up against a number of other agents all seeking to attract the same listing into their agency. Those other agents will be using a variety of enticements and discounts.
It should be said that the provision of discounts to a client is not a good way to win a listing. Agents that cut corners on fees will generally cut corners on service. Given that the client wants a result with their property, cutting corners really doesn’t work. Adjust your pitch to suit that message.
You should win the listing based on your experience and relevance to the property type and the client. Your strategies and marketing solutions should be so comprehensive and relevant that the client can see no other alternative but to give you an exclusive listing. Build your presentation on that logic.
Discounts don’t work
The clients seeking a discount should be encouraged to understand the commerce of the deal and the marketing effort required by you as the agent. A few hundred dollars saved in commission is nothing compared to the better price that you can achieve for the client with a dedicated campaign that is personally conducted.
It is the quality of your presentation and pitching process that will help the client understand exactly what you are going to do for their property and its challenges. Your services need to be superior to that of the competitors locally. Be relevant and be different. Show the client why they need you.
Here are some tips to help you refine your presentation strategy when it comes to commercial and retail property.
- Check out all the competing properties in the local area so you can advise the client as to how the listing needs to be comprehensively marketed.
- The first four weeks of any marketing campaign are the most important. During this time you will need to connect with the defined target audience and create as many inspections as possible. Structure your marketing recommendations accordingly.
- Be aware of the current market conditions relative to the property type, and the seasonal sales or leasing pressures that can influence the starting of the marketing campaign. If you have a quality property to release to the market, it may pay you to consider the ideal time frames to do that.
- Use some sort of graphical display to illustrate to the client how you will move the listing forward. A Gantt graphing process is good for this application. You can show the client exactly how things are done and where those things will head over the coming weeks.
- As a general rule, every property should be exclusively listed. In that way you can create the correct amount of momentum, optimize the inspections, and negotiate directly with the client knowing all of the facts that are involved.
- Vendor paid marketing should be part of the exclusive listing process. Get quality photographs taken of the property to feature in all the marketing material created and used. Be aware of the opportunities that each marketing method provides. The Internet should feature in every campaign. In the first instance, it is the visual side of marketing that will attract more enquiry so use the best photographs wherever possible as part of your marketing effort.
When it comes to pitching for the commercial property listing, your strategies and ideas need to be well planned and optimized for the prevailing conditions and the property. Help the client see why your strategies are so important.
It is a common event that some agents will be hard pressed for commercial real estate listings during a working year. The problem develops when you are not prospecting correctly or enough.
The knee-jerk reaction is to go and get more listings and most particularly anything that you can find. That is a big error; quality is the key to the process. If you want to be a top agent, you must have quality stock. Don’t waste your time on low quality listings.
Here are some tips to help you with your listings and the prospecting process for them:
- It doesn’t really matter that you have only a few listings. What matters is the quality of those listings. Quality can be many things but it usually relates to price, rent, location, availability, and improvements.
- I have seen many if not most top agents earn more money from fewer transactions each year. This means that they are very selective to what they work on and when.
- Look at the cycle of the property market in your area. Most markets will have a pattern to them. Commercial and retail real estate will usually cycle in and out of the market every 5 to 7 years. This is because the property investor or property owner needs to change. This then says that you should identify those properties that were bought about 4 years ago. They will be the next properties to come back into the market.
- Every time a competing agent puts a signboard on a listed property, use that listing as the chance to talk to nearby businesses and property owners. Those nearby people may be seeking to compete with the other agents listing. You are best placed to help them.
- The property market today will have trends when it comes to property choice. As you advertise and promote more local property you will soon see what properties are desirable. Selective prospecting will then be a priority.
Many times I have had agents ask me about best ways to get the details of property owners and make contact with them. There are no easy short cuts to the process. The best way to prospect is to consistently make it a part of your daily diary. Two or three hours are what is required. When you devote the time you will get momentum and that will eventually bring results your way.
You can get more tips for listing commercial real estate in our commercial real estate agent newsletter right here.
In many respects, you as the local commercial real estate agent will have some geographical territory and property type in which you specialise. When you specialise, you can provide much more value to the client with comprehensive local market information. It also helps you greatly when it comes to pricing and marketing solutions. Here are some tips from our Agents Newsletter.
To help you here, you can create a property inspection report process to be used for many different reasons and client requirements. The report can become a checklist around which you can base your recommendations and marketing strategies.
Here are some categories that can be merged into your property inspection report. Add to the list based on your specialist property type. Also add the geographical factors that may have an impact on any listing.
- The ownership of the property will need to be completely checked against the information provided by the client. Make sure that you’re dealing with the right people and decision makers.
- Review the description of the property and the title. Check out any encumbrances and rights of way that may have some impact on the title, the tenants, and the property ownership.
- You will sometimes find that there are issues relating to neighbouring properties and the local precinct that are not detailed on the title. Boundaries are a good example of that situation. Ask the client for an update regards any current outstanding issues that need to be resolved prior to the commencement of any listing and or marketing. Take notes in this process given that the information can have significant impact on future negotiations, or leases, and contracts.
- If the property contains tenants, you will need to review the leases comprehensively. Each lease can have strengths and weaknesses that can apply to the income stream and the property ownership. When looking at a property with a number of leases and tenants, take the time to go through the tenancy mix report, the tenancy schedule, and the lease profiles. You will need original lease documentation to do that, and expect that the process will take many hours if not days.
- Review the services and amenities that apply to the property and the current condition. Add to that the details of property improvements, strengths and weaknesses, zoning, and rates and taxes. It is worthwhile checking that the permitted use of the asset complies with the local zoning and approved development plans.
- Review the income stream for the property both in gross rental, and net rental. Review the outgoings for the property that apply on an annual basis. Check those outgoings against similar properties in the same area today. You need to know that your property is competitive when it comes to gross and net income. The net income will have an impact on the potential price that you may achieve a sale.
- Ask questions about the history of the property and the improvements over time. The landlord, the tenants, and the neighbouring property owners will have some value in this process.
All of these things lead to a solid set of recommendations that can be made towards the property marketing program in today’s economic climate. All of these things will give you relevant ideas to help in the promotional marketing activity.
You can get more tips like this in your Agents Newsletter.
When it comes to commercial and retail property services today, the fees and commissions that we negotiate are critical to the performance of our property agency business, and its stability over the long term. Whilst discounting fees and commissions may be an option, it should not be a normal activity when it comes to working with clients or taking listings.
Far too many agents provide discounts as a factor of encouraging the listing. The fact of the matter is that discounts do nothing towards helping the client with a satisfactory sale or lease as the case may be. When it comes to a competitive situation between agencies in attempting to win the listing, it is better to provide real strategy and points of difference as part of your service offering, than any discounting for the client.
Here are some rules that can apply to the commissions and fees in your listing processes.
- Establish a significant and comprehensive marketing campaign that is funded by the vendor. Give the client a number of alternatives to consider when it comes to marketing. Invariably and in most cases, you will see the client select the middle ground when it comes to marketing costs. Show the client a number of alternatives when it comes to the marketing of commercial and retail property today. Tell them what works, and show them the results that they can achieve. Drill down on the facts so that they know exactly what the recommendations are.
- Do not discount your commission to attract a listing. The fact of the matter is that property commission is a reward based fee. If the client wants a successful outcome, they will understand the value of a fair fee for service. If they still want you to provide a discount, and you still want to take the listing, then discount your available services as part of the process. Lower commissions deserve less focus and marketing activity on the part of the agent. Does the client really want a sell or lease their property? If they do, discounting the commission is not part of that process. Show them the real savings and service that they will achieve when they have your total focus as a specialized local property agent. If they still want a discount, then you have not successfully and comprehensively sold your experience and relevance to the client when it comes to the particular property.
- Consider the other fees that will be incurred as part of the transaction preparation. It may be that certain fees will need to be recovered prior to any marketing effort and promotional activity. This is certainly the case when it comes to preparing an information memorandum for the particular property. Many agents recover the cost of the information memorandum up front, given that it will take them a few days to put the document together. It is not unusual to see a fee between $1000 and $2000 for this document preparation.
Do not be too eager to provide discounts. Be focused on your specialised value as a local commercial or retail property agent. Top agents do this all the time. It is hard for a client to ignore or walk away from a top agent. In the end result, the client wants a satisfactory property outcome within the earliest possible time frame. That should be the focus of your listings sales pitch or presentation.
When it comes to the leasing of commercial property, you as the commercial real estate agent really do need to understand the trends of the local area. It really does not matter if you sell, lease, or manage property as the main part of your job; you still need to understand how to lease a property and how that lease can improve the sale or the property performance.
The clients that you work with will expect you to bring significant local market knowledge to their needs and opportunities. That local knowledge will also need to be very apparent in your sales pitch and presentation; you want the client to listen to you.
It is a fact that many agents are far too general when it comes to the initial presentation to the client of the available services and solutions for their property. Being specific to the property helps the clients really understand the relevance that you bring to the property requirement.
Leasing is one of those disciplines that will eventually create a property sale or a property management opportunity. That being said, a commercial or retail leasing specialist should be suitably versatile to talk about sales opportunity and property management strategies as well. One commission opportunity will turn into several over time.
For a commercial real estate agent to be of any relevance to the client that they serve, they will need to have a toolbox of strategies to implement for any particular client or their particular property. Those strategies should not be generic, because the client is likely to be seeing a few agents before they make a selection on what agent should get their listing.
Here are some factors for commercial and retail property agents to optimize as part of their services and solutions for clients:
- Get to know the rentals in the local area as they apply to the different property types. There are differences between gross and net rental when it comes to different property locations and property types. In some leasing circumstances you may use a net rental strategy, whilst in others you may use a gross rental strategy. Either of these choices will have impact on the rent review process that you negotiate for the particular lease.
- In any particular property market is very common to have a variety of incentives available to new tenants. The size and type of that incentive will change from time to time based on the supply and demand of premises locally. When there is little vacant space available for new tenants to occupy, it is likely that the incentive will diminish or even disappear. That will only remain the case when demand for premises exceeds supply. Over time you will see new property come into the market through fresh new property developments; the leasing leverage that each landlord creates in those circumstances will be that of an incentive. As the local property expert, you need to know the incentives that are both available and sensible for any particular property that you could be leasing. Compare those incentives to other properties nearby and in the general property market. Offer the landlord some alternatives when it comes to those incentives and how they match the needs of that tenant enquiry that you know exists currently.
- When it comes to establishing a new lease, it is best to have some regard for the existing tenants in the current property and their proximity to the current vacancy. What you want to do here is spread the risk of any vacancies occurring in adjacent premises. In other words, you want to minimize the chance of multiple vacancies occurring at the end of lease terms at about the same time. The only reason you would have any adjacent vacancies occurring would be in the circumstances where a renovation or relocation strategy was required for property improvement.
- The operating costs for the property (the outgoings) that appear in any lease negotiation should be acceptably similar to those which apply in competing properties. If your property outgoings levels are too high, then it is likely that the vacancy will remain difficult to lease. On this basis it pays to understand the levels and types of outgoings that are available and charged in competing properties in your area. There is a large difference between the outgoings or operating costs charged for a retail property, and industrial property, and an office property. Generally speaking the outgoings for a retail property are far higher than those that would apply to office property. Similarly, an industrial property is at the bottom end of the outgoings scale in occupancy cost structure.
Get to know your local property market comprehensively and thoroughly. Properties will come and go in the area from time to time, and some rental or lease transactions will occur.
Get to know the actual rents that are achieved from the particular lease deals as they are the rents that are acceptable to the enquiring parties in today’s market. As part of this process, stay abreast of the future new property developments that are coming into your region and that could have an impact on the supply and demand process.
As a commercial property agent, you will frequently be asked to inspect properties and pass your opinion relevant to the sales and leasing process that could occur. In many respects, the clients that ask you to inspect their property will be testing you out, and deciding if you are relevant to their property challenge and need. Professionalism and confidence are essential ingredients in the property inspection process if you are an agent.
The clients that approach you to inspect their property will have their own view on price and marketing, however you should have your clear perspective on existing market conditions and correct marketing processes. In many respects, there is no point in listing something that is unrealistically priced; it can waste a lot of your precious time and effort.
Here are some property inspection tips that can help you create a checklist in a property inspection. This is a process that you could use when moving through the property with the client.
- Get details of the property title and the property location before you reach the premises. That will allow you to understand the correct property ownership structure and the legalities of the title itself.
- Check out the zoning of the property relative to the local property development plan. That will give you a clear perspective of the type of property operations that are allowed in the area. The zoning of the property will also have relevancy to the permitted use in any lease documentation applying to the tenancy mix.
- if the property is occupied as an investment property, you will need to sight and review each of the leases for each of the tenants. Many leases present issues that need to be resolved prior to any marketing campaign. Look for things such as upcoming vacancies, expiring leases, missing rent reviews, and outstanding lease options. Consider the cash flow that each particular lease provides to the owner of the property through the rental escalations.
- As you move through the property, look at the tenancy mix and the profiles of the particular tenants. Do they seem to be trading well, and have they correctly integrated into the configuration and improvements of the property? Some tenants will disrupt occupancy for other tenants. Look for these matters of conflict as they can impact future inspections and property negotiations. Most buyers for a property will interview the existing tenants prior to making an offer.
- As a general rule, always take notes when talking to the owners of a particular property. Those notes will come in handy at a later time when property negotiations are underway or if matters of disagreement occur. Expect that the current property owners will limit some of the information that they give you. They may not completely share all of the elements of property operation and title, and perhaps even hide some of the challenges that the property presents. This is where your professionalism and attention to detail will be very relevant to the listing process.
Develop a comprehensive process to inspecting properties before they are taken to the market. Ask lots of questions before you form an opinion regards price and marketing strategy. Take into account all of the prevailing market conditions and the proximity of competing properties.
All of these things will have an impact on your marketing campaign, and on that basis potentially influencing the pricing and promotional structure. When you review a property comprehensively, you can list it with a view to a positive outcome.