Commercial Real Estate Brokers – Where Your Best Commissions are Derived

business man walking out door
Know where to find your best clients and better commissions in commercial real estate.

In commercial real estate brokerage, you must know where your new business is derived from and where the best commissions are likely to come from into the future.  Some new property business can be much more lucrative for you over time.  Understand what that new business looks like and how you can find it.  Focus into the segment that works for you.

Your opportunities will come from your local property market.  The way to find that business is to specialize and improve your services accordingly.  Top agents are very good at just one or two things, and then they drive themselves into that or those segment(s).

Where then are you likely to find the best business in both listings and commissions into the future?  When you know your skills and knowledge, you can do something with growth and market share.   You can also practice and improve your skills on the things that really matter.  That’s how you generate more commissions and listings in a relevant and real way.

Your special market segments?

Consider the special market segments below and how you can select the right category of business activity.  Ultimately strive to grow and shape your market share as a broker or agent over time.  Plan your way forward:

  1. Sellers agent – If you are a seller’s agent (or want to be) then you must know how to pitch and present your listing services competitively and directly to the people that matter. This is the ‘pointy end’ of our craft; pitching and presenting is something that will always vary based on the property and the client.  Ultimately you will need a good database of clients to focus on so you are there to help them at the right time when they need a property solution.
  2. Leasing agent – Three are always businesses looking to relocate locally. Spend some time looking into the business community and what they want from a property and improvement perspective.
  3. Property management specialist – The management services to be offered today to the owners of any quality investment property can be quite unique and comprehensive. Your fee structures should be as comprehensive as your services offered.
  4. Property performance improvement – Can you improve a property and its performance? Ultimately if your fee in property management is based on a percentage of passing income, then you can improve your fees through improved property rental cash flow.  When the landlord wins, you also win.
  5. Lease negotiations – Every lease negotiated deserves a reasonable fee. The value of a lease into the future is sustained as long as the lease is structured with due care.

And so the list goes on.   Can you see the opportunity here?  Specialization works in commercial real estate brokerage.

Look at your location, your client segments, the levels of professional services offered by your competition, and then understand exactly how you will pull in your commission and what your professional services provide your clients.  You will never have a big problem in setting your professional fees if you and your services are regarded as the best available for the client and their property challenge.

Your services?

Here are some other valuable service alternatives for you to open up into as a real estate agent for your location:

  • Tenant advocacy
  • Tenancy mix strategies
  • Buyers agent
  • Project development
  • Industrial property
  • Office property
  • Retail property

Your ability to earn money as commission and to convert listings will be based largely on your skills and knowledge.  Practice what you do and learn as much as you can.  That is what our business is all about.

(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)

Income Optimisation in Commercial Property Management

female commercial property manager reading file
Optimise your income in commercial real estate today.

When it comes to managing commercial and retail property, it is very important to optimise the income for the landlord.  The income for the property should be looked at both individually with separate leases, and across the entire property and the tenancy mix.

At the beginning of every financial year, there should be some form of budget created for the tenancy mix and the potential property income.  All of the leases currently existing will have rental strategies and rental increases to merge into the income budget.  This income budget can be incorporated into the business plan for the property for the upcoming year.  The best time to do the budget is in the months of April and May, just prior to the beginning of the financial year.

Here are some tips relating to income optimisation in commercial or retail property management:

  1. Always allow for some measure and method of adjustment given that the property market is always changing in your local area.  When you set a property income budget, it should be reviewed on a monthly and quarterly basis.  Any established trends in the local area should be tracked and then be used as a form of rental adjustment for the landlord if those trends are firm and established.
  2. The vacancy factor in your local area will change based on the supply and demand of available property.  To monitor this process, you should track down the changes to the property development plan in the region.  Look for any new developments that could have an impact on your property.  Those new developments will have a timeline of construction and occupancy; it is likely that those developers will also have an allowance for rental incentive to attract tenants into their property.  That incentive will have an impact on your property leasing strategies.
  3. Market rentals will change from time to time.  They do not always go upwards, and more commonly will stagnate or slightly reduce when the property market slows.  To help you with the levels of market rental, you will need to understand the impact of incentive in the market rental structure as it exists today.  If an incentive exists in any market rental negotiation, it creates what is called a face rental.  That face rental will be discounted by any property valuer back to a level that is truly aligned to the effective rental and the market.  Incentives create a false level of rental.
  4. Business sentiment will change from time to time based on the local and regional economy.  Some business segments and business types will be more active and successful than others.  Track those business segments and monitor the needs for property change or occupancy.  Some of those tenants could be relocated to your property if the opportunity arises.
  5. Existing tenants in the property should be categorised into long-term tenants and short-term occupants.  Some tenants will be more attractive to the landlord and the performance of the property over time.  They may have a tenancy profile or business identity that encourages other tenants to the property.  Reviewing the tenancy mix is called tenant retention.  You can create a tenant retention plan as part of your business planning model.
  6. Pressures of expansion and contraction will change from time to time with all other tenants in your tenancy mix.  Look for those changes, and keep close to those issues through the business year to identify any pressures of change that may need to be accommodated in the building.  It is better to have a tenant in your property that you understand and appreciate, than find a new one that is unproven and costly in occupancy changeover and leasing costs.

The income for a commercial or retail property can be enhanced when you fully understand all of the above factors and adjust the property accordingly.  It is not unusual to adjust the business plan or for a property three or four times during the financial year.