How to Achieve Results in Commercial Property Leasing

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.

(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)

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Working the Advantages with Vacant Properties in Commercial Real Estate

Every commercial property vacancy is an advantage to be seized.  The landlord is likely to be moving through some challenges of rents, occupancy and tenant mix.  You can do something to help, particularly if you know something about rents, lease enquiry, and tenant placement.

In this audio I talk about the things that you can do with property leasing.  Be versatile with the services that you provide and look at the vacancies locally in your town or city for a business opportunity.

Tenant Management Tips for Commercial Property

Human shadow figures in a building uid 1461085

When you lease and manage commercial property today, you really do need to monitor the activities of tenants within the tenancy mix and be ready to respond to occupancy issues.  Be aware of the changes within the building and the activities of tenants in each of the separate premises.

(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)

Why worry about this?

It is better to be ahead of the tenancy problems before they become overly large or pressured, thereby impacting the landlord and the asset.  It is better to negotiate with the tenant through their trading or occupancy issue at the earliest stages.

  • Protect the tenant mix, lower the vacancy factors in your asset, and keep your good tenants for the long term.

Most buildings today with multiple tenants in occupation will have some form of tenant retention plan to consolidate occupancy and cash flow over the foreseeable future.  Within that document will be the necessary lease strategies, rental indicators, and tenant profiles.

So what is it?

It is a landlord based investment planner to help with occupancy planning.   Shopping centres and large office towers would have such tenant planning processes in place, and then they adjust the plan every year based on what can be observed and predicted in tenant occupation and known vacancies.

Tenant retention planning?

So the retention plan is a document that allows you to prepare at the earliest stages for the worst and best possible leasing scenarios, and control the best outcomes.  In other words, you can stay well ahead of the leasing and tenant mix problems before they get out of hand.  Isn’t that what the leasing strategies should be in any investment property?

 

  • Look for the indicators and the pressure points of occupancy.  Given the pressures of the economy and business today, tenants can sometimes suffer with pressures of cash flow emanating from variations of staff structure, seasonal sales, production, and intellectual property.

 

So what can you do here?

On a regular basis look at how the tenant and their business appears to be tracking, and wherever possible identify any weaknesses that could impact occupancy.  In simple terms, you stay close to the tenant in every way possible through a series of telephone calls, meetings, and email exchanges.  You take plenty of notes, and you negotiate through any issues as early as possible.

Here are some ideas to help you with that lease management strategy:

  • Inspect the property and the tenancy frequently so that you can see when changes are underway.  Where necessary, take photographs and plenty of notes to support your observations.  You can see variations with staffing, management structures, production, on-site storage, and business activities.  Look for the indicators and asked plenty of questions.
  • Stay in contact with the decision makers of the business so that you can identify when they are under any particular pressure of occupancy.  In any corporate structure there will be different levels of management to interact with.  Take notes and make observations when it comes to any meetings with tenants and management personnel.  A simple thing evolving from a meeting today can be a major issue in the future.  Understand the impact of a shift in rental or tenant occupancy within the asset.
  • Watch for any shift or change relating to staffing and management within the tenant business.  Are they still employing the same number of people? Has the management structure changed within the business?  When you see changes, ask questions.
  • The lease document will be important when it comes to enforcing lease conditions and rental cash flow.  Review the lease regularly for the necessary critical dates and methods of response that apply to the occupancy process.

Given all of these things, the landlord needs to be fully briefed on any lease issues and recent tenant meetings.  Those facts can be merged into the end of month reporting for the property leasing and tenant management updates.

(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)

The Important Features of a High Quality Tenant in Commercial Real Estate Brokerage

office property foyer
Focus your leasing efforts on quality buildings and quality tenants.

In commercial real estate leasing today, the first tenant that you find to fill a vacancy in a property may not be the best tenant for the investment over the long term.

Ultimately you need to consider first and foremost the future of the property, the improvements within the asset, and the investment targets of the client.  You can then choose the best tenant by type and market the property accordingly.

The marketing strategy behind the leasing requirement will allow you to drill down into the factors of attraction that apply to the vacancy.  You want to attract the best tenants for the location.

Information

So you will need some information to assess about the property, the client, and the local area.  The depth and the strength of your research will help you match your services to the requirements of the client and the property

Before you lease the property and the vacancy understand the client first and foremost.  The client as the landlord owning the property will have certain targets to recognize including the following:

  • How long do they wish to hold the asset?
  • What are the requirements of cash flow from the lease?
  • Are there other tenants within the property to support the rental return?
  • In any medium to large property, you will need to review the lease expiry dates, rental structures, and occupancy pressures before you lease any vacancy to a new tenant.
  • Are there factors of renovation that need to be incorporated into the tenant mix and the lease structure?
  • Are there factors of risk that need to be incorporated into the property performance plan and the overall leasing strategy?
  • Has the client diversified their property portfolio across a number of different locations? Diversity brings with it other strategic factors to consider.

In answering all of these questions, you will have a reasonable idea of the best tenant by type and by location.  Understand how the tenant will fit into the tenancy mix to strengthen the overall property profile and income return.

Lease Priorities

Subject to all of the previous questions raised, you can drill down into the best types of tenants that suit the asset and the investment targets of the client.  A good tenant for an investment property will usually bring the following factors to the asset:

  1. Stability – Every tenant should be assessed for stability before you commit to lease negotiations. You will need to review their business history, other locations of occupancy, and talk to the key people.
  2. Income – Look at the levels of rental that apply in the local area. Will you be leasing the property on a gross or a net rental basis?  What are the market rentals that apply respectively?  How can you improve the income over time through rent review structures and strategies?  How long should the lease be?  All of these questions will impact the income for the asset.  Answer the questions before you negotiate with the tenant.
  3. Profile – Some tenants will bring with them a business profile that is attractive to the property. A business brand or a business profile can bring a marketing advantage to the property.  Some franchise brands also achieve the same enhancement.

Taking these three elements into account you can do something with your lease negotiation.  You can give the landlord some solid reasons to negotiate effectively and directly with the chosen tenant.  Most landlords will cooperate when it comes to attracting a new tenant in a stable and strong lease arrangement.

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

Shopping Center Managers – How to Assess and Improve Retail Shopping Center Performance Comprehensively

woman with shopping bag
Understand the reasons behind and for a successful shopping center.

A retail property and particularly a shopping centre is a special asset in many different ways.  It takes skill and knowledge to make something of property performance.

There are numerous things to put in the retail ‘balance’.  Special strategies are required.  Are you up to the retail challenge?

Understand the retail facts

So what are the variables that make this so challenging?  Consider these for starters:

  • Tenants struggling to make sales – Some tenants will always struggle given that they may not be offering the right products or services. They may also be inexperienced in retail trade and sales.  If you have a difficult tenant in a property  it is perhaps better to move them on at the end of their lease (assuming that they can trade until the end of lease)
  • A tenant mix that just doesn’t work for one reason or another – A poor group of tenants with weaknesses will quickly slow customer interest and repeat visits. That weakness then leads to sales decline.  You must quickly fix a retail shopping centre tenant mix if you have issues that are weaknesses and impacting property performance.
  • Vacancies currently in the property or those that can be expected – When you have empty shops to resolve, ensure that you are coming up with immediate strategies such as creating short term occupancy and placing marketing material in the empty space. Customers will see the vacancy so build some ‘vibrancy’ into the empty space.
  • Market rentals and strategies for the property – Understand what the rents are doing for the property type in your region. How does your property compare?
  • Outgoings recovery from the tenants – The lease documentation will be important when it comes to outgoings strategies and recoveries. The rent types used in the property will also have an impact.
  • Customers and their spending patterns – At different times of the year the sales results change for the retail sector. Watch the process and how it is impacting your tenant mix.
  • Lease documentation that is complex and critical to occupation – Understand all of the leases in the property. Some will be better than others.
  • Landlord net income requirements – The landlord will have expectations when it comes to the net income they achieve. The expenditure in the property will place pressures on cash flow.  Understand how those things work in your retail property.
  • Retail sales patterns for the region – Always look at shopping and sales trends for the region. Understand if your property is being pressured by other properties locally.  Understand why that is the case and try to fix the weakness.
  • The configuration and presentation of the property – It is a fact that any retail property will be higher in upkeep so costs and strategies will be required. The presentation and functionality of the property has to be at the standards expected by customers.  In that way the customers can keep coming back to the shopping centre.  A retail property will soon be in decline if maintenance and presentational factors and lacking.

Every one of these issues can demand specific focus and effort from you as the specialist broker to bring about a resolve for all concerned.

So if you are a retail property manager or specialist leasing manager, you will know the importance of what I am saying here.  Are you up to the retail challenge?  Can you handle these issues in a comprehensive way?  Plan and improve retail property performance from a base of personal retail skill, knowledge and strategy.

You  can get more tips and ideas about retail property performance in our eCourse ‘Snapshot’ right here.

Commercial Real Estate Brokers – How to Solve Commercial Real Estate Vacancy Problems

office cubicles
Vacant office space requires real strategy

 

Most commercial investment properties will have vacancy pressures to deal with from time to time. The larger the property, the greater the potential for vacancy issues to frustrate rental cash flow. If you are involved in the management or lease of any large investment properties, it is essential that you understand the intentions of sitting tenants when it comes to future occupancy.  The concept is called tenant retention.

Tenant Retention Plans

In an ideal world, vacancies should be resolved quickly and effectively for any landlords that you act for. The only way to achieve that level of control will be through a mix and match of the following strategies:

  1. Understanding the intentions of sitting tenants when it comes to lease expiry
  2. Monitoring the upcoming lease expiry dates approximately 18 months in advance
  3. Do a lease audit for all existing tenants
  4. Negotiating any lease expiry’s early so you can deal with the vacancy in a timely way
  5. Keeping in close contact with all of your sitting tenants within the tenancy mix so you know what they are thinking when it comes to occupancy
  6. Understanding the local business sentiment applies to rents, relocation, and property requirements
  7. Keeping in close contact with all local businesses to attract new tenants to your property when required
  8. Understanding the requirements of the landlord when it comes to market rental, cash flow, outgoings recovery’s, and lease documentation

 

Any leasing agent providing a specialised leasing service locally should satisfy and engage in all of these mentioned issues. All of these issues can be merged into a tenancy mix plan and a tenant retention plan for a major investment property. Large office buildings, and large retail shopping centres would be suitable for those control processes and plans.

To provide a top-quality leasing service, any vacancies currently or into the future should be controlled and filled. A top leasing agent will stay in contact with the landlord and all the tenants to ensure that vacancy downtime is minimised.

Any vacancy in an investment property can be a significant drain on cash flow over time. Not only is there a loss of rent, but the outgoings for the vacancy will become a landlord cost and therefore not recovered. Any property with a high vacancy factor will find it difficult to negotiate rent reviews and options with sitting tenants. Market rentals will also be hard to establish and maintain because of the high vacancy factor.

If you are involved in the management and leasing of any complex property with multiple tenants, it is essential that you track and control vacancies as they apply to the tenancy mix. Work well in advance to negotiate existing lease options, minimise vacancies, and attract new tenants that could be thinking about coming to the property.  Why is your property more attractive than others in the area to tenants?  When you know the answer, you have the basis of your lease marketing campaign.

The Easy Way to Find Tenants in Commercial Real Estate Leasing Today

office property reception area
Typical modern office tenancy.

 

If you are leasing investment property and particularly office, industrial, or retail property, you will need to know lots of tenants.  So many agents focus on winning a listing to lease, and then they take steps to advertise the property hoping that they will find a tenant.  The reality of that process is that it is slow and uncontrollable.  If you want to negotiate and secure lots of leases, the number of tenants that you know will correlate to the deals completed.

There are a number of ways to find tenants, and you will need a system to implement as part of your marketing process.  There is however an easy way to find tenants that could want to move premises; in simple terms you make lots of cold calls using the business telephone book for your town or city.

Here are the advantages to the process:

  1. Every city has a business telephone book.  In using that telephone book and particularly the current phone book, you do not stumble into the ‘Do not call register’ problem that exists with private telephone numbers and individuals.  You can telephone local businesses and that will lead you to market intelligence and opportunity in leasing activity.
  2. The list of businesses in the telephone book will be online and in hard copy so make sure you have the latest list of local businesses.  The ‘yellow pages’ will also be useful for a point of cross reference in the process and particularly the online version; in saying that many businesses are not overly concerned with a ‘yellow pages’ listing because search engines and websites are taking over as customer marketing tools in many industries.
  3. Over time you can improve your tenant cold call process and dialogue through practice.  Remember that you are not pushing for a sale or a meeting; the main reason for the call is to determine if the person you are speaking to has a potential property need now or in the future.
  4. You can track and measure your call efforts and conversations with tenants.  At different times of the year and at different times of the day you will find your results vary.  Understand the best times to make your calls and start your processes around that.
  5. From a call process you can build a tenant database that will support you significantly for the long term as a real estate agent; it’s a personal thing that can lead to lots of property opportunities and commissions.  When you connect with a previously qualified person with property potential, keep the connection going with at least one call or meeting each 90 days.  In that way you will create a marketing presence in the mind of the person that you are talking to.

So the process of finding tenants is quite easy.  Don’t complicate the call process.  Get out your business telephone book and progressively work through it.  Improve the quality of your call contact by practicing every morning your dialogue and conversations.  Soon you will find tenants that are looking to relocate because of rental pressures or a need to adjust, expand or contract as part of a business decision.