In commercial real estate leasing, the competition that exists in your property market will very likely be talking to the same very people and businesses that you are. In saying that, the quality of the connection between agents and businesses or landlords can sometimes be of poor quality, so you have something that you can work with and improve.
If you are going to stand out as a top agent in the leasing market, then you have to do the right things with real focus and control; and then you should work on the good quality buildings or locations from a leasing and vacancy perspective.
Stand out as the agent of significance for the location and property type. When you work the better buildings, more inquiry will come your way.
Drill Down into Facts
To get ahead in the leasing market, here are 7 points of focus to drill down into with your landlords and tenants:
Know who you are talking to – Always get to the facts when you are talking to someone new, be that across the telephone, in a meeting, or through a door knocking process in the local area. The people that you talk to will give you the momentum in your leasing business, but understand who they are before you say too much about the property or give out information. If a person is slow to introduce themselves, then you should also be slow to give out the property facts. There is no point in wasting time on someone that is not fully honest and open with you.
What do they need and when? – Get to the core facts of their property situation. What do they want from a leasing perspective and what will be the critical timing? Ask about their critical points of choice or need with any property they may find or want to inspect.
Where are they now? – If they are in business now, seek out the facts of that occupancy. It is also valuable to see their current location and how they use premises as part of a business operation. You can see the interaction between staff, customers, business operations, and layout of the current property.
Exactly what can they afford? – Rents change by location, not just by property type. Tenants don’t fully understand that fact, so a market rent awareness for a new location and property type is valuable. Help them understand net rents, outgoings, and other operational costs such as water, electricity, and gas. Those services will be consumable within the property, and the tenant will have to pay as consumed. How will that happen?
Business requirements for the change – When you ask about their current business, there will be many things to explore in property layout, configuration, improvements, access in and around the premises, and special zones such as showrooms, administration, sales, and storage. See how they are using their current property with these factors in mind.
Staff and customer requirements – How will the balance between staff and customers be accommodated within the building? There will be special zones to consider such as car parking, customer service, customer sales, and showroom access. Remember also the factors of parking that may apply in the precinct and on the street. At certain times of the day there may also be issues with access from busy roads and freeways.
Timing for the change – The timing of property change will be variable and will likely be impacted by individual business activities and seasonal business fluctuations. It takes time to move business into a new building and location. There will be a crossover of time that applies to the relocation into the new property. You may be able to help the tenant in understanding how the new occupancy can commence with rent-free periods and early access being given to the new property and location.
There are some quite specific things that you can look into as part of the leasing services and solutions you provide to tenants today. Ask the right questions and go deeper into the issues that really impact the relocation for the business.
The deeper that you can go into the tenant’s situation will show a degree of professionalism that other agents may struggle with. Be special, real, and relevant when it comes to the commercial property leasing market today. Show that you are the best agent or broker to assist when it comes to business relocation and leasing resolve.
The leasing segment of the commercial real estate market is particularly specialized. Many agents choose only to work on leasing opportunities within their property specialty. That being said, if property leasing is your primary source of real estate income, then you need to consider the quality of property that you work on and the clients that you serve. Low quality listings can be huge amount of work for very little personal outcome or commission. Choose your listings well. Don’t let low quality listings drain your resources and time.
Vacancies in good properties will always attract enquiry. Poor quality properties and vacancies achieve lesser enquiry; that will drag down the inbound enquiry and the achieved rental rate. The net result will be lower commissions. So you need to be selective on the properties and the premises that you work with from a leasing perspective.
So the first priority here is that you should focus on the servicing of good clients and good properties in the market. Research the local area to understand exactly where these clients and properties are located. Put them at the center of your prospecting processes.
It can take time to build the necessary relationships with the appropriate and the best landlords. To make the matter a little bit easier, build an extensive database of business tenants through the region. In that way you improve your value to the landlords that you serve. Soon they will know that you have the necessary tenant contacts and leasing opportunities that they need.
Here are some essential things to do every day as part of specializing in property leasing services:
As a general priority, focus on achieving exclusive listing appointments with the landlords and the vacancies that you service. In this way you can control your market. An openly listed vacancy will give you little opportunity to grow market share, and if you achieve a leasing result it will be by luck more than process.
The first thing that you should do every day would be in telephone prospecting and cold calling. Given that you work with business type tenants, most of your prospecting can occur between 8.00 AM and 10.00 AM. Most of the businesses in your local area will be operational in that time. Your focus should be to talk to the business proprietors and to understand their leasing and occupancy needs. So the prospecting call is a questioning process a rather than a sales pitch. Seek to understand the tenant’s needs and upcoming leasing issues.
Build a significant database as a result of your prospecting activity. That database should be split into tenants of different business types and locations. The tenant database should be separate to the landlord database; it should also be a lot larger. One of the factors of attraction when it comes to pitching your services to a landlord will be that of your database size and its relevance to the property type. For this reason, ensure that your database is comprehensive, large, and totally up to date. It is difficult for a landlord to ignore an agent that has total control and awareness over tenant movement in the local property market.
Stay in contact with all of your clients and most particularly those with an exclusive listing. Keep them advised of the changes to the local property market when it comes to supply and demand for leased space. Watch out for the new property developments that could impact market rentals, lease incentives, and occupancy rates.
Check out the listings that are still on the market and those that are new to your property segment. Wherever possible, identify the resultant lease terms and conditions relating to any finalize lease deal. There will always be a difference between an asking rent and an achieved market rental.
Make sure that your current lease deals are progressing based on the terms of the lease agreement and or current negotiations. Every lease transaction should be supported by valid market rental, guarantees, accurate and legal documentation, and suitable deposits. Stay on top of your current agreements and the parties to the negotiations. Make sure that your lease negotiations are not stalling for any reason.
A leasing agent is always closely watching the activities of tenants and landlords in the local area. You can add to this list above by understanding the greater property opportunity locally and the good clients that you are targeting. Set some rules and start prospecting.
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.
Leasing commercial property today can be a challenge for all sorts of reasons. The landlords that we act for and the tenants that we negotiate with all have requirements to be balanced into a lease structure. Negotiating a lease can be a real challenge.
When you look at the financial or calendar year, there will be ‘seasons’ of property activity. Sales and leasing activity for a property type will vary during those ‘seasons’ of business and tenant activity. As the local real estate agent you must do the best you can with leasing given the rental and leasing requirements. Understand what the property market is doing and then ‘prospect’ into it. You will soon find the landlords and tenants that require help.
Reflecting on today’s property market, here are factors that require attention of the leasing agent:
Comparable properties in the local area should be understood and watched. From time to time you will see those comparable properties take your tenants or seek to attract your tenants away from their leases. It’s all about you being competitive as a property when it comes to lease terms and conditions. Use a tenant retention plan to keep your tenants happy and in occupancy. Talk to your tenants regularly.
Market conditions will change during the year. Pay particular attention to the factors of market rent and vacancy rates. See the trends in both and look for the upcoming new property developments that could impact the supply and demand factors of occupancy.
Rents and incentives will change during the year. Gross and net rents will rise and fall based on the supply and demand for space. Importantly your vacant areas should be competitive when it comes to marketing vacant space to new tenants.
Local property types will show trends when it comes to rents and vacancies. Watch what the market is doing. Stay ahead of the trends and advise your clients and landlords how to handle their tenants and rents.
Landlord requirements will vary based on the holding requirements and cash flow of the property investment. The leases that you negotiate will also be based on the holding requirements of the landlord. Understand these factors.
Vacancy factors will have an impact on the tenant mix. Work with your tenants to keep the vacancies under control. Talk to new tenants to encourage lease negotiations of currently available space.
Outgoings recoveries will help the landlord with net rents. Look at all the leases to see what recoveries can and should occur. Reconcile and charge those outgoings correctly in accordance with the leases.
Lease documents will vary across a property and on a landlord by landlord basis. Read your leases and enforce them correctly.
To be successful in leasing commercial property today, you must understand the market, the landlord, the local rents, and the property performance. It is a fine balance that is a professional requirement for property leasing agents.
When it comes to moving a tenant into a commercial or retail property, you can develop a checklist to keep you on task and cover the critical issues relative to the property and the parties involved.
In leasing and managing a property, there are many things that happen every day to distract you. The checklist process will cover issues well and help prevent errors. Moving a single tenant into a property is not all that hard, although the issues become much more complex with multiple tenant movements, just like that which you get when you are looking after a large project or shopping centre.
So here are some tips that can help you structure your tenant movement processes and controls.
As a general rule nothing happens until the lease is signed by all parties, rent is paid, deposit is paid, guarantees are in and validated, and any other lease requirement completed. Hold on to the keys until these things have been done.
Meet the tenant on site to inspect the premises together. As part of that process take plenty of photographs around and in the premises to record the state of the tenancy at time of handover.
Give the tenant a set of ‘fit out guidelines’ that control the building activity that is likely to happen in the premises. Those guidelines should also contain the plan approval requirements and the specification of materials and finishes to be used in the premises.
Give the tenant a set of ‘building rules’ that tell them exactly how things happen in the property. This strategy is wise when you have a building with a number of tenants. They all should occupy to the same set of rules. That will include access, common areas, security, property use, and risk management.
Note the condition of the premises in a ‘condition report’ that the tenant should sign at the end of the inspection. Give them a copy and you keep a copy on file. The report will be important at the end of lease term when the make good is under consideration.
Tenant fit out works should not commence until all the required plans and approvals have been obtained. This then says that you should get the plans and drawings from the tenant to submit to the landlord. If the landlord approves those plans, they can then be submitted by the tenant to the local building approvals authority. Fit out work should not commence until the approvals are in place.
Put the tenant details into the directory signboard system for the property.
Whilst the tenant is completing their fit out they should not disrupt other tenants nearby.
When the fit out has been completed, inspect the premises to ensure that the works undertaken comply with the approved plans and drawings.
Get a full set of tenant plans after the works have been completed.
You can add to this list based on the property, the landlord, and the tenant. Create your checklists to help you with all of this tenant movement.