Many times I have spoken to salespeople in commercial real estate about the market and what they perceive as opportunity this year. Some people have got a real grasp on their activities and listings. Sadly the majority (at least 90%) do not, and for one simple reason. They do not do enough cold calls to prospects. They do not therefore control their market and they do not have enough listing churn.
No matter how successful you think you are right now in commercial real estate sales and leasing, you must do the cold calls yourself and you must keep control of your own database records. Both of these issues are avoided by most salespeople; the reason for the avoidance is lack of commitment and persistence.
Here are some tips for those that are prepared to make the calls:
- Set aside the same time each day for the calls. In only that way will you make it a habit.
- You will need about 2 hours each day for the process.
- Do not hand your cold calls to a telemarketer, it is a waste of money. Only you really know how to talk to a prospect with relevance.
- Stand up when you make your calls. You will need a headset for the process. In standing up you will find that your conversation flows more freely and confidently.
- Make 50 calls per day to fresh contacts from the business community.
Is this a lot of work? Yes, but the rewards are real. If you are good at your calling process the market will be attracted to you and listings will follow. If you want some more tips on cold calling and listing business generation, then check out our website at http://www.commercial-realestate-training.com/
Connecting with and keeping in contact with tenants in a professional way is foundational to a solid and strong commercial property performance. The object is to address and resolve tenant service and maintenance issues such as:
- Maintenance matters
- Leasing matters
- Emergency matters
- Keeping the tenant informed of upcoming changes and issues
- To identify when the tenant is under occupancy stress
Happy tenants support your cash flow from rent. They also minimise your vacancy factors. It is notable that existing tenants in a property can either impede or assist the leasing process. Therefore it is all the more important to keep the tenants in your property happy. Prospective tenants will seek out sitting tenants and learn quickly if those existing tenants are unhappy. Keeping tenants happy and comfortable is all part of the property daily system and activity for the property manager. Keeping in contact is part of that process.
When taking on a new property management that is office, industrial, or retail property, first and foremost the property manager needs to get on top of tenant matters. The tenant is already in the property from the moment the property manager takes over the property. Tenants have issues, and on that basis the lease terms, the tenant occupancy, and premises detail have to be high on the agenda of review for the property manager. Having a fixed handover procedure or checklist is essential.
All tenant occupancy terms are usually reflected in a lease. If not, then they are likely to be monthly or casual tenants. In that case the tenant will have no lease to refer to in relation to terms of occupancy. In that case the tenant will still have occupancy rights and obligations to understand from law and legislation in your location. When in doubt see a good solicitor.
One small word on leases that do exist is that they can be registered or un-registered. This means that they may or may not be on the title for the property. Either way the tenant has rights which are protected and explained in that lease. Find all leases that apply to the tenants in the property and review them for impact on service and maintenance matters. It is quite possible for any tenant to have special terms and conditions in that regard.
To review a lease for this type of issue, read the lease in its entirety so that relevant matters of maintenance and response are recognized. The types of issues frequently written into leases are those such as:
- Security situations and systems
- Air conditioning provisions and service to the tenant
- Maintenance obligations and methods
- Occupational Health and Safety obligations
- Response times and processes in any maintenance
- Methods of keeping the tenant informed
- Methods of accessing the tenancy for service and maintenance events
- Levels of acceptable safe or comfortable occupancy
- Rent adjustment or abatement in times of service failure
Keeping in contact with tenants so that service and maintenance needs are addressed in keeping with occupancy documentation, is essential to property performance. When major failures of plant and machinery occur it is the property manager that has to have the levels of control and communication to preserve and protect the landlord’s position.
In property management expect that big things will go wrong from time to time. A response management plan or a crisis management plan is part of the toolbox for a property manager. The larger the property you find the greater the potential for a major building failure, and possibly personal injury. If you know your property is located in an area of reasonable natural disaster potential, then be prepared. Do you have the control systems and people to keep things under control?
You can get more detail on Commercial Property Management at our website here http://www.commercial-realestate-training.com/
In tenant advocacy, the real estate agent works for the tenant and has them as the client. This is a deliberate shift from the normal work that a real estate agent will do with a landlord in letting vacant space. Most particularly tenant advocacy is a real and significant service for corporate businesses that require relocating.
In normal circumstances corporate tenants consult with their solicitor to assist them with the lease and relocation process. In real terms, the solicitor will usually know nothing about the property market and only becomes useful when legal documentation is to be prepared.
The tenant advocacy service is therefore a specialised offering for the corporate customer requiring new premises. In this market, as we adjust to a new commercial real estate cycle, the movement of businesses and corporate tenants is becoming more frequent and will remain so for the next couple of years. The corporate real estate customer will be looking to seize the opportunity of new premises at realistically lower rentals. At this point in time, landlords are still under pressure to find tenants in many locations. This produces lower rentals, higher incentives, and tenant favourable lease documentation.
Tenant advocacy, as a specialised service offered by a real estate agent to a tenant, effectively costs the tenant nothing when handled correctly. This is because the real estate agent provides real savings through market intelligence and negotiation skills. The tenant pays for those skills through commissions. They get the expert they require for finding the new premises.
For some property agencies, this is a significant shift in mindset; they would normally work for the landlord. This can also provide difficulty if they work for landlords in a smaller precinct or real estate market. In a larger property market it makes no difference.
If you are in a smaller property market, or are worried about the impact of working for tenants specifically, the best way forward is to appoint a specialised staff member who will focus only on this tenant advocacy market segment and therefore not cross over to the landlord client relationship. Conflict of interest is therefore reduced, although it should be said that the tenant as a client should never be introduced to a property that is listed with your real estate agency from the landlord client relationship.
You can get more detail on Tenant Mix and Tenant Advocacy at our website http://www.commercial-realestate-training.com/
Do you want more commissions and listings? You simply have to be great at prospecting and cold calling. The rest of your business will follow.
Guess what? Most real estate agents and brokers are not sufficiently disciplined to do the right levels of prospecting on a daily basis. That is the most significant opportunity that exists in the property industry; you just have to be better than the rest at prospecting. Sure listing, negotiating, and closing are other important skills, but they will come as a natural by-product of prospecting.
Focus on cold calling and prospecting. So how do you do this? You set some prospecting rules and you start practice. The words ‘rules’ and ‘practice’ are another couple of problem words for many in the industry. Many struggle with doing both.
So let’s get away from the negative and presume you have the determination, the focus, and the drive to prospect for new business on a daily basis. Here is a ‘killer prospecting model’ that really works. The rest will be up to you. This model takes 3 hours a day, 5 days per week.
- There are no gaps and Saturdays and Sundays are the only days off in the prospecting process. That is the first rule; probably the most important.
- The second rule in the process is that you must prospect on the telephone in the morning because after that you will be distracted by other things and not stick to it. Without going deeply into it, there are established facts of personal performance in business that show the morning is the right time to do prospecting.
- Get away from setting any meetings in the morning. Tell the boss that you prospect at that time and that you would prefer to set meetings with him and anyone else in the afternoons. Even meetings with clients and prospects should not occur in the morning unless it is an absolute necessity. The only reason to break the rule is if the meeting is for an active deal that is closing.
- The 3 hours of prospecting each day in the office is done from the telephone. In commercial real estate you are predominantly dealing with business people and they generally will take your call if commercial real estate is an issue for them. If it is not an issue then you simply move on. Do not set up a meeting with someone who has no interest; remember that your time is precious.
- Drop the cold calling scripts and use your own words; that will be the way you will feel comfortable with the process. Use trigger words to flow the discussion, but do not use scripts as the listener will sense the processes and turn off.
- Know that it takes you about 20 minutes of cold calling every day to get the process into momentum. Once you are through the 20 minutes you must keep going and not stop for 2.5 hours. In that way you will make progress.
- Find a quiet place to make your calls so that you can focus without distraction. Your success in tele-prospecting depends on it.
- Research your call list the night before so you do not waste critical call time in research. This is critical to the call process.
- Create a series of simple forms to use in the call process so that you can capture the results later in the database. You must not stop the call momentum.
- Try to contact 10 new people on the telephone each day. If they are not in the office when you call then simply make a note to call back. You should be able to make 50 calls in 3 hours.
- Your only reason for calling prospects is to see if they have a need or an interest in commercial property. When you really understand that yourself, then the calls will be easier and the quality of the discussion will be higher.
- Have a great database to record everything. Use something that you are comfortable with. At the basic end of the database alternatives you can use Microsoft Outlook, or Access. Both are useful, low cost and user friendly. When you want to move to something more relevant to the property industry you can spend many hundreds dollars; personally I believe you can do very well with the basics providing you know how to use a computer well (in that you have no choice).
These are the rules that you need to set in your cold call prospecting. After you set the rules, you start the practice and you will need to do that for a couple of weeks until things are moving well. To your success in commercial real estate prospecting! You can get more detail on prospecting and cold calling in real estate here at http://www.commercial-realestate-training.com/
In commercial property the handover of premises is a critical time to take note of important issues and matters requiring attention. These notes can later support the tenant or the landlord in any matters of debate or dispute. There is a handover and the beginning of occupancy and again at the end of the occupancy.
In all respects the occupancy of the tenant and the premises handover should be in accordance with the lease. This says that you as a property or leasing manager must read the lease and understand it. Even in a single property with many different tenants, the leases can be different and usually are. The ‘make good’ clauses and the ‘handover provisions’ of the lease are unique and should be understood relative to each tenancy.
Taking photos also is part of the documentation of premises at handover time. It is recommended that the photographs taken are date and time stamped in the camera, and the photographs are later saved as ‘gif’ files and not ‘jpg’. This is because ‘gif’ files are a more stable and fixed format that cannot be manipulated by software editing tools such as ‘Photoshop’. If you want the photograph to be evidence of something important, then the ‘gif’ format is a reliable choice.
Whilst every tenancy is unique, let’s set some rules to give you some benchmarks to work with at handover time. You can then add some other matters that may be applicable to the location or property that you work on.
- Take ‘gif’ format photographs as evidence of important things and levels of presentation
- When taking photographs it pays to put a scale reference such as a ruler into the picture
- Take notes of any comments or agreements from any parties to the lease
- Check all walls and painted surfaces for damage and or current condition, taking photographs as appropriate to record the current condition
- Check ceiling tiles and t-bars for ceiling presentation and integrity
- Look above ceilings for the satisfactory removal of any unnecessary cabling that should have been removed
- Check all floor coverings for any damage or deterioration beyond normal ‘wear and tear’
- Look for any floor or wall penetrations that exist or need to be remedied noting that any penetrations must be fire rated to the standards of the local building codes.
- Check air conditioning function and note any need for air conditioning balance due to fitout or altered or installed partitions in the leased space
- Check lights and light switches for function and safety. It may be necessary to replace all tubes in the light fittings as part of the make good provisions of the lease
- Check all doors and locks for safety and security. Do not overlook the need for doors and locks to comply with all building codes. All keys to the doors should be provided or returned as appropriate. If a master key system is installed in the building then check that the keys all comply with the master system
- Check windows for function, security, and safety
- Check electricity supply to the tenancy and any metering of consumed energy
- Check the installation and compliance of any signage for the premises and that such is in accordance with architectural rules set for the building.
- Look for any matters of change to the structural integrity to the building and the premises
As part of the checking process it sometimes pays for the landlords contractors to inspect the premises and provide a full report of any complex or sensitive issues. This will support any later legal dispute over make good terms and conditions.
When keys are exchanged between the tenant and the landlord, or the landlord and the tenant, a receipt should be obtained as a record of handover of the keys. The real estate agents actions in the handover to any tenant should also be supported by notes. It is surprising how many disputes arise later when you least expect it; in such case your notes are invaluable.
Never hand back any bond money or bank guarantees to tenants until you are absolutely certain that all make good requirements of the lease have been satisfied. It is also of note that all make good must have been done at and before the expiry of the lease; it is not something that is done after lease expiry.
Efficient make good and handover procedures are a critical skill for the real estate agent to develop and implement on every lease situation. You can see more about this on our website here http://www.commercial-realestate-training.com/
Commercial real estate is such a diverse property type across industrial, office and retail property. Closing and negotiating the property deal is therefore specific to the property type and the parties to the negotiation. You have to be the best negotiator that knows the market, the deals, the people, and the regional trends.
The role and rules you set in the property negotiation are critical to your success and the outcomes you get. The normal variables apply at the start such as:
- Lease details
- Contract terms
- Settlement dates
- Occupancy dates
- Subject to provisions of contracts
- Availability of finance etc.
But there is more. The real ability to close more leases and sales deals comes from your ability to ‘inoculate’ yourself from the threats to the deal. This means you must be prepared for the negotiation before you start.
To ‘inoculate yourself’ for the negotiation you have to know all the ‘BATNA’ elements of both parties. This is a common term used by experienced negotiators and means simply one thing. You have to know the ‘Best Alternatives to No Agreement’. When you know the BATNA’s, you can have your answers ready and the strategy ready.
So how can you do this? Both the buyer and the seller (or landlord and tenant if you are doing a lease deal), will have alternatives to fall back on if no agreement is reached. The lesser number of alternatives they have the better, as it will keep the negotiation simpler for you. Whatever their alternatives are, you need to know them. When you work from this position, your negotiations can be more direct and successful. Your property deals will be better as you will be the ‘clever negotiator’ that is well prepared. You will be more aligned to the arguments you present, and it will be harder for the other parties to the negotiation to counter your proposal.
Your client will be one of the parties that you want to help with the BATNA concept. To know their BATNA’s is productive from the outset, and they need to know that. The concept should be discussed with them beforehand because you are to chase the best outcomes for them.
The third party is the person that will not always tell you the BATNA’s so you will have to work them out yourself through clever questioning at the time of property inspection. Whatever BATNA’s they have should be lessened so that they have little alternative than do agree to the property offering.
So the moral of the story is to know the complete BATNA picture of both parties and then to negotiate from a position of strength into that picture. You can see more about this on our website here http://www.commercial-realestate-training.com/