Tenant retention is a critical part of retail property leasing today. Every good retail property should have a tenant retention plan in place to preserve and protect the income from the rental in the property.
Every commercial and retail property leasing specialist should have a specific approach when it comes to tenant retention and lease negotiation. It is a specialist process and it does command a good fee. Focus on the quality properties and clients when it comes to providing the service.
Here are some ideas to help you build a tenant retention strategy into your commercial and retail property agent’s services.
Review the current property market so you can understand the market rentals that apply to current lease negotiations with new tenants. That market rental will have some relevance on the lease negotiations with sitting tenants.
Identify the types of incentives that are available to influence new tenants to relocate. Those incentives are likely to be of interest to some of your tenants as they consider staying in your property or relocating to another. The landlord of your property will need to be prepared to provide incentives to sitting tenants.
Split the tenants in your property into the categories of good tenants and redundant tenants. At the time of lease expiry, it is the good tenants that should be encouraged to remain within the property on new favorable lease terms and conditions. The redundant tenants or those that are of little benefit to the property overall should be vacated given the circumstances of lease termination that apply. There is no point in keeping bad tenants in a property as it will have impact on the other tenants in the mix and the income profile.
Consider the requirements of renovation and refurbishment that need to occur in the common area and within certain tenancies. These factors will need to be merged into your lease negotiation, tenancy placement, and relocation plan. In many respects, a tenant should be responsible for their internal renovation requirements as part of ongoing occupancy. They may however try to push the issue to the landlord as part of a new lease negotiation.
Develop lease standards that should apply to most lease transactions. Those terms can be recommended to the landlord and approved for future use as part of renegotiating any lease or bringing a new tenant into the property. The lease terms should include market rental, the type of rental, incentives, rent reviews, and option terms. Making clear decisions with regards to these matters will help you when it comes to finding new tenants and understanding how they can integrate into the tenant mix and lease profile.
Look at the balance in the property between anchor tenants and specialty tenants. Carefully assess the tenancy mix profile with regard to each, and the stability of the anchor tenant as it applies to the local customer demographic. Stay close to your anchor tenant or tenants to ensure that they integrate well into the function of the property. Get your specialty tenants involved in the seasonal sales activity of the anchor tenant.
As a general rule, all rent reviews and option negotiations should occur early. This then says that you should monitor the critical dates in all current tenancy lease documentation for that very purpose. Stay well ahead of the critical dates that are coming up. Be prepared for the negotiations and brief the landlord accordingly.
So these are some other things to get you started with a tenant retention plan. You can graph the tenant movement and tenant profile in your property. When you make the right lease decisions in a timely way, the income for the property is protected, and the vacancy profile is minimized. That then produces a great tenancy mix.
In this commercial real estate market, the competition is fierce and the quality of enquiry coming back to you is selective. That being said, you should never ‘wing’ your presentations and inspections of properties.
You can do far too much damage to your chances of winning the deal or the listing. You can also send out the wrong message when it comes to your skills and relevance to the client or the prospect that you are presenting to.
What’s going on?
This property market is significantly competitive. Many of the agents you are up against will choose to use discounts and other enticements to influence the listing or the decision of the client.
On that basis your presentations need to be carefully planned and relevant to the solution that the client requires. That is why you cannot ‘wing it’ when it comes to your presentations.
Most clients today will initially be influenced by statements such as the following:
Low marketing costs
Availability of immediate property inspections
Open vs. exclusive listings
To help with the entire sales pitch and presentation process you can specifically discount all of these distractions providing you plan your presentation for the property and the client. Best results will be obtained when you completely understand the focus of the client and the challenges that are troubling them.
Set up your Checklist Strategy
Here is a checklist that you can apply to a planned sales pitch and presentation process. Into this model you can feed elements of the local property market and the particular property.
STRENGTHS AND WEAKNESSES: Define or restate to the client the challenges that you know they are facing. Clarity is important here so that they can see you fully understand their opinions and concerns. Generally they will be focusing on the expected outcome of price or rental, and the time required to achieve a satisfactory outcome. Part of that process will also involve the money required to market the property in the best way possible. It should be said that vendor paid marketing is the norm and not the exception. Always ask for a reasonable amount of vendor paid marketing.
COMPETITION: Be quite clear to the client when it comes to the competing properties in the local area and the achieved prices and rentals of similar properties over the last 12 months. Market evidence is a powerful tool if you use it correctly.
GET THE FACTS: A detailed inspection of the property prior to your sales presentation will allow you to build on the features of the property that you know will help you convert enquiries to potential sales or leases. Show the client that you really understand the factors of the property that will help convert a positive result.
SHOW THE STAGES: Prepare a timeline to the process of listing, marketing, inspecting, and negotiating. The timeline should be a visual process incorporated into your proposal documentation. You can use a Gantt graph for this process. One simple graph is far more powerful than five or six pages of your proposal document. Strategy is everything in this tough property market. Show the client that you really understand the right strategy for the property and can implement it conveniently and efficiently.
PICTURES: Take plenty of digital photographs in and around the property prior to the final sales presentation. Those digital photographs can be automatically scrolled on your laptop computer whilst you talk about the property and the solutions that will fit the client. It is remarkable how much positive attention and client focus these photographs will provide to your presentation.
A good sales pitch or presentation to list a property takes about 1 hour. Many clients will try to compare your presentation to other competing agents. Providing you have comprehensively covered these five items above, the client will find it very hard to overlook the strategies that you are providing.
When it comes to selling or leasing commercial real estate today, the marketing plan process is fundamental to getting the message out to the market. Property investors and business owners have to be attracted to the property given its attributes, improvements, design, and functionality. A good marketing plan will do this even when the property market is tough or slow. Here are some tips from our Newsletter for Commercial Property Agents.
There are fewer buyers and tenants around for the average commercial property that is taken to market, so enquiry is limited and clients should be made aware of that restriction from the start of the campaign.
The property market is today more restricted than previously with the sustained pressures on finance availability, so each marketing campaign has to be correctly structured and implemented. Some agents fail to adjust to this fact and do little that is different between property types. Generic property campaigns are not successful today, and in many cases the generically marketed properties stay on the market for a very long time.
Today’s promotional campaigns on commercial property are or should be specifically constructed and implemented. The agent really does need to know the target audience that they are seeking to attract from their marketing, and they should also understand how to tap into that audience.
The best marketing campaigns for commercial property today are a mixture of the following:
Defining the target market before the campaign commences, and helping the client see what you are to do with that
Identifying the right media and advertising that will reach the target market will be a central component of your strategy. Stagger the media in an appropriate promotional way.
Branding the property with a theme that can be consistent across the marketing campaign and feature in all the marketing.
Defining a core period of promotion at the start of the campaign will help drive results. A full 75% of the marketing costs and efforts should go into this ‘core period’.
The process of ‘test and measure’ is more important today than ever before. As the campaign proceeds, keep a close check on where the enquiry is coming from. When enquiry is lacking, adjust the campaign quickly.
If the property fails to attract enquiry and results in 3 months, it is better to stop the public advertising process and promote the property verbally off market. This allows the property to freshen up and wait for a new selling and promotional period.
Today there is a lot more personal involvement and promotion in property marketing. Every property campaign has to be driven by the personal involvement of the commercial property sales person. That is why an ‘exclusive agency’ is more important than ever before. Any property that is ‘openly listed’ should not attract any special marketing effort of the salesperson. Open listed properties are an exercise in hope and luck; if that is what the client wants to do, then so be it, they will see what generic marketing will do in slowing things down.
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