In commercial real estate agency the tenants that you talk to must be qualified before you spend a lot of time with them. Most tenants looking for new or alternative premises to occupy will have spoken to quite a number of local property agents; on that basis you are just another person to get information from. Asking the right questions will help you work with the right tenants in the right way.
Most towns and cities will have a good supply of vacant premises available. We have some good listing stock to work with. If you want to dominate the local leasing market for your property type, it is wise to focus on the best property locations and the quality properties. In that way you will move more listings and do so faster.
Here are ten questions to ask prospective tenants before you get deeply involved in matching listings and undertaking property inspections:
Find out just who you are talking with and determine that they are the principal decision maker that is looking for property to lease. This issue gets more complex when you are dealing with a company or corporation. You may be talking with the local business manager but they may have little decision facility.
Understand their property requirements in location, improvements, car parking, area of premises, permitted use, and rental budget. These simple facts will help you with creating a short list of premises to look at.
The services and amenities in a property may be of relevance given the way the business or tenant operates. Staff and customer numbers will place some pressures on property choice.
A lease can be negotiated on the basis of gross or net rent. Through direct questioning you can see what rent types could suit the tenant. That will then influence the choice of property, the lease negotiation and the initial term of the lease in years and or months.
Ask them about any contacts they may have made with other agents. If your market is dominated by open listings it is likely that the tenant has looked at a lot of your listing stock already; on that basis you can see your commission from a lease agreement ‘disappear’ due to another agents introduction to the same property earlier.
The ideal timing of property changeover will give you an idea of just how important the move of premises is to them.
When you have got these facts sorted and identified you can move to the next stage of property selection and inspection. A wise leasing agent will get all the leasing the facts on the table and clearly identified before the hard work starts in property identification.
When it comes to listing commercial and retail property today the listing process is perhaps one of the most important things that will have an impact across your entire marketing campaign and property negotiation. As a commercial real estate agent it is a matter of gathering all the correct information, and preparing the client for the upcoming inspection process, marketing effort, and negotiation.
Here are some listing strategies that can be adopted in your commercial real estate agency:
From the outset, it is important that you understand the client and their current motivations. There will be reasons behind their actions in marketing a property today. Those reasons will impact the pricing, the marketing, and the eventual negotiation. It may be that they have certain challenges relating to property ownership that need to be satisfied. Discharging a debt could be part of that process. Ask the right questions and get to the real facts.
Comprehensively inspect the property so that you really understand the target market that will be relevant to the marketing campaign. Review all of the improvements within the property, the layout of the property, services and amenities, the precinct, and the property zoning. All of these things will align to some form of strategy when it comes to property promotion.
The prevailing market conditions should be assessed relative to the property type and location. You need to know exactly how much enquiry is coming in for a property of that particular nature. When it comes to people making property enquiry today, what are those people looking for when it comes to property purchase or property occupancy?
Check out all of the other properties locally that could be competing with your listing. The assessment should include improvements, time on market, pricing, services and amenities, agency marketing strategy, and client motivation. Some of those listings will give you hints as to what works and what doesn’t in today’s property market.
As a priority, your listings today should be on an exclusive basis wherever possible. That exclusive listing process should include vendor paid marketing funds. In only this way can you comprehensively connect with the buyers or tenants in the local area.
An exclusive listing with a satisfactory marketing campaign will always shorten the time on market. In most cases, that is what the client will require. Show them the advantages and the differences between open listing and exclusive listing. In many respects, it is not unusual for some top agents to walk away from open listings. Open listings are generally a waste of time unless you know that the property is well positioned for potential enquiry within your database.
A retail property is quite special when it comes to tenant mix. In many ways the tenant mix will shape the future of the property. The success of the market rent for the property will come from the relevance and stability of the tenant profiles and the anchor tenants in the property. Are you an expert in all of these things?
In saying all of this, if you are a retail property manager, shopping centre manager, or perhaps a retail leasing specialist, you really should spend time on understanding the factors that strengthen a tenant mix profile in a retail property. In this way you bring better value and knowledge to your clients and property owners.
Retail property leasing and performance is really the pinnacle of skill and speciality in investment property today. Most of us that know the retail shopping centre industry well, find retail property very interesting and challenging.
A successful retail property is a balance of many things; as a retail specialist, you need to know what those things are and how to work with them. Good clients pay well for top retail property agents to help them.
Here are some of the important factors that come into a tenant mix plan and tenant retention plan for a retail property today.
From the outset you must know what your customers want and how the property interacts with the local community. For this reason it pays to survey your customer base and find out what they think of the property and its tenant offering.
Talk to the tenants in the retail property. They will have factors that they can share regards shopper requirements and buying patterns. Also note that some tenants will have different ‘stories’ to tell in this regard given their retail offering and position in the property layout.
Work closely with your anchor tenants so you understand just what they are seeing in shopper buying patterns and movement. Integrate the anchor tenant to the specialty tenants in the property to optimise mutual trading advantages.
Do you have common areas in the property where people and shoppers are encouraged to congregate and spend time? Do you have a food court in your common area layout that will help the shopper retention factors in the property?
Look at the lease terms and conditions for all the tenants. As part of the tenant retention plan it pays to negotiate any lease renewals early so you know just how much vacant space is coming up for renewal; then you can plan how you want to use it.
Expansion and contraction factors in a retail property are always happening. Some tenants will need more or less space; that is why you should create and how you should manage your tenant retention plan. Look after the good tenants in the property and manage the poor tenants out of the property at the end of their lease term. Over time the market rental can be underpinned by better tenants working in cooperation with each other.
Should you give tenants any options for a further term in a lease negotiation? Not necessarily is the right answer. The final decision on lease options will be based on the overall tenant mix, the property renovation requirements, and the landlord’s investment plans. Most large shopping centre owners do not like giving options for a further lease term given that it takes away a lot of control that they would otherwise have in a shop location and its position in the tenant mix.
Some of these factors can give you real control on the future of a retail property. Formulate your tenant plan and put it into motion. Over time this will help your retail property perform more effectively as the retail trading environment and economy shifts and changes.
When it comes to leasing commercial or retail real estate today, there is a distinct timeline to the process that should be optimised and driven by the commercial agent or realtor. Failure to drive the process can see the landlord or the tenant slow the entire process down. When the property market is tougher like that of today, a slower lease transaction is not a good outcome for any of the parties.
As a special note it is worthwhile observing that many a solicitor working on the part of the landlord or tenant will also be a source of slow action or response. Yes, I know solicitors are busy people, but the landlords lease document and transaction is really important.
So here is a timeline to develop and use in the marketing and leasing of commercial or retail property today. These are the main issues to consider in leasing, and you may be able to add to the list based on your location and property type.
Inspect the premises to be leased so you really know the features of the property and just how you will take people around the premises. A well-considered inspection process will help in negotiations and conversions from initial enquiry to the creation of lease.
Remove any hurdles or presentational issues in the property before the marketing starts. That may mean renovation and carpeting or similar upgrades.
Define the target market for the property to be leased so that you really capture the right people from your marketing efforts.
Establish a targeted marketing campaign to attract the right enquiry. As part of that process, choose the right factors that help you promote the property on the internet and in the newspapers. What features exist in the property that will help lease it?
Get a signboard on the property early in the marketing campaign to send the message to all the local business owners and property investors. When the signboard
goes up, take brochures to the local nearby businesses to spread the word about the property availability.
Qualify the tenants coming off the marketing efforts before you show them the property. The same rule applies when someone rings you off an advert in the newspaper or on the internet. Ask the questions; in many cases the call may not be genuine and could be competitors seeking information.
From a good property inspection, any lease negotiation should be evidenced and initiated in writing. This will be by way of a well-constructed letter of offer or lease agreement. Get the parties to show their intention on paper. As part of that process ensure that you get a good deposit commitment from the party making the offer. That should also include an agreement to provide a bond or band guarantee to the landlord as part of taking a lease from the tenant.
If agreement is reached between the parties to do a lease, then documents should be prepared quickly by the landlord’s solicitor. There should be a follow up process to ensure that the signing of the lease can occur quickly and effectively. Add to that the necessary paperwork and deposit or rental money and you have a complete cycle of lease.
When all factors of the lease agreement are correctly actioned by all parties, then and only then should the keys to the premises be made available to the tenant for fit out works to commence. As part of that, the landlord should be approached to obtain the approvals of the new fit out construction and configuration.
So there are a lot of things to do here. Be well prepared and use a checklist to the process. Your leases will then be more effective in both negotiation and completion.
When it comes to commercial property management and leasing today, the factors of tenancy vacancy are something that you would normally want to avoid. The basic object of property performance is to stabilize and grow the income base from the tenancy mix. When businesses and tenants are under pressure, you need some real strategies to renew leases early for all the good tenants within your property. Here are some ideas from our Newsletter for Commercial Agents.
Tenant Retention Plans
This can simply be called the development of a tenant retention plan. It is a service that can be provided by the commercial property agent to the landlords that they act for. The fees to be achieved from renewing a lease with the sitting tenant are usually less than those which you would get from a new tenant coming to the property. However, the fees are contained and readily available for the proactive agents offering tenant retention services.
So here are some strategies available for optimizing the current tenancy mix and renewing existing leases.
Keep close eyes on all leases coming up for expiry or option inside of the next two years. Understand the high priority leases that will expose the landlord’s cash flow to instability. All of these identified leases should be tagged for early renewal and negotiation. It is necessary to work with the landlord and the tenants regard future occupancy needs. There may also be other factors such as property refurbishment to consider as part of the lease renewal.
If your property involves anchor tenants, these leases need to be protected at all costs. They are generally leases for very long lease terms over sizeable space; however any pending expiry and loss of the anchor tenant may totally destabilize the property and all smaller tenants. Anchor tenants are very special when it comes to maintaining property performance.
The clustering of tenants within the tenancy mix involves considerations of tenancy size, tenancy offering, and businesses of similar type. The clustering of tenants can occur in office or retail property and will be based on the expectations of the business community and the local customers. The successful clustering of tenants will improve the business identity and vibrancy of the property. The net result is improving rental.
Some of your tenants at lease renewal time will require a modified occupancy including more or less space. This may require negotiations with adjacent tenancies or total relocation to other areas within the building. Either way the process works as long as you are working well in advance with all the relative tenancies and their occupancy needs.
A top performing property is the result of careful lease management strategies applied in balance with sensible property financial management. When it comes to the times of a tougher property market, these factors are highly important.
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