Commercial real estate leasing is quite special in a number of ways. There are pressures to work through with tenants and landlords. In this audio program by John Highman, you can learn how to optimise the leasing process for better results. (NB – you can get plenty of leasing ideas in Commercial Snapshot right here – its free).
John talks about the property leasing market today and what needs to be done to convert better enquiries from tenants. There are some other ideas in the audio program about listing, marketing, and negotiating.
In every town or city there are things that you can find that relate to commercial property sales, leasing, or property management. You can get plenty of leads if you drill down into the location. Meet people and ask questions. A good conversation will take you closer to a property activity.
Having a good database will always help with new business generation. For the new people in the industry, the priority to establish a good database is high. Three to six months of effort will usually get a contact list established; from that point on it is a matter of keeping the data fresh and accurate.
To help my friends in the industry get established and stay on top of the right market trends, this audio will probably help. It talks about who you should know and why that should be done. Enjoy.
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:
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?
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.
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.
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.
When you work with commercial property landlords with leasing and or property management requirements, it is essential that you provide comprehensive and detailed monthly reports of property activity and location based leasing movement. Any quality property should receive such detailed attention and documentary control.
What is Impressive Reporting?
So you as the specialized commercial property agent or broker can create some impressive reporting formats to support local property activity, asset performance summary, and recent leasing results. Any landlord owning a high quality asset deserves such attention and communication.
Who Needs This?
Focus on the best clients and the best properties as part of providing this reporting and communication service. In that way you can support and drive portfolio growth within a group of quality listings and clients. A perfect reporting process helps you to consolidate and improve client services and outcomes.
Give all the Facts
Here below are some ideas to help you establish a comprehensive landlord reporting process:
CLIENT REQUIREMENTS: Understand the property and or the leasing process from the client’s perspective. They will have certain factors of property priority and focus that are high on their agenda. They will have particular aspects of property control and timing that will be very important to them. Generally and typically speaking most landlords are focusing firstly on rental cash flow, secondly on tenant occupancy, and thirdly on existing and upcoming lease documentation. After those three particular things are seen to be under control, other things can be looked at in any property report to your client.
DIVIDE THE FACTS: Split your client or landlord report up into particular segments with logical headings and subheadings targeting the points of client focus. In that way you are showing the client that you totally understand what they are looking for and where they are heading with the property as an investment. Some of the most common headings and sub-headings to merge into your report are income, expenditure, lease documentation, tenancy mix, vacancy factors, maintenance, rent reviews, lease options, and capital expenditure. To those sections or headings you can then add summaries of market activity and the feedback you have received from any recent property inspections involving vacancies.
MIX VISUAL WITH REAL AND PRACTICAL FACTS: The visual approach is sometimes complimentary and valuable to any client information process. Add some charts and some timelines to the reports that you provide to your client. Help them see the strategies and the issues at play. Offer them some solid recommendations based on market evidence and the facts within your report including income, expenditure, leasing activities, and market trends.
So there are some good things that you can do here when it comes to the landlord and or client reporting that you undertake. If you manage or lease a high quality property for any client, they deserve being supplied with the latest information in a comprehensive way.
Keep your clients fully informed with both property performance and market opportunity. A fully informed client is likely to be a valuable client to you in the future across many categories of activity.
In this podcast I thought I should spend some time focusing on Commercial Real Estate Leasing. That is for a number of reasons, the most important of which is that property leasing introduces you to the landlords and property owners who will eventually need more help in the future with things like sales and property management. In other words a simple lease transaction can lead to other things.
I have split the audio program up into a number of segments. The summaries of the program are below:
Why you should not let your tenants get out of control – in any property containing a group of tenants, the communication and control process is very important. Tenants talk to other tenants and that can be a problem if issues exist in the building. So this is all about those buildings with multiple occupants and how to connect with them.
How you can be a commercial real estate leasing expert – you can do so much with your leasing knowledge. You can establish tenant advocacy services, landlord leasing services, tenant mix advice, and basis brokerage leasing. What sections of the leasing market can you see reasonable leverage and commission activity evolving from? This part of the audio program will help you with ideas.
How to work with franchise tenants and why that is a good idea – the franchise section of the commercial property market today is forever evolving and growing. If you connect regularly with local franchise groups you can help them with property selection choices and any required relocation’s. Get to know a few franchise tenants locally and come to understand what they need by way of property and when that is likely to occur.
Some simple ideas for qualifying industrial property tenants – the industrial part of the property market is generally the first to respond in an upturn and also a downturn. That being said it is a reasonably uncomplicated part of the industry. Get to know a number of industrial tenants and businesses locally; see if you can help them with current and future property needs.
These are parts of the audio podcast by John Highman. You can listen to the audio below.
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:
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.
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.
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.
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.
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.
In commercial real estate brokerage, the use of prospecting letters will help boost your networking and new business efforts. New clients and listings can be generated by a good prospecting letter system. That being said, it is not just a matter of sending letters and hoping that results will occur; you need to develop a real logic to the process. You should also follow up the letters with a telephone call whenever possible.
Why would you send these letters? In most cases it is to achieve one if not all of the following:
More Sellers as listing prospects
More Landlords for leasing services
Better enquiries from the market
Buyers and tenants for your listings
Establish your brand as an industry expert
Looking at these things very simply, it is essential that you design your prospecting letters in separate ways for the market that you want to tap into; understand the new business that you are looking to attract back to you. Write your letter accordingly.
Here are some rules to creating a marketing system of letters for commercial real estate brokerage:
The letter process is a repeated system. In each period of 12 months the letters should be sent every 2 or 3 months. Each letter sent should have a separate message and theme.
Understand the ‘pain factors’ that apply to the market today and reach into those issues as part of the letter layout and message. Establish your brokerage as the ‘solution’ for all the pain and discomfort that a landlord or property owner could be experiencing.
Focus on listing stock. When you control the listings you control the market. Exclusive listings should be part of your proposal and presentation process.
Any of your competitors listings will be a trigger for prospecting letters in the same location. Any other property owners looking to sell or lease may like to compete with the other property.
Write ‘success letters’ for every sale or lease that you achieve. Send them into the immediate vicinity of the successful transaction.
Follow up all letters with a telephone call whenever you can. The personal approach is really important to conversions.
Purchase a good book on ‘copyrighting’ and ‘words or phrases that sell’. These simple books are invaluable when it comes to attracting the eye of the reader in your message.
Your marketing letters should be simple and composed over 3 or 4 paragraphs on one page only. Enclose your business card with each letter. Make it easy for people to get back to you.
If you want more listings in commercial real estate brokerage today, this strategy of sending prospecting letters really does work beyond the all too convenient ‘email’ strategy used by many. Most agents only rely on emails for prospecting communication; in those situations the client or prospect will usually not even read the content. The ‘delete’ button is all too convenient.