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Commercial Real Estate Brokerage – How to Help Your Clients with Leases and Tenants

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Help your clients with their leased investments and tenants.

It is one thing for your client to purchase a property with the tenant in occupation. It is another for them to purchase a high quality investment with an excellent lease covenant and a high quality tenant.

The fact of the matter is that lease documentation will support the investment and on that basis the lease documentation should be analyzed for opportunity together with the tenant(s) before your client purchases the property.

What do they want?

Most clients looking to purchase a property will focus on a property and its location first and foremost. They may look into the basic facts of the lease structure and strategy across the tenancy mix, but rarely will they read the lease document itself as it applies to each and every tenant. That is where you can add value and provide commentary relating to the investment over time as that investment may be supported from and through the lease documentation. In a complex property with plenty of tenants in occupancy, that is then a real service and something that should be provided to your best clients.

So the message here is that you can find the right property for your clients in your local area taking into account the complexity of the tenancy mix and the lease documentation. You can determine and understand the investment benefits that the lease documentation in any property will provide to your clients over time.

Lease Facts to Know

Here are some ideas to help you do exactly that:

  1. RENTS: Understand the rental structures and strategies that apply to the lease document. Compare those rental structures to the prevailing market conditions. The type of rental will also have an impact on the outgoings recovery be that as a net rent or as a gross rent. Exactly how can the landlord recover the outgoings from the property given the prevailing market conditions and the existing lease documents? Should any of the existing leases be replaced with better documents when the next lease negotiations arise?
  2. RISKS: Are there any risk exposures within the tenancy mix? Risk will usually be created through a future threat of vacancy, or an existing vacancy exposure. You can deal with these problems through planning tenancy placement and negotiating leases well in advance prior to expiry.
  3. COSTS: Assess the levels of outgoings as they apply to the particular property under consideration by your client. How do those outgoings compare to the industry averages for the property type in the location? Look at the history of outgoings expenditure within the property over the last few years. Look for patterns of expenditure and make sure that the costs to run the building are genuine and real.
  4. MAJOR CAPITAL COSTS: Whilst ordinary running costs will likely be recoverable through the various types of lease rental and documentation, major capital expenditure items will not be recoverable in that way; they are a property owner cost. On that basis you can review the property for upcoming items of major capital cost outlay. Will your client have sufficient funds to cover such a capital expenditure in the timeframe required for renovation or rectification?

So there are some good things that you can do here when it comes to helping your clients with lease documentation and property selection. You could help them understand the way each and every lease document will work as part of their overall investment performance and result.

Look for the strengths and weaknesses in lease documentation as it applies to investment property today. Show your client exactly how they can benefit from a well negotiated lease and a high quality tenant.

(N.B. these ideas are also sent out to regularly to our friends in Commercial Real Estate Online Snapshot to help amplify brokerage results…. Get your access here)

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Creating the Best Outcomes in Commercial Real Estate Brokerage

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Professionalism is a big part of commercial real estate brokerage.

Commercial real estate brokerage can be a highly profitable industry to work within.  In saying that, it can also be a difficult industry if the right people and processes are not applied correctly as part of a plan and targets process.

There are some rules skills to develop across sales, leasing, and property management.  There are some real knowledge challenges to address and resolve with office property, industrial property, and retail shopping centres.

Here below are some ideas from our eCourse Snapshot.

What are your targets?

The message here is that you can and should develop some real targets in your business to define and improve the outcomes of your commercial real estate brokerage.  It really doesn’t matter if you are part of a large team, or if you operate individually.  Here are some valuable targets to work towards:

  • Commissions written per transaction
  • Listings generated within a defined area
  • Exclusive listings vs. open listings
  • Signboard presence within a defined territory
  • Referral business created from every successful transaction
  • Repeat business from existing clients

Everything in commercial real estate today comes back to results and activities.  The right activities will always produce momentum, and the best activities can then be tuned over time to achieve some real momentum in listings, clients, and commissions.

Understand your local commercial property industry

Nothing remains the same in our industry, and the activities that you undertake each year should be shaped and changed based on current market activity and trends.  In other words, every broker and agent should be tracking personal efforts and property indicators.

Through a simple set of key performance indicators every broker and agent can monitor their activities across prospecting, listing, time on market, and deal conversions.  A focus on quality listings and better clients will always help boost enquiry levels; database growth can be part of that process.  A good quality listing will always encourage the players within the local property market to display their hand and connect with you.

Why struggle?

When an agent or broker is struggling in the property market it is usually because they have not focused on the best listings locally.  They are also avoiding the importance of exclusivity in listing conversion.  You cannot dominate the property market without exclusivity.  You must control the quality listing stock and the clients that you work with.  Those simple rules need to be remembered at all times.

Identify the strengths and weaknesses in your property market, and then adjust your business efforts accordingly.  Improve your skills were required, and start talking to the property owners locally.  You must control your listing stock and your clients.

Where are the opportunities?

Look for the opportunities and look for the weaknesses in your local area.  Understand what’s happening when it comes to property investment, occupancy, and business sentiment.  Consider the following questions:

  • What segments of the market are showing the most enquiries?
  • What are the tenants and the buyers looking for when it comes to property occupancy or purchase?
  • What is the supply of property today and how is that being impacted by current and future demand?
  • How are prices and rents trending in today’s terms?
  • Are there any threats on the horizon when it comes to commercial real estate in your town or city?

So there are some valuable questions to consider here as you establish your commercial real estate business.  Undertake a regular assessment of market conditions and relate those market conditions to your personal skills.

Practice and improve your processes at every opportunity.  Soon the commercial real estate precinct in which you operate will start to present opportunities that other agents and brokers have overlooked.

You can get more tips about commercial real estate brokerage growth in our eCourse right  here.