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.
The marketing of a commercial property today needs to be quite specific and unique. The attributes of the property, the prevailing market conditions, and the requirements of the property owner will all have some bearing on the marketing campaign to be created.
Gone are the days of a generic marketing campaign. To be fair to every commercial property taken to the market today, the exclusive listing process is highly important together with vendor paid marketing. In this way you will attract the right levels of enquiry to convert inspections and eventually negotiate on a closed transaction.
Here are some tips that can be applied to the marketing process so that you can achieve a high level of well qualified enquiry.
- Inspect and review the subject property in a comprehensive way. Do so with due regard to the existing levels of improvements and the attraction factors that the property provides. If you were a buyer or a tenant for the property, what would attract you to make the property enquiry that is required? What would trigger you to lift the telephone and contact the agent?
- When you completely understand the subject property, you can look through the local area for any competing properties that may still be on the market. You can also look for any existing properties that may have been recently sold or leased. Get details of any recent sales or rentals that have impact on your subject property. This local information will be invaluable when it comes to client conditioning, and future negotiation. The buyers and tenants that are in the market today will understand the availability of other nearby property and the prices or rentals as the case may be.
- Given the two previous points, you can now consider the ideal target market that will apply to the subject property. From that target market, you can construct an ideal and comprehensive marketing plan. I go back to the point made earlier, where the landlord or property owner should be required to give vendor paid marketing funds to you as part of the marketing effort. It is quite normal for one per cent of the expected sale price to be the contribution required of the property owner towards the marketing campaign. It is very wise to get these funds paid in advance into your trust account or client advertising account as part of the preparation for marketing.
- Determine the duration of the marketing campaign given the known target audience and the complexity of the property. How long will it take you to reach the target audience and activate the right level of enquiry? In most circumstances, this can be achieved in a period of eight weeks. For this reason, most marketing campaigns can be focused on an eight week time frame, with suitable adjustments during that time frame as enquiry comes in. You will know during that period if the right messages are being conveyed to the local business community and target market.
- If the local property market is saturated with similar properties of similar type, then you will need to adjust the marketing campaign after the initial eight week period. If the property is to remain on market for an extended period then a secondary strategy will be required. That being said, the initial eight week marketing focus should have created some form of substantial enquiry for you to establish market feedback and potentially some offers.
- Mix your marketing efforts across a number of media types and media strategies. We all know that the Internet has a major role to play when it comes to the marketing of commercial and retail property today. In your local area, you should know the strategies that work best when it comes to marketing property and generating enquiry.
From the earlier comments made above, you will have noted that the exclusive listing strategy is a key component of marketing commercial and retail property today. A good exclusive listing marketing campaign will always create more enquiries and hence give you a better chance of converting a lease or a sale as the case may be.
When you work with and on exclusive listings you will be building a database of well qualified buyers and tenants in your location and industry. Over time this will lift your conversion factors and potential commissions. If the property owner wants to list their property openly across a number of agencies, it can be a complete waste of time from your perspective. Some top agents will not normally work with open listings for this very reason.
It is an interesting fact that most property solicitors acting on behalf of a client in a leasing situation will never really visit the subject property to understand the factors of occupancy and property performance. They simply create a lease based on previous standards and their experience as a property solicitor.
This is not to say that solicitors don’t know what they’re doing, but it is to suggest that some solicitors need to take more time in understanding the properties that the client owns. Every property should be regarded as unique and different. The factors of occupancy that apply to each tenancy can be quite specific.
Here are some factors that would apply to a standard lease situation:
- Decisions need to be made regards the rental type to be used in the lease. The rental type could be either gross or net, and that will have impact on the recovery of outgoings for the landlord.
- The the amount and recovery of outgoings in the property will change over time given the age of the premises and the value of the property. The lease document needs to allow for these two factors.
- Each vacant space will have unique factors of presentation and remediation. At the end of the lease there will also be issues relating to the making good of the premises. The make good clause should specifically talk to the factors that the particular tenancy and occupancy create.
- In every lease occupancy, careful consideration should be given to the time frames that apply to negotiating rent reviews and lease options. Both of these issues create critical dates that will need action and response by the landlord and the tenant. Failure to act and respond by those critical dates can expose either of the parties to unnecessary risk and obligations.
- The duration of a lease will have a direct relation to the cash flow for the landlord. In a property with multiple tenancies, there can be a potential threat of vacancies occurring at the same time in close proximity to each other. Excessive vacancy in the one property and at the same time, can frustrate the leasing process, increase vacancy downtime, and increase the financial impact of incentive on the landlord.
- Incentives are usually required for the leasing of premises to new tenants. That being said, the landlord needs to discuss with their solicitor the best types of incentive that will suit the property and the investment over time.
So there are a number of factors to consider when it comes to leasing vacant premises. On that basis the landlord should be encouraged to select the correct solicitor who has the time to investigate the attributes and pressures that apply to each particular property. In that way the landlord will get a lease that clearly matches the investment cycle and the cash flow that they require. This will also help the commercial property agent when it comes to lease negotiation with potential new tenants.