In commercial real estate brokerage, you will find challenges when it comes to every real estate team. The disciplines and business processes across sales, leasing, and property management will vary, and on that basis you need to know that every member of the team is implementing the necessary skills to serve the client base and improve the business.
Every brokerage principal or manager should be closely interacting with the client base to identify and determine any factors of under-performance or client concern. Invariably most clients suffering the effects of poor agency performance will tell others about their concerns before they tell the relevant agent or brokerage; over time they can do a lot of damage to the brokerage brand. It is common for a client to move on at the end of an agency term of appointment where the listing hasn’t been well serviced or communication with the client has been below par.
Whilst you may spend a lot of time encouraging the agents in the brokerage team to improve personal skills and strengthen opportunities, are they really implementing the necessary skills and habits to move to the next level? The only way you will know that is through tracking results of each agent when it comes to the core factors of the business. Most particularly they are:
- The type of prospecting activities undertaken on an agent by the agent basis
- The amount of prospecting undertaken each day by each agent
- The conversions of meetings with new people as a direct result of prospecting
- The leads and opportunities that evolve from client meetings and prospect meetings
- The number of listing presentations made each week
- The number of listings per agent on an open listing basis versus an exclusive listing basis
- The time on market for each exclusive listing
- The amount of commission generated per lease transaction and per sales transaction
- The number of new clients entered into the database by each agent on a weekly basis
- The accuracy of the database when it comes to client contact details and current information
- The number of clicks and hits that apply to listings placed on the Internet by each agent
- The way in which each agent will integrate social media to listing opportunities and marketing efforts
- The amount of vendor paid marketing funds converted on a weekly basis for current listings for each agent
- The listing refresh process and frequency that applies to current listings with each agent
- The feedback that each client may give when it comes to the services provided by each agent with the listing
So there are plenty of things to track here when it comes to identifying performance opportunities, as strengths, and weaknesses. The rules should apply across the brokerage and should delve into the activities of each agent. You will soon see and identify the agents that are under-performing, allowing you to take the necessary steps of adjustment in each case.
The commercial real estate industry can be highly rewarding in so many different ways when appropriate tasks and opportunities are seized in a timely way. Almost every element of success in the industry will be centered on the activities of individual agents. Encourage your people in the business team to do the right things in the right way and to make adjustments where necessary.
Time is really precious to any business person, but in commercial real estate time is perhaps the most important resource that you have. How you spend your time will impact your listing outcomes and your commissions. We all have choices that are critical to our business.
There are 3 types of salespeople in our industry:
- Those that watch what others do and follow the ‘leader of the pack’. Those people may be happy but they will not make much money. They don’t stay long in the industry.
- Those that conform to the trends of the market and the business team. Conforming is a comfortable way to do business although not very rewarding. Generic performance is the outcome.
- Those that see opportunity and drive new business from unique personal endeavours. This group of agents and brokers are independent in their visions and actions. They don’t need others to put momentum into their business.
If you have chosen commercial real estate as a career, you have done so for a number of reasons. Here are some of the most common:
- Income opportunities
- Independence as a business person
- Professional skill development and drive
- Unique skills and interests in the property market
Perhaps you are one of the few that have a focus on all perspectives. Whatever your priorities may be, the way you use your time will be an important attribute of your business.
Here are some tips to help you use your time more effectively as a real estate broker or agent:
- The things that you do every day will have a significant impact on the results that you achieve. It is therefore critical to understand the matters that are of high value to your commission and listing opportunities. Those things should be repeated regularly as part of the daily diary activity. Habits are really important to our professional careers.
- Some of the things that we do in the market today should be tracked for improvement and results. You can do that with key performance indicators and comparisons relating to your property type and fellow agents. Look for those agents and brokers that are highly successful; check out their activities to see if any of them can be replicated. In this industry you can learn from the skills of others. You can also learn from your own personal professional skill development. Track and measure the things that are occurring each day from your efforts. Adjust those efforts to suit improvements in listing opportunity, client connections, marketing strategies, and negotiation outcomes.
- In many respects, you can bring most of the specialized skills that we have back to simple things that can be practiced. As they say, practice makes perfect. You can practice your dialogues, negotiation skills, and presentation skills. Every day we use those things in so many different ways.
So the message here is quite simple. Have a serious look at your diary and how you use your time every day. Devote at least 1/3 your business day to business building activities. Take steps to improve your core skills through regular daily practice.
Commercial real estate agency has significant attraction and opportunity for agents and salespeople that are looking for the potential of higher incomes and a good career. That being said, results that you achieve will only come from directed effort. Each and every day you need to do particular things to help you build market share, listings, and quality property enquiries.
It is interesting to note that many agents choose an agency or a brokerage to work for, and then expect to be fed listings and opportunities. If only the industry was that easy. It is a fact that most of your income opportunities will come from personal effort in prospecting, marketing, and negotiating. The agency or brokerage that you work for only has a small role to play in those factors.
If you are starting a new career in commercial real estate, or if your career has failed to move ahead with good results, now would be a good time to look at goal establishment and personal business planning. This is a specific process that will help you get traction when it comes to attracting listings, converting clients, and closing more deals. The goals you set will help you understand where you are headed, and the business planning process will give you the tools to take the required actions.
It is a fact that the property market will change throughout the year. The business plan that you create will need to be reviewed on a monthly and quarterly basis. In that way you can make the necessary adjustments given the prevailing market conditions. You cannot control the market but you can control your responses. Directed actions will always help you grow market share under all types of pressures.
So here are some rules to help you with goal establishment as a commercial property agent:
- Determine the reasons that you are working in the industry. It is wise to be quite clear when it comes to working and controlling your market share. Be quite precise when it comes to understanding where you are heading as an agent or broker and why you are doing it. Perhaps you have an income focus, or perhaps you have a professional target as a top salesperson. Either way be quite clear and specific when it comes to your reasons to be in the industry.
- Determine your market geographically so that you can focus your prospecting efforts inside the zone. Get some maps of the region so you can determine your primary location of business opportunity; outside of that zone will be the secondary precinct that will also feed some listings to you. The primary business precinct should have plenty of activity or opportunity within it. A full 75% of your business should come from within that area. The area should be reasonably local and you should also have a good knowledge of the property types and the market activity. Any listing or business opportunity that comes to you from the secondary business precinct will be the other 25% of opportunity that you will generate throughout the year; it will come to you as a result of luck more than directed effort.
- Understand the property types within your primary prospecting precinct. Ensure that you have the necessary knowledge of the market and the property types when it comes to sales, leasing, and property management. Be prepared to talk across all three disciplines as required in any client or prospect conversation or meeting.
The goals that you set based on the three previous points should now be determined on criteria that you can track. Here are the most common numbers that form a goal tracking process for individual salespeople and agents:
- The number of outbound prospecting calls made as part of a cold call prospecting process.
- Meetings generated from that cold calling activity. You should be talking to property investors, business leaders, tenants, property developers, solicitors, and accountants. These are the groups that will give you the best opportunity to act on in the industry.
- The conversions of listings or transactions from those meetings.
- Track the differences in listings when it comes to open listings and exclusive listings.
- Track the time on market relative to the listings that you control as exclusive listings. Open listings do not need to be tracked.
- Monitor the commissions that you write in both sales and leasing activity. Break those commissions down into size of sale and size of lease transaction. In that way you will see where you should be lifting your focus to better quality properties.
- One factor linked to all of the above will be that of your database. The size of your database should be monitored and its quality improved. The database is the one thing that can help you grow market share and close more transactions.
Taking on all of the above points, you now have some meaningful information to merge into your personal business plan as a commercial real estate agent. Set the right numbers relative to your property marketplace and the history of the area. Over time you can see where you are improving and then you can adjust and grow your skill base.
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.
In commercial real estate agency, the sales team forms the central part of the income base for the business. A highly performing team will bring in many commission and listing opportunities over time. That being said, the team really does need to be built, guided and optimised for results.
Here are some challenges to look at when addressing sales team performance issues:
- Some salespeople operate best when they are left alone to get their personal plan in motion. Over time this group can rise to the top of the market using a plan and strategy that works for them. On average this type of salesperson is in the minority. Agents in this group know what they have to do and they make sure they are doing it every day of the week.
- Other salespeople (the majority) are more inclined to take random action in the market place. This group requires constant guidance and redirection from the team leader. If left to their own devices and actions these salespeople will usually underperform and stagnate with listings and commissions. Agents in this group usually experience ‘peaks and valleys’ in listing conversions and commission income.
- The administrative team should support the sales team with back up listing and marketing infrastructure.
So just how do you adjust to this challenging team and get the best out of them? Here are some ideas to help:
- Know who your best agents and salespeople are. Let them work with autonomy on their plan (providing the plan matches that of the business). As long as they are getting results there is no need to interfere. Top agents understand what they have to do and they get on with the process. The income and commissions for these agents will be constantly growing.
- Determine just who your ‘rising stars’ may be in the sales team. They will require special guidance and assistance to grow and improve. Provide them with personal coaching and training so they can achieve set key performance indicators. Each week and each month this group will need shaping and nurturing. They should continue to get the dedicated attention providing they are responding to fresh ideas and showing growth.
- Some of the remaining members of the sales team will be operating in the ‘ordinary zone’ of performance and will be quite ‘happy’ to do so. Members of this team segment usually have plenty of excuses to apply when it comes to a lack of listings and commissions. The income that they generate will fluctuate greatly during the year. Should you tolerate these people in your team? Probably not over the medium term (over 6 months and beyond). Give them some guidance and training to correct performance problems; if they fail to adjust then it is better for all concerned if they move on to another agency.
It is better to have a smaller team of top agent performers than a big team of below average agents. Below average agents drain the life out of the business over the long term. Choose your sales people well by undertaking a ‘sales character assessment’ prior to employment.
One of the significant problems in a commercial real estate team today is the lack of goals or the focus of individuals on previously set goals. Goals are commonly set by the team leader for both the team and the individuals on a yearly or quarterly basis. In many cases the personal goals are simply a ‘wish list’ that never really gets activated. At the end of 12 months, the goals have simply not been achieved and the salesperson has not changed their personal performance. So everyone heads ‘back to the drawing board’ to set new targets.
The reasons salespeople should be setting their personal goals is to give some firm targets to aim at and strive towards. Goals should never be a ‘wish list’ that is relegated to the bottom drawer of the desk and only to be taken out when questions are asked.
Commercial real estate sales and leasing is a result driven industry and career for those that are prepared to work hard. It is certainly not and industry for the feint hearted. Constant focus and continual action are critical parts of personal improvement and results.
Most salespeople and agents will understand the focus on listings and commissions; they will not however change their habits to generate more listings and commissions. That is the reason why so many salespeople struggle in difficult markets and move from agency to agency looking for the ‘pot of gold’ at the end of the rainbow. The answer ‘lies within’ as they say.
The real purpose of establishing goals is to set some clear perspective on where the salesperson can head if they take consistent and relevant action. Goal setting and goal management really does work providing you give it the due regard and focus that it requires.
Here are some rules to the process of goal setting in commercial real estate today:
- Understand your local property market and the possibilities that it provides. There is no point focusing in a market segment that has no future or opportunity. There should be plenty of listing opportunity available for your choice of property and choice of market. Get this information sorted and defined before you continue.
- Define your market geographically on a map. Set the boundaries that you want to work within based on the major highways and any of the main roads. Inside the relevant area you should have sufficient listing stock that is easily identifiable.
- After you have defined your market geographically, look at the history of the area relevant to the property type. Research the sales and leasing activity that has occurred over the last 5 to 10 years. That research will show you trends and opportunities for the future; it will also show you the players or property owners that are active at various times.
- Having satisfied the previous three points, it is now time to decide exactly what advantages you bring to the market in and with your property specialty. Why are you different? What can you do for your client that is relevant and important? Are you better than the other agents in the area, and if so why?
- Providing all of the above points are ‘in balance’ and suitably positive, you can now set some clear goals and targets. With due regard to the history of the area, you can set some targets around quality listing stock, exclusive listings, time on market, and commissions. Have a serious look at the quality of property that you can work with. Quality listings bring in better enquiry in any market; for this reason you need quality properties that are controlled by you or your agency on an exclusive listing.
- All of your goals should be quantifiable and easily tracked. Each few days and certainly at the end of each week you should be revisiting your goals to identify how you are progressing. In most cases many salespeople need to adjust as they proceed in their goal management plan. The road to success requires effort and change. Be flexible and be open to adjustment.
The process of goal management and goal targeting is one of the best ways to get salespeople on track. Expect the entire process to take personal effort and real focus. After approximately three or four weeks of hard work, the whole thing gets a lot easier and results start to come in. From that point onwards you know where you are heading and how it’s occurring.