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:
- The supply and demand as it impacts particular property types
- The levels of market rental that are being achieved across the various categories of properties
- The time on market applying to vacancies locally
- The lease standards that are expected on the part of landlords when it comes to a new lease structure
- The incentives that are in the market today to attract new tenants
- New property developments that could have an impact on existing occupancy rates and tenant movement
- Vacancy rates that exist now in the market and the trend upward or downward
- Business sentiment as it relates to property occupancy costs and relocations
- 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.
It is an interesting question to ask in this property market. Exactly why are you a better commercial real estate agent for a client to use than some other agents locally? Why do you stand out as the best choice to take on the listing? The clients and prospects that you serve will be asking themselves those questions and they don’t want to make mistakes in getting to the answer. Here are some tips from our Newsletter.
Here is what most agents say when it comes to providing the answer to their clients:
- We have all the experience with properties of this type
- We are top agents locally by far
- We have the best people on team that will serve you comprehensively
- We are part of a very big network of offices and your listing will be promoted across the network
- We know how to promote this property
- We have the results in the local area
- We know exactly what you want Mr Client
- We can do this your way without marketing funds and at a lower commission
- We are the best at getting results faster
Have you heard some of these before? If you say any of these things to a client you have to prove what you say. It is not sufficient to ‘throw out the line’ without any substance to back it up. The clients that you serve expect you to prove it.
It is no secret that the current commercial and retail property market is under some pressure in prices, rents, time on market, and negotiations. You have to do more with less when it comes to working and marketing a listing.
Do you treat your exclusive listings with the focus they deserve? Can you prove to the client that the exclusive listing process in your agency is quite special and unique to the point that it is exactly what they need to create the property enquiries and the inspections? As you can see from these questions, I am pushing you to think about the sales pitch and presentation that you use today, so you can make it highly relevant to the client and the property. When you do this the listings are far easier to convert.
New agents and salespeople in commercial real estate always find it difficult to attract and convert exclusive listings, and on that basis most of their listing stock initially is ‘open agency’. If this sounds like you, start to focus on improving your relevance and your pitch. Remove the ‘generic comments’ from your sales pitch and become very property specific. Provide marketing, inspection, and negotiation solutions that are matched to the property and the client. In simple terms, be very special.
It is very easy in commercial property management to forget about performance standards as part of serving the clients that you work for. In any working week, the activities of the day can get away from you and the job just ‘gets done’. Any standards that you are working towards can easily be forgotten.
It is the larger and more sophisticated property owners that require careful attention and for that reason, performance standards are really important. You have to track the processes and systems that you provide for all owners; some of them will have special procedures and standards that must be respected.
It is up to the property manager to understand the property and the client in ways that allow them to provide the performance and portfolio outcomes required. If the client is not happy then the property will suffer and the income will slide. It is for this very reason that the top management agencies have well qualified people employed in the property management division.
Top property managers cost money from an employment perspective; however they should be attracting and managing the best properties in the local area as part of their employment. Each managed property should be charged a reasonable fee for service. If you skimp on fees, then you skimp on people, and that is a ‘downward slope’ when it comes to servicing demanding and specialised property management clients. Over time you will lose these clients if they are not well catered for.
Here are some benchmarks that should apply to performance standards in commercial and retail property management today. A property manager and management agency should be judged on these things quarterly and annually.
- Vacancy rates in the property will be of concern to the property owner. Track the vacancies and make every effort to remove them with a well-constructed lease.
- Tenant management and relations can improve a property and its performance. The property manager should be connecting will all tenants regularly to ensure that any problems are well responded to and actioned in keeping with the landlord’s requirements or instructions.
- Income control will help the landlord in many different ways. Keep on top of income collection and arrears management.
- Expenditure management is quite important throughout the property financial year. For this very reason it pays to have a budget that was set with the approval of the landlord. During the year the property can be tracked to the timed budget and any shifts in performance can be responded to early.
- Business planning will help the property in many different ways. Creating a business plan for the property at the start of the year is very wise when it comes to complex tenant retention and lease management. The plan can remove any unexpected events.
- Lease management will always be a key component of your property management service. As part of that process, seek to minimise the threat of vacancies by implementing your tenant retention plan efficiently and directly with the landlord.
- Monthly reports and landlord communication will help the property service remain on track. All monthly events and outcomes should be incorporated into the report as a tracking tool for issues and property control.
A property manager and the agency should be judged on these issues. You can add to the list as your location or property type demands. These factors become the performance standards by which your property management service can be judged.