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3 Tips for Leasing Commercial Property Today

Commercial Office Building Leasing
Lease more commercial buildings the right way. Use a checklist approach.

When it comes to leasing commercial property you really do need to know what is going on in the local property market.  In only this way can you match your marketing activities to the levels of enquiry that currently exist.

Three tips to help you with the leasing process centre on market evidence and market activity.  Here they are:

1)      Assess the levels of net and gross rent for comparable properties nearby before you start your leasing process.  Your property will need to have asking rentals that are similar to the other properties because the tenants that you attract through marketing will already know what the rental levels are in the market today.  The differences between net and gross rent will also be of interest to tenants and centre on the levels of outgoings that apply to the asset.  Most tenants will be concerned regards any extra rental payments that need to be made beyond the base rent.  This is where the levels of outgoings can frustrate the leasing process.  Make sure that your outgoings are in parity to properties of a similar type nearby.  If they are an extra payment to be made by the tenants, ensure that the outgoings are realistically structured and charged.

2)      Choose a lease format that covers all the activities and uses of the property.  The use of generic leases today is far too common.  In most cases generic leases are only relevant on the most basic of property (such as an industrial shed).  It is interesting to note that many landlords take the generic lease process because it is way cheaper than a specific lease; when things go wrong with the property or tenant they then have troubles in solving issues given that the lease is just too basic.  The message here is for the lease to be drawn up by a good commercial property experienced solicitor.

3)      Get a good rental guarantee to boost your landlord’s position and protection in the case of lease default.  Tenant default is a common problem today, and the traditional ‘Directors Guarantee’ is not much value in the scheme of things.  The landlord must be able to get easily their hands on ‘real money’ if the tenant defaults; that will normally be only through a bank guarantee or cash bond.  As to the amount of what should be asked for and held as part of this process, the answer is usually ‘the most you can get’.  That should be between 3 and 6 months rental (all types of rent including outgoings and any taxes paid) depending on just how difficult the property could be in the reletting process.

There is no doubt that the leasing process and activity is high in many locations today.  When sales opportunity slows, the leasing activity tends to lift.  Good agents can handle leasing as well as sales and they adjust their activities depending on what the property market requires.

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Lifting Productivity in Your Commercial Real Estate Team

Commercial Real Estate Sales Team
You must solve problems of productivity in the commercial real estate team the right way and do it fast.

There is no doubt that a commercial real estate office is a busy place with agents coming and going at all times of day.  The situation gets worse the more salespeople that you have on your team.  It should be said that productive salespeople should not be in the office much during the day, but out in their territory.  The only time that they should come into the office is when they have some calls to make, or paper work to complete.  They should be in the office for only 2 hours per day maximum.

The office principal or team leader that wants the salespeople in the office most of the time is really not giving enough trust to the team to get on with the job. 

Sure, if you have some members of the team that are not producing then they are likely to be wasting the business day and not doing the right things.   In that case you need to know where those sales team members are and what they are up to.  But do you really want them in the office?  Wouldn’t it be better for them to get out and about and meet the people?  Couldn’t you get them to give you a diary update of movements at the end of the day or week that would satisfy your questions?

Poorly performing salespeople that cannot account for their movements should be dismissed as part of an ongoing business cleansing process every 3 months or so.  There are ways to manage out the underperformers.  A constant recruiting process goes hand in hand with running a real estate business.

Salespeople are intelligent and will make their own choices.  If their choices do not match your business model then they should go somewhere else and be helped to do so.  Do not let any underperformers become the ‘elephant’ in the sales team that is frustrating everyone else and taking the majority of your focus.  You and the team do not need the stress of the issue.

Why would you want to tolerate a member of the team that is not producing and is destabilising everyone else?  Sure, they may be providing some income and that fact may hold back your decision to sack or dismiss them, but eventually the ‘elephant’ issue will become so frustrating that it will have impact on your personal performance as team leader.  Remove on any ‘elephant’ issues quickly.  Get on with supporting and helping your good people achieve.

Here are facts that apply to running salespeople in a team:

  • Great salespeople like flexibility and support to get on with the job and produce commissions
  • Great salespeople will produce business their way if you give them the flexibility and the trust to do the business
  • Great salespeople know that they are responsible for the results that they achieve and will get on with the process if you give them the leverage to do so.

If you do not trust any or all of the members of the sales team then you either have the wrong people, inexperienced people, or your need to adjust your business practices.  Trust is really important when it comes to optimising listings and commission results from the real estate team.

Whilst you want the team to perform, the sales team need to see and feel the trust between you and them.  If they know and feel that you do not trust them, they will break the rules anyway and eventually leave the business to move somewhere else where they think they will be ‘trusted’.

Don’t make the sales office a ‘roller coaster’ of emotion for the sales team.  If you are the team leader, give them stability, trust, and direction in the office.  Give them the real flexibility and trust to do a good job and achieve.  Manage yourself first and foremost.

The team needs the leverage and opportunity to be out in the market place most of every working day.   Track their performances by KPI’s and if they do not soon show their results in the figures, then you have the wrong people.  You cannot micro manage salespeople for too long; they will take too much of your time and soon revolt and move on.  Give your top performers flexibility and trust above everything else.

Check out some more tips for commercial real estate teams at http://www.commercial-realestate-training.com/

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Commercial Real Estate Agency Results Leader

Commercial Office Skyscrapers
Look at sales person performance differently in Commercial Real Estate Agency

In this commercial real estate market place, it pays to be a results leader when it comes to the agency performance.  Results leadership should be from a base of both agency outcome and salesperson performance.

The traditional commercial agency performance is usually ranked on the basis of one or more of the following:

  • Numbers of listings in the marketplace
  • Market share for the agency ranked on current listings and assessed by Internet and advertising counts
  • The time on market for the average listing to be sold or leased
  • The conversion rate of listings to successful transactions against those that are not sold or leased
  • The numbers of property managements held by the business and the fees generated per month
  • The numbers of quality properties on the books currently and compared sales person to sales person.
  • The conversion of listings to completed transactions
  • The average commission per sales transaction and per person
  • The mean average of the achieved sale prices by property

So all of these factors should be tracked and assessed.  This should be done on a monthly basis so you can see exactly how the business is performing (weekly assessments do not show you the shifts quite as easily).

You can take many of these numbers and drill down to the level of individual salesperson performance.  From that process you can compare and rank salespeople into one of the three categories being top performers, improving performance, and new recruits.

So how should you rank each member of the sales team to help them understand how they are improving and show them how they can improve?  One of the biggest mistakes a lot of real estate agencies make is to only compare salesperson to salesperson.

The reality of the situation is that every member of the sales team is different and on that basis should be assessed and compared to their previous personal best performance.  It is a bit like being a member of the swimming team.  You know what the fastest swimmer is achieving, and certainly that can be a goal, but the way to reach that high point is through improving your own personal best performance to date.  Small incremental steps personally get the process of improvement underway.

When each salesperson is compared to their own personal best performance to date, they can accept the fact of improvement and will do something about lifting personal outcomes and personal performance for the business.  The secret to the process is that each salesperson respects and understands their personal skills and opportunities.  They then take and more readily accept ownership of the self-improvement and performance process.  They know that they can improve and are more willing to do so.

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Commercial Real Estate Marketing – Get it Right the First Time

Commercial office building
Ask the right commercial property marketing questions to attract quality enquiry.

There are many ways to market a commercial property today, but agents and salespeople should make the right choices so they can attract good levels of enquiry.  This then says that every marketing plan or process should be optimised for the particular property.

So you as the local property agent want to sell or lease a commercial property?  Ask yourself these questions:

  • What are the best times of year to sell or lease the property?
  • Are there any factors or hurdles that should be addressed before the property is taken to the market?
  • What will be the best method of sale or lease to attract the right levels of enquiry?
  • What publications and media outlets will get the message out to the right segments of audience?
  • Who are the buyers or tenants that can act in this economic environment?  Do these buyers or tenants have any limitations on price or rent?
  • Are there any local changes in business sentiment or community demographic that can impact the promotion of the property?

Answer these questions before you proceed to the stages of property marketing.  I like to call these the ‘foundations of property marketing’.

When we capture the enquiry, we have something to work with not just for the subject parcel of land or building, but we have a source of enquiry to feed into other campaigns.  That is the opportunity that an agent brings to the clients they act for and serve.  An agent with a comprehensive database can attract the right levels of enquiry and cross sell or cross lease as the case may be.

It should be said that vendor paid marketing is an essential part of property promotion today.  Every exclusive listing should be optimised by a vendor paid marketing campaign specifically designed for the property and the location.  Gone are the days of generic marketing and random sales or leasing strategies.

The best commercial property agents and salespeople give the client real solutions to solve the property pain and reduce the time on market so that a sale or lease can be achieved as quickly as possible.  Specific marketing campaigns can achieve this.

Get more free tips on commercial real estate property marketing at http://www.commercial-realestate-training.com/

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How to Build a Commercial Real Estate Sales Team

Selling or Leasing Commercial Office Buildings
You need great people to handle commercial buildings like these. Choose your sales team well.

When it comes to commercial property sales and leasing, it is really important to have a great sales team behind you as the agency principal.  Finding the right people or getting the best performance from every person can be very difficult.

It needs to be said that out of every 10 salespeople there are on average only 2 that are really very good at what they do.  Everyone else is rated in some variation of ‘average’.  To be ‘very good’ I mean the following:

  • The consistency to prospect for new business every day no matter what is on the agenda
  • Knowing how to negotiate at all levels with all types of landlords, property owners, investors, business leaders, and tenants
  • To pitch and present commercial property services in ways that really match the client or the market
  • To have a comprehensive market awareness and how to build opportunity from that
  • To understand how to close and document any type of sales or leasing agreement for all property types
  • To list and sell or lease at better than the industry average and to have a shorter time on market factor in closing sales or leases
  • To know how to target market commercial property to capture the best levels of enquiry locally
  • To dominate the local property market by area and property type
  • To close on exclusive listings and vendor paid advertising each and every time
  • To be the agent of choice for the local property investors and business leaders
  • To be excellent managers of their own time on a daily basis.

It’s a challenging list for many salespeople and agents.

There is a choice here and it comes down to each and every salesperson that you may employ.  Do they have the personal discipline to improve themselves and make their mark in the local property market?

My ‘cut’ on this is that as agent principals we have to be very careful in the employment of new people.  The poor selection of staff costs tens of thousands of dollars and hundreds of man hours.

I once had something to do with a large agency where the principal would only employ new members of staff for the sales team if they passed the test on a Psyche Sales Analysis.  The criteria on the analysis were centred on ‘sales’ and ‘negotiation’ skills.  In hindsight the business was very successful and remains so.  Any person that did not pass the ‘analysis’ would not be employed.  The right character and drive had to exist in the salesperson before they would be considered for employment.

Can you train existing salespeople to improve and grow their personal skills in commercial real estate?  Yes you can.

Should salespeople be open to learning and change to improve their market share and performance?  Yes they should.

How long should you tolerate average salespeople that fail to improve and grow their skills?  Not long.

If you want some more ideas on commercial real estate agency sales and leasing, you can get that at our parent website http://www.commercial-realestate-training.com/