In commercial and retail property, a top leasing agent will make a lot of commissions. That is because they specialise. They know the local businesses that are looking to move over the coming years and they work towards putting the right deals together.
In reality, landlords need the top leasing agents to help them that really understand the local area. Those top agents will have their market covered in a comprehensive database of tenant movement, lease strategies, rent alternatives, and marketing ideas. Finding the right tenant for the right property is a real skill.
Landlords do not need an agent that just knows how to lease. Anyone can put a sign on a property and list it on the internet. When you are a ‘top agent’ you will have the market coming to you because of that intense and relevant market knowledge. You will also know who are soon to be moving and for what reason. Market intelligence is invaluable in our market today as businesses change location and seek better leasing deals.
These are the skills and knowledge factors of a top leasing agent today:
- They have a comprehensive awareness of what all the local tenants are doing in their current leases. They know when those leases will expire and will work towards helping those tenants in the last year of their lease to find something of better value or relevance to the business.
- They know where the successful businesses are that will need property change. They look for tenants in pressured occupation. Expansion or contraction factors are major triggers when it comes to property leasing.
- Top agents know the landlords of the area and the best properties that create the major interest. When you can relate to those properties and the existing tenant mix, you will soon see property change and opportunity in each.
- Rentals will change from property to property and location to location. To a great degree, the rentals in any location are driven by the rate of tenant enquiry and the supply and demand for leasing space. As part of that equation it is wise to keep a close eye on the upcoming property developments in the local area. It takes about 2 years from approval to completion when it comes to getting a new investment property established. That being said, the property developer will be offering some very real incentives to attract tenants even before the property comes out of the ground.
- Lease terms and conditions are sometimes standard to a property or landlord, but they will also be influenced by the rate and type of local property enquiry. A lease that is offered for a vacant space should be matched to the prevailing market conditions and current lease enquiry. You may need to create incentives to attract that lease enquiry.
- Franchise tenants are a good source of lease enquiry. Top agents work the franchise groups to find the right properties that suit them. Those franchise groups will have a priority in location and lease terms. Get to know what the franchise groups want.
To be the best leasing agent, you can dominate your market when you know what the tenants, the landlords, and the properties are doing. Isn’t that what we should do anyway?
In this slower commercial property market, there is a lot of pain and discomfort being experienced by some of our commercial real estate clients and local property investors. That being said, we as the local agents and realtors are the ‘pain relief’ behind the equation. We can solve a lot of problems for our clients. We have the market processes and tools to do that.
Here are the typical frustrations of property investors in commercial and retail property today:
- Higher vacancy factors and selective tenants
- Protracted vacancy periods
- Poor tenants in the tenant mix and unstable market rents
- Less quality enquiry for a property that is taken to the market for sale or lease
- High property outgoings in maintaining the property for occupancy
- Extended time on market when it comes to selling or leasing a property
- Reduced price or rent outcomes from a contract or lease
- Difficulties with finance requirements and lenders
Rest assured that the property market does change and will get better. Remember that just 5 or 6 years ago we had just come through a huge boom period of commercial and retail property sales and leasing.
In these more challenging times, we as the local commercial agents and realtors are best placed to solve property problems for our clients. We have the tools and the ideas to move some of these challenging properties over a slump or hurdle.
Top agents can thrive in this market because they have the contacts and the database to do a lot of good things for their clients and property listings. When the market gets tougher, the top agents simply focus with more action and relevance; they know what is required to help their clients and they set about doing just that.
So here are some tips to work with focus in this property market today:
- Work with a focus on the local business community. They are likely to need property change or relocation. Some businesses will be more successful than others; sort through the local businesses to see who wants help with expansion, contraction, or relocation.
- Some local property investors will be needing help with tenant retention plans and occupancy changes. Your database of tenants will help them.
- Look at the older buildings that tenants are leaving. Those buildings may be a case for renovation or redevelopment.
- The methods of sale or lease in this market should be carefully considered with due regard for the property and the surrounding area. Exclusive listings for a lengthy period of time are the norm and not the exception.
- Vendor or client paid marketing should be obtained for every listing that is made exclusive.
- Take every listing into the local area personally to the business proprietors within regional proximity. A current listing is a reason to talk to others.
In this property market, we are the specialists that can solve many issues for our clients. It is just a matter of how that is to occur.
If you want more tips for commercial real estate agents, please join our newsletter here or visit our main website http://commercial-realestate-training.com/
In commercial property management, the process of income improvement is fundamental to the performance of the asset for a property investor. There are many ways the income for a property can be improved; the greater number of tenants in a property, the easier the process is. If you have a single tenant, then your options are limited.
When the property market is slow and tough, the income from the property is more important than ever before. The basic rule is to minimize the vacancies within the property and to optimise the occupancy given the available tenancy space.
Here are some further ideas for property managers to improve property income for the landlord.
- Selecting the right tenants for the property will always be an important factor in the leasing strategy overall and the property management process for the property. In an ideal world, you want tenants that can bring you both stability of occupancy and good business profile. High quality corporate tenants bring an identity to the property that may also attract other tenants to your other vacant tenancies if and when they arise in the same building.
- Rent review terms and conditions are created in and from the initial lease negotiation. To a degree, they will be shaped from the pressures of the particular lease negotiation. The lease negotiation will then be influenced by the prevailing market conditions. All of that being said, the rent review terms and conditions should be suitably shaped to improve the landlords position and rental income. Many agents and property managers choose to use or negotiate a rent review profile for a lease that is indexed to the growth in CPI. In most cases, this process only has benefit to the tenant given that the rent increases in a limited way. It is better to target rent reviews that are established to a more substantial rental increase for the landlord; that can be through a fixed percentage increase, or a fixed amount increase. Market rent reviews are also useful and worth considering, although it does depend on the property, the location, supply and demand of vacant space, and the prevailing market conditions. In the case of a property that is only average in location and presentation, it is better to choose less market rent reviews and more fixed increases. The income from the property is therefore more predictable.
- Options are useful when considering the leasing of a property. It is always wise to remember that lease options will tie the property up for a number of years beyond the initial term. Options for renewal can remove some elements of control from the landlord, and on that basis they should only be used where the landlord feels totally comfortable with the process of giving the tenant an option for a number of years. In older properties that face redundancy this can be an issue.
- Extra rental areas can occur in any building. They may be created for storage, signage, and the use of special areas in the common zone of the building. The extra rentals may be established on separate licence documentation.
- Vacant space optimisation should always be considered. A creative property manager or leasing manager will look at the variations of occupancy and how vacant space can be fully leased at a top rental. Other tenants in the property may be candidates for taking up vacant space if they need to expand.
- Tenant retention plans will help you keep the right tenants within the property. You will also help you identify those tenants that should be moved on at the end of lease occupancy and expiry.
A commercial or retail property today requires creative thinking when it comes to income optimisation. There is a fine balance between charging too much rental and charging the right rental. If the balance is not achieved, you can finish up with excessive vacancies within the property and a lack of potential tenant enquiry. This is where an experienced property manager or leasing manager can provide the knowledge and experience to a landlord. Watch the property market and the properties that you compete with; the tenants that are out there are doing the same thing.
When inspecting commercial property with a prospective tenant you will need to give the person concerned a package of information that outlines the property detail. The contents and comprehensiveness of the presentation packet will assist you greatly in converting the deal to a successful lease. So let’s give some thought to the contents of that ‘packet’. We have put these separate matters in a logical order that is common in the market place.
- Covering letter – This needs to summarise all previous conversations that you have had with the decision maker. It will thank them for letting you serve them with their leasing needs and it will then detail your understanding of the occupancy needs. From that point you can overview the properties that you are to take them to and let them inspect. Your reasons for showing them these particular properties should also be given.
- Map of the area and greater region – Maps are always of high value in the inspection process. You need to give maps of the immediate region of each of the relative properties to be inspected and also a map of the greater region showing transport corridors and key points of business geography such as city centres, main roads, and railheads or airports.
- Locate the properties – On your regional maps ensure that you highlight the location of the properties that you are showing. Some prospective tenants do not know where they are in relation to other parts of the town or community.
- Property review information sheet – As the name suggests every property must have a property information sheet that is carefully constructed with key property information. Given that properties can be of different types such as office, retail, or industrial, the property information sheet will be adjusted with the relevance to suit. This will include:
- Buildings name
- Area detail (site and tenancy)
- Asking rental (for the specific space plus any supplementary rentals such as signage, car parking, storage)
- Outgoings applicable to the deal
- Asking lease term
- Map of the property or tenancy
- Photographs of the property inside and out
- Floor plans of the space available for lease
- Details of council zoning that effects building usage
- Building detail to suit property type (floor loadings, height of warehouse, span detail in warehouse etc)
- Car parking detail and access points (plus a plan of the car park)
- Access detail and transport systems or corridors nearby
- Improvements provided in the premises for the occupants (carpets, walls, floors, fitout configuration, electrical supply, air conditioning layout)
- Services in the property (power, water, communications, lighting, air-conditioning, cleaning)
- Amenities provided for occupants (car parking, showers, tearooms, toilets, common areas)
- History brief of the property (this is general information on the age, architects, engineers)
- Demographic overview of the region
- Profile of neighbouring properties
- Sample draft lease document – This is not always provided at the first leasing inspection with the tenant, but it is helpful to be able to go through the general terms of the lease with the prospective tenant. This says that you must feel comfortable with knowing how to quickly scan through a lease and look for key issues to answer simple and focused questions from the tenant. Detailed lease questions are best referred on to the solicitor acting for the landlord.
- Inspection tools of trade – In any inspection you should carry the essential tools of trade to deal with any simple questions. These tools should be in your motor vehicle and easily accessible.
- Measuring tape (up to 10 meters)
- Measuring wheel (for large distances)
- Laser pointer (to illustrate points of interest in the inspection)
- Laser measuring device to measure rooms and internal space or height (you can get these from any large hardware store)
- Camera (to record matters of interest or questions from the tenant)
- Note pad
- Mobile phone (so you can call the office or the landlord if needed)
- Dictaphone for general notes during inspection
GOLDEN RULE: In any inspection of a property should you have any doubts or questions in your own mind regards a request for information from the tenant, do not ‘guess’ your response. Always suggest that you will get the full and correct answer that the tenant needs, and that you will come back later that day in writing with the relevant information. Legal action is not uncommon in the industry for things that have been said without due care.
BUSINESS COURTESY: After all leasing inspections are undertaken send a simple letter or email to the prospective tenant to thank them for their interest and suggest that you will be happy to help them with any further questions that arise. Also drop a note off to the landlord summarising the inspection and the outcome to date.
RECORDS: Keep separate written notes after all inspections with each potential tenant; it is surprising how this helps when you have premises that are attracting great interest from the market. Whilst it should go without saying, all prospective tenants must get entered into the office database after the inspection so that you can optimise the enquiry on other premises if necessary. Most tenants look around the market for only a short time (less than 2 months) and then make a new occupancy decision.