Best Shot Commercial Real Estate Market Intelligence – Talk to Local Businesses

In today’s commercial property market, the tenants in your local area will tell you a lot if you ask the right questions.  For that very reason you should merge local tenants and businesses into your prospecting activities.

Any local building with multiple tenants should be merged into your call canvassing program.   Providing the owner of the building is not a client of your agency through some other business relationship, there is great advantage to be had by calling down all the tenants on a regular basis.

You can ask the business owners and managers questions such as:

  • Do they own the property?  Property ownership may be an opportunity for a sale and lease back at some stage in the future.
  • Do they lease the property?  If that is the case they will have lease change over issues and lease expiry dates coming up.  Most tenants have no idea about the availability of leased premises in the local area or the current market rentals.
  • When will their lease expire?  If you know this date you can provide market information to them in the year leading up to the lease expiry.  They may be prime tenants for relocating.
  • Do they have local storage needs?  Existing businesses can sometimes be under some pressure to expand storage or relocate staff into nearby local properties.  Ask the questions to see what pressures of occupancy may exist.
  • What type of business are they?  This will have bearing on the type of property and the improvements required in leased occupation.
  • Some businesses have a significant lead time to relocate given the way in which they operate and the plant and equipment that they may use in that business process.
  • What labour force requirements do they have?  The location of the business should be convenient for labour sourcing and access.
  • Some businesses need to be near public transport or have a significant onsite car park for staff and customers as part of business operations.  Find out what the business requires in case a special property in the local area could come onto the market one day.
  • Ask the business owner about the landlord of the property (if they are a tenant).  If you can identify the landlord, you can approach them at a later time regards leasing and property requirements.

In addition to all of the above, the tenants know a lot more about the local area than you do, and the right questions about other businesses in the street may very well turn up a property opportunity.

The best way to gather this information is to call by local businesses on a daily basis.  It takes time, but if you do between 5 and 10 a day, you will get valuable leads to work on.

Industrial Property Sales – The Importance of the Liquidity Factor

 

When you work in industrial property sales there is a thing called the ‘liquidity’ factor.  It is quite relevant to the property type and has an impact on the marketing campaign that you will need to create and run.  A high ‘non-liquidity’ factor could radically change the way you market and sell a property.

Meaning?

So what does ‘liquidity’ and ‘non-liquidity’ mean?  It is the ability to move the property and sell it.  Depending on the property this may be easy or difficult.  A lot depends on the industrial property size and uniqueness.

  1. A property with a high ‘non-liquidity’ factor will be difficult to move and sell.  There will be clear reasons why this is so.  The property will be so unique in size and type that it will attract only a small number of buyers.  The risk that the property presents will limit buyer interest.
  2. A property with a high ‘liquidity’ factor will be easy to sell.  This industrial property would be ‘main-stream’ in size and highly flexible in usage.  From an investors perspective there will be low risk.

So the more specialised the industrial property in design, size, and usage, the more difficult it will be to sell.  This is a common factor in industrial property given the way the property is designed or used.

An example may be a ‘cold store’ industrial property that is leased as an investment to a tenant for a long period of time.  Whilst the lease may be attractive to an investor from a cash flow perspective, the uniqueness of the property could scare off many investors if and when the property comes up for sale.

Assessment?

So the ‘liquidity’ factor is something that you assess in setting up the marketing of the property, as well as pricing the property.  If the property is likely to be very difficult to sell, it may be better to market the property confidentially and directly to specific companies and investors that have a special interest in that property type or location.  A property with a high ‘non-liquidity’ factor will likely be difficult to price, understanding that there will be few comparable properties to establish a pricing benchmark.

Recommendation

As part of establishing a price and marketing plan for the property, do a ‘liquidity assessment’ for the client.  It will be a point of difference in your agency service and may even be a trigger for gaining the listing appointment.