In commercial real estate brokerage you have one or two directions to take. You can let the property market come to you with any leads or opportunities, or you can go out there and find the new business that is available. The latter is preferable.
Get involved with connecting with new people every day. Put prospecting at the top of the list when it comes to new business activities in your daily diary. Don’t let any person or career pressure divert your activities away from new business prospecting.
A common problem
All too often you see brokers and agents avoid the requirements of new business generation. They soon lose market share and fail to convert commissions. Here are some facts to be remembered about commercial real estate brokerage:
- MOMENTUM: It takes about 3 to 6 months of dedicated prospecting activity to generate some listing churn and commission flow. Many agents and brokers struggle to maintain the required prospecting momentum and organisation. That can be an amazing opportunity for the small segment of people that can keep things under control.
- KEEP THINGS MOVING: When the new business starts to evolve, don’t stop prospecting. It is very easy to slip back into a situation where commissions and listings are hard to achieve. Avoid the peaks and troughs of the industry by continually prospecting regardless of the business that you are currently generating. Understand the lead times between prospecting, client contact, listing conversion, and negotiating. I go back to the point that a time frame of about 3 to 6 months exists in the industry as an average business cycle.
- CONTACT LIST: The database that you create is perhaps the most important business tool that you will use. Protect your database and its information. Keep in regular contact with all the people within the database so that you know when they move to a point of action or challenge when it comes to local property.
- IMPORTANT CONTACTS AND PEOPLE: The relationships that you strike with clients should be nurtured and encouraged in a relevant way. Provide local property information freely and directly to the clients and prospects that you have identified. Free local property information will always be of interest to property investors, business owners, and industry professionals.
So the secret here is to develop a proactive approach to commercial real estate brokerage. There are always plenty of opportunities to be found, nurtured, and converted.
Local property investors and business leaders are always on the lookout for assistance when it comes to leasing, sales, and property management activity. Get involved with the people in your property community and maintain ongoing relevant contact so that you can build your database and grow your market share.
You can get more proactive tips and ideas in commercial real estate brokerage right here in our eCourse.
In commercial real estate brokerage, what do your customers look like, where are they located, and what do they want from you? Why would they contact you? They are interesting questions; when you know the answers, you have the central focus of your prospecting model.
One of the biggest mistakes in commercial real estate is for an agent or a broker to prospect generically over a large area with little focus. The prospecting message then becomes clouded and non-specific. A message of that type will have little attraction to the target audience of local property investors and business owners. So it is clear that a few decisions need to be made regards the clients and prospects that you want to work with. I like to call it a ‘customer commonality’ process.
To get some direction with your customer focus and prospecting model, consider the following ideas and topics. See how they can be merged into your client contact systems:
- The best prospecting model involves personal follow up and contact. Anything that you send out by way of correspondence, marketing, or brochures, needs to be followed up with a telephone call. It directly follows that your letters sent and brochures dispatched should be in suitable numbers for new personal contact and follow through. The process should be repeated every 30 or 60 days.
- Understand the activities in the market today. What pressures are occurring on property owners and business leaders? Where can you offer the best levels of assistance and professional service? In a town or a city, there are likely to be a number of answers to these questions. For that reason you should consider separate prospecting models and messages for different market segments and different market locations.
- Review your area geographically so that you can split your prospecting efforts up into groups of buildings, groups of properties, and types of people. This then helps you significantly with the marketing message and central prospecting concept. It is quite clear that a generic prospecting letter is of little use and is highly likely to be put into the rubbish bin rather quickly. To lessen this chance of any failure factor, make your marketing messages quite specific and of interest and value to the person that you are connecting with. Provide some information regards the market, recent listings, prices, rentals, or industry changes. Whilst keeping the letter or the correspondence simple, a few dot points will capture the interest of the reader.
- When you break your customer base up into a number of market segments, you will see that there are common factors and leads to be exploited. They may be associated with market trends, property activity, regional changes, and transport issues, property zoning, and planning matters. When something happens regionally that can have impact on property owners and occupants, you have an opportunity to make direct contact with your database in a relevant and real way. That’s what professional prospecting is all about.
In saying all of these things, it is wise for you to focus on a particular property type within a location. In that way you can relate specifically and accurately to the variations in price, rental, market interest, and the supply of new stock. The commercial real estate industry is not difficult; however it does require specific focus and property speciality.
The commercial real estate market of today has some challenges to deal with. In most cases it is a slow market or there is an abundance of unsold properties, and or vacant premises for lease.
The property market doesn’t disappear; it just changes. That change factor is what we as commercial real estate agents can help with. We become the ‘agents of change’ and can provide the right solutions for property investors, business owners, and tenants. People need our help in many different ways.
If you are finding that things are a bit tough at the moment for you as a Real Estate Agent, have a look at the way in which you are doing things. Today you need a ‘toolbox’ of solutions to help the clients and prospects in today’s property market.
Creativity and relevance are the two facts to aim for here. Are you creative in marketing your properties for sale or lease? Are you relevant as a top agent in this type of property market? Generic agents struggle in this type of market because they do not have the ideas and strategies active to solve property problems for clients.
So let’s give you some ideas to put into your agent toolbox for commercial real estate sales and leasing.
- Have all the market facts and information at your fingertips for the particular property type and deal that needs to be done. You cannot change the client’s perception without the right information.
- Check out all the competing properties locally before you meet with your client. Be very familiar with prices and rents that are being asked. Time on market assessments will also be of value in helping the client see what is going on today.
- Have stories of success with other local properties and listings that you can share. Most clients will listen to the experiences of other properties and clients.
- Have alternatives for the client to choose from. When alternatives are available, the decision to be made is less difficult. Most clients will choose the ‘middle ground’ alternative.
- When you list any property, set the rents and prices for today’s market. The client’s perspective on price or rent should be challenged if it is too unrealistic. You do not want to waste your time or theirs in the listing process.
- Provide the solutions that the market needs including personal marketing systems that will allow you to take the listing to the right people in your database and the right local property owners.
Help the parties make decisions. In many respects our clients and prospects are just looking for the right agent that can solve their issues quickly and effectively.
The services we provide as the local commercial or retail real estate agency are quite specific and special. The local property market will change throughout the year, as will the supply and demand for premises. On that basis, we are the experts to help the clients that we serve.
Sales and leasing strategies for commercial and retail property will change throughout the year. Each and every prospect should be entered into a database so that we can build on all future opportunity when the right property comes along. Your diligence here will help your commission conversions and future listing opportunity.
Local property market information will come in many forms including prices, rentals, future developments, and the supply and demand for new space to occupy. The clients that we serve cannot hope to cover those issues themselves. That is where we step in as the experts and property strategists.
Top agents know how to package the negotiation for the best outcomes and results for the client. These agents know what the market is doing, and how to package the right transaction for the clients that they serve.
Here are some tips to help you design your services for your local commercial and retail property clients.
- Local market information will vary throughout the year; you will see changing results in both sales and leasing activity. This local market activity will be setting the necessary benchmarks and the market rentals or prices as the case may be.
- Local business sentiment, together with changes in the business community will have impact when it comes to property occupancy, sales, leasing, and rental returns. It is our job to accumulate the necessary market knowledge and strategy to help the clients that we serve. Optimising property occupancy and rental returns will help the eventual sales equation and resultant price.
- Rental strategy is quite specific to the location, the property type, and the intentions of the landlord. In most cases, the rental should be set with the landlord prior to commencing any marketing effort relating to the particular property. Standards and differences will apply when it comes to gross rental, net rental, incentives, rent reviews, and lease options. We are the experts to help with these factors.
- Monitor the lease terms and conditions that apply to existing properties in the local area. Business sentiment will have impact on existing negotiations and marketing strategies that you apply to each and every listing. The supply and demand for local property will have immediate impact on the starting rental for any leases. The same for pressures apply when it comes to the sale price. On this basis, you need to know the differences between asking prices or rents, verses the facts and outcomes in finalised and completed transactions.
- Outgoings and operating costs will need to be recovered when it comes to lease occupancy. The decisions you make here will have impact on the landlord and the rental structure of the lease document. Local market standards, and the particular elements of the property may influence you when it comes to gross or net rental. Importantly, the operating costs for the property should be recovered as part of the lease structure, so make the right decisions when it comes to rental type and outgoings recovery.
- Tenant mix strategy will shift and change throughout the year. Tenancy mix decisions become important when you are working with a property containing multiple occupants in close proximity. The duration of leases, and the proximity of those leases to other tenants need to be considered as part of each lease negotiation.
- The permitted use for each lease and tenant occupancy should be well considered and controlled. Is quite important to ensure that the permitted use described in each lease that you negotiate is very specific and tight. Too much latitude here will allow the tenant to change the focus of the business and the offering to their customers. This also has impact on any future lease assignment or subletting situation. The permitted use will also have relevance to the tenancy mix strategy and any tenant retention plans that you implement.
- Vacancy and lease management should occur throughout the year. Staying well ahead of any lease events and critical dates is quite important. Prepare the landlord for any negotiations well in advance. Have due regard for the local market conditions and the benchmarks established by other similar properties nearby.
It is easy to see why the services we provide as commercial real estate agents are regarded as specialised and unique. That is why we charge a significant fee for service. The clients that we serve can benefit significantly from the factors of our negotiation and finalised transactions.
In commercial real estate agency it is easy to get distracted on things that will do nothing for your business or market share. In many respects, the easiest way forward is not the best way. Consistent action is required every day to build your market share in commercial real estate sales and leasing. In that way you can proceed and grow the listing and commission opportunity as an agent.
The top agents of the industry work to a system or a plan. They know the things that are required to help them move ahead. They do those things every day. It is the system that is taking them forward.
You hear so many wise and experienced salespeople in the industry say that nothing happens until you take action; they would be right, it is however the right action that is required so you can build your market. You will know your market and the changes that are underway; those changes will give you priorities in action and focus.
Look for the Changes
Every month and every year the property market changes with respect to property enquiry, time on market, and listing quality. Staying ahead of those changes will help you match the right actions to the market that exists. So what can you do? Try some of these:
- Building your new business prospects just has to be number one on your diary of activity as a commercial real estate agent. When you do this you will find that the market will offer lots of opportunity.
- Keep track of new property developments so you can watch the balance of supply and demand that may have impact on your property type or in your territory.
- Keeping your listings moving ahead at all times. Exclusive listings are really important in this process. Open listings are basically a waste of time unless you know that you have a buyer or tenant available now or soon.
- Connecting with Clients has to continue in all markets and at all times. A good database will help you do just that. How many prospects and clients should you have in your database that you regard as high value and active? The answer is about 300. It takes time to build those numbers but the process works. You may have more contacts than that now, however the number of 300 relates to the key people that you believe that may have momentum and want some property help in the future.
- Work to a system of prospecting and cold calling on a regular daily basis. Each day a call system will create new meetings if you call enough people. So how many people should you call each day? The answer is about 40. You will not get through to 40 people but you should get through to at least 15 people and of those you should be able to get at least one meeting with some opportunity.
Set clear targets for listings, prospecting, meetings, and contracts or leases. Use a database to capture all of your contacts and meetings on a daily basis.
When you have a vacancy or a pending vacancy in a commercial or retail property, you need to target the right tenant to fill that vacancy. This then suggests that not all tenants will be suitable for a given property, and that observation is correct and real.
Commercial property agents should know exactly what the right tenant would be for a given vacant area in any property; and then they should know how to find that targeted tenant. Top agents do this all the time. These top agents are in touch with the movements in the local area and business community.
- How much do you know about the local business community and its leasing pressures and leasing future?
- Do you know what tenants are looking for today when it comes to new property movements and where they are moving to?
- Are you in touch with lots of tenants as part of the prospecting model that you use?
So what does an ‘ideal tenant’ look like in your property location? To a degree the question is answered with the following factors in mind:
- The needs of the local business community
- The prevailing tenant mix
- Business sentiment and volatility
- Supply and demand for new and older lettable space
- The growth of the surrounding population
- The business base and profile of the local area
In any investment property location and area, there will be ‘seasons’ and ‘peaks’ of property enquiry in any given year. In most ‘years’ the leasing market is active for just 10 months, allowing for seasonal holidays, climatic conditions, and property availability. For this very reason it pays to work well in advance with known property vacancies and leasing requirements.
An ‘ideal tenant’ will vary from property to property but many of the following factors could be on the list of ‘tenant requirements’ from a landlord perspective.
- A stable business that brings brand and identity to the property
- A tenant that integrates into the property existing tenant mix well
- Lease terms and conditions that strengthen the property rental income over the lease term
- A solid and secure market rental that underpins the value of the property for the landlord
- Tenancy design and layout that gives a good image to the property
Does such a tenant exist? Yes is the basic answer, and to find them you should make contact with all of the businesses in the local area on a regular basis. Over time you will find the good tenants, and those that want to move to other quality properties. Most businesses stay within the same general location when they relocate, so they can take their customer base from property to property.
Today it is somewhat of a challenge to find the tenants that you need to fill the vacant premises in all of your listings. Rest assured that the tenants are out there, and it is just a matter of developing a contact system to find them.
An in balance in supply and demand for new and existing lettable space means that most cities and towns can be experiencing an abundance of vacant space. If that sounds like your property market, then read on.
The Best Way?
One of the best ways to find new tenants to lease premises is by maintaining a contact system in your database where you keep going back to the businesses in your local area every 90 days to see if occupancy matters have changed for them.
- Do they need to relocate?
- Do they want more space locally?
- Do they want to sublet?
- Would they want to assign their lease?
All of these are interesting questions that require specialist assistance and that is where the local agent can be of great value. The local leasing agent understands the property market in many different ways including rents, lease terms, incentives, and lease types (just to name a few).
The fact of the matter is that most business owners just want to get on with making money. They have little or no idea of leasing trends of the local property market until they require new premises to relocate to.
Most leases go for a period of 3 or 5 years, however the 3 and 5 year term is really common. This then says that any tenant that has been in a lease for a period of time could be coming up to a lease expiry or renewal. Approaching tenants and asking the right questions is all that is required to become successful as a leasing agent in this and any other property market.
Build the property market around you so that you know what is needed by the tenants today and have all of the property information at your fingertips.
What does a ‘top agent’ look like? They look ‘busy’. Build your system of contact with your local businesses and the leasing market opportunities will open up for you.