Having spent a lot of time working on and in various building and leasing projects over the years, I know that the opportunities of working with commercial tenants and landlords today will always bring in other business openings into the future. (NB – you can get more commercial brokerage ideas here in our Snapshot program – its free)
Everything in our industry is linked, and your clients locally will usually have diverse needs in leasing, sales, and property management at some stage. It is all a matter of timing and relevance. Are you ready for some property leasing action?
Landlord and Tenant Opportunity
Recognize that a simple property lease transaction can open the door for you with a key landlord or business owner. Relationships are important. It can also be said that if you know plenty of things relating to local rents, lease documents, occupancy costs, property performance, and fit-out improvements, you can add considerable value to a property in capitalized cash flow. Strategy and ideas can help facilitate an agreement between a landlord and tenant.
In this audio program, I talk about the importance of the tenant and landlord relationship and how you can tap into it as part of your commercial real estate career.
If you are working as an agent or broker on the leasing segment of the market, then look to the ways that you can improve results for the clients and the properties that you serve. A focus on ‘results’ allows you to convert more listings of better quality, and on an exclusive basis. You could say that ‘relevance’ is at the centre of all of that focus and conversion.
When you control the property market and your listings, you can build more momentum into your property efforts.
If you are perceived as the top agent for the location or property type, then ‘exclusive’ listing conversions will not be such a problem.
Create Your Opportunity this Way
Let’s drive some more opportunity your way. Answer this simple question. How can you bring better results to the clients that you serve in property leasing? That’s the question that you need to answer in a very visible way locally.
The tenants and landlords of the location should know you as the ‘go to person’ for resolving leasing challenges. Your leasing ‘visibility’ has to be specialized and locally driven. Here are some ideas to help you do that:
Finding more tenants – Get to know more tenants comprehensively. It is one thing to know who the tenants are in a location or building; it is another to know what they are thinking from an occupancy perspective. The best way to get to know tenants for a location is to concentrate in streets, properties, and business types. In that way you are not ‘shooting blind’. Specific tenant contact will help you with your conversions.
Improving market rents – Hopefully you know what rents are for a location and property type. Property age will have something to do with the rental levels, and market rent will be impacted by supply and demand for the location. So look at those things and determine how you can improve rents for the landlords that you act for. Merge those ‘income improvement’ statements into your listing or client presentation.
Strengthening investment performance – You can improve lease outcomes and results in an asset over time by creating a better lease document with better tenants. All of that will happen from the initial lease negotiation. Look at negotiation on the lease from your client’s perspective; drive that aspect forward. Look at the averages of rent for the property type, understand the asset in question, and build better landlord or tenant perspectives on why the property should be leased in today’s terms.
Shorter time on market – Vacancies cost money within the investment, so find ways to shorten the time on market. Asking rents will have something to do with that, but also will the factors of marketing, negotiation, and inspection. You can improve your professional processes in each of those 3 ways for the transactions you are working on and your clients. Create more inquiry per listing and seek to create better marketing outcomes for all of your exclusive listings. They are the properties that really matter, so shorten the time on market for your exclusive listings, and show your clients how you do that in a positive way.
Relevance is everything in commercial investment leasing. Create significance in your professional property services. Focus on results for your client.
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.