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7 Ways to Get Ahead of the Competition in Commercial Property Leasing

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.

(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)

Focus on the Right Things

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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?
  5. 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.
  6. 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.
  7. 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.

(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)

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Cut to the Chase with Commercial Property Vacancies

A vacant commercial property is a significant frustration for an investor.  They are loosing out on rents and outgoings recovery.  Over time that can all add up to a large amount of money and financial discomfort.  Look at vacancies for the opportunities that they are for you in leasing brokerage.

(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)

Survey the local property market so you can find the listings and properties that need a vacancy solution.  Approach the investor owners directly.  Work with tenant mix challenges and vacancy problems.

In this audio program, John Highman talks about the advantages of working with vacant properties and providing specialized leasing services.

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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.

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How to Prepare for a Commercial Property Lease Negotiation

Staircase with marble landing and balconies
Prepare comprehensively for your commercial property lease negotiation

If you have had a bit to do with tenants in leasing any commercial or retail property you will know that they can really delay things for their own reasons, thereby impacting the landlord in negotiation and slowing the agent as to finalizing the deal.  As the leasing professional your job is to work with that challenge and encourage agreement to the benefit of the client.

(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)

Understanding the tenant’s situation now and applying that requirement to the current property market will help you with activating and progressing the lease deal.  That then means a better negotiation.

The tenants focus?

Good questions and research will usually help you to get to the tenant facts and motivators.  As you move through that, don’t forget just who your client is in the process and how you are representing them through the process of leasing.

Here is an interesting leasing based question for you. Can you believe what at tenant tells you about the property lease requirements that they have?  Perhaps not totally, however you can ‘read between the lines’ of what the tenant is saying and doing, and get to some of the real facts of what is happening in their business world.

A good outcome?

A good lease negotiation is generally a result of the leasing broker informing the parties to the deal, then discussing, listening, and seeing through the challenges.  Though all stages of the inquiry, inspection, and meeting process you can find out more of the tenant’s requirements and priorities.

So what really goes on in a lease negotiation?

The balance of any lease negotiation will shift and change based on just how much available space may be in the property market at any point in time; you have to prepare for that variation.  It directly follows that you should be prepared for any and all of these tenant ‘delay’ tactics:

  • Looking around at other properties
  • Comparing rents across the market and between vacant premises
  • Comparing properties and the improvements
  • Incentives to sweeten the deal
  • Slowing discussion to make a decision
  • Wanting to change lease conditions
  • Asking the landlord to do some internal fit-out works
  • Seeking early access to the premises before documents are signed
  • Fit Out approvals slowing
  • Plans of the fit-out not available

There are many variations as to what a tenant will be looking to do with a lease negotiation.  As the professional, you are to guide the process and negotiate through these barriers and many more.  Control and research are the keys to any successful commercial property lease negotiation.

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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)

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Commercial Real Estate Leasing Vacancy Solutions and Strategies

Large entryway with tiles and plants
Vacancies in office property can be resolved through strategy.

In commercial property management and leasing, you have to closely watch the tenant mix and the leases for any upcoming vacancy risk and or tenant in distress. The property market changes all the time, and each city will have unique pressures that can set the momentum to move tenants around and impact business performance.

(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)

Local Issues?

So what is happening locally for you in your location? Do you have clients and properties under vacancy pressure? It’s an opportunity to resolve. You really do need to know why vacancies are happening and then work on a strategy to resolve them.

Before I go too far into this concept, I will say that the leasing market is lucrative from a commission perspective, if you focus on one or all of the following:

  • Quality properties – some properties are better than others. Look for the differences in local properties and buildings in your location. Choose the better properties from a leasing perspective.
  • Larger tenancies – the size of the tenancy will dictate more rental and therefore more fees per transaction.
  • Corporate tenants – the companies and corporations in any town or city tend to need property help in relocating and expanding or contracting. You can have an appointment to locate their next property lease.
  • Particular property types – when you look at the rents per unit of area per property type, you will soon see the property types that create better interest from tenants and better rents. That is where you should focus your leasing efforts.

Given these 4 facts, you now know what types of leasing factors should feature in your prospecting model. Take deliberate care to stay within your set leasing criteria. You will then find the tenants and the better properties.

What value do you bring?

So why are vacancies happening in any building or location, and how can you help? To get to the answers, you really do need to look into the following factors and do the appropriate assessments:

  1. Rental pressures and shifts – rents that are consistently climbing will reach a plateau where business owners will resist leasing. In a city where rents are escalating, understand the realities of a business paying higher occupancy costs. What are the limits?
  2. Competing properties – other properties locally are likely to be competing for your tenants so watch the problem and intervene where necessary.
  3. Occupancy costs – rent and outgoings all add to the cost of occupancy; a tenant has to be able to afford the total occupancy package.
  4. Tenant mix problems – some tenants have issues with being close to others and other business types; look for those problems.
  5. Permitted use or exclusivity – in a larger building where you have multiple tenants, ensure the balance of tenant mix, and avoid giving away exclusivity (retail properties in particular).
  6. New properties being developed – any new property will shift the balance of supply and demand, thereby pushing businesses out into the leasing market.
  7. Landlord issues – some landlords are very difficult to work with, and will give tenants a good degree of frustration as part of lease negotiation and occupancy.
  8. Quality of services, amenities and improvements – buildings age as do the services and improvements.

From these things, you will find the properties and the businesses needing leasing assistance. At that point you have some advantages to work with.

(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)

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4 Proven Strategies in Commercial Real Estate Brokerage Leasing

office building and desks
Understand the complete commercial property leasing requirement.  Specialize in all the facts and the property details.

When you lease a commercial or retail property today, it pays to set some rules to the process so you can correctly match the tenant to the property for the fullest of available advantages.

Investment property leasing is where all the important decisions are made to find the best tenants for the investment performance. Each tenant is different, each landlord can be quite special, and between both of those stakeholders you have a property and its occupancy opportunities.

Establish Your Commercial Property Leasing System

Are you ready to specialize in leasing and investment property performance?

What are the rules you can set for leasing buildings and premises?  Try some of these for starters:

  1. Know who you are talking to and always get their contact details first – When an inquiry comes in from a tenant, ensure that you are talking to the right person who you believe is in control of the business. Before you disclose too much about the property, write down the important contact details of the person and the role that they play in property selections and choices.  Don’t be too eager to talk about the property without the fullest of contact details from the person you are engaged with in conversation.
  2. What do they really want in leasing new premises? – There will be a main motivator(s) behind a tenant in changing properties. Questions will always get you to a few important points to understand.  Of the few factors of importance in finding new premises to lease, a couple of factors will be high on the tenant’s agenda.  Get to those facts fast and directly.  Delve into location issues, and then improvement requirements in any property to be leased.
  3. What can they afford? – Is it a tenant’s market or a landlord’s market in your location currently? There are differences to watch for, and those differences will impact your negotiations with rents and lease terms.  Some tenants have little understanding of the current property market conditions, and the same can be said for the landlords that you serve.  Be prepared to quote real market evidence from recent lease deals to occupancy arrangements, lease negotiations and market rentals.  Tell the tenants and landlords that you work for how they are positioned in the current property market and how realistic their expectations may be in changing property today.
  4. What property improvements do they need? – Every business will have challenges of placement when it comes to fitting into a new property. Your job is to bring ends to meet together across the void of a leasing negotiation.  Your client is the priority above everything else.  What are the targets of your client in the lease negotiation?
  5. Factors of supply and demand will impact your negotiation – Always track the vacancy factors in your location. Those vacancy factors will be impacted by supply and demand for the location and the property type.  Higher vacancy factors push up lease incentives.  A volatile leasing market will drive greater elements of risk for landlords, and that is where a tenant retention plan will help you with the overall income stability for your clients.  Become a specialist in tenant retention, lease negotiation, tenant sourcing, and lease marketing.  There are plenty of leasing advantages to be had from an active property market with tenants and landlords.

So you can do some good things here with your tenant and landlord interactions.  As the leasing specialist get to fully appreciate market trends and changes and pull those factors into your leasing arrangements.  Position yourself for helping your clients in the best way with all your leasing deals.

(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)

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Commercial Real Estate Snapshot Podcast 225 – A Focus on Commercial Real Estate Leasing

audio headset
Commercial real estate training MP3

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:

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

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The Perfect Leasing Strategy for Commercial Real Estate Agents Today

Commercial Real Estate Agent giving Ok handsign
Leasing in Commercial Real Estate Agency today requires real specialists.

In today’s commercial and retail property market, you really do need to develop a leasing strategy for each and every quality property that contains vacancies.  The abundance of vacancies available means that the limited pool tenants available has a lot of properties to choose from.  Attracting enquiry from tenants and then converting the enquiry is a real ‘art form’ in this market.  Here are some more tips from our Newsletter for Agents.

It should be said that the marketing of any lease or vacancy should be on an exclusive basis.  You should be appointed as the agent of choice to market the property for a period of time.  Controlled listings are the only way to attract enquiry in this market today.

Given that the landlord requires leasing results in their property, the controlled listing is the only way to achieve the necessary commitment on the part of the agent and the necessary market penetration into the tenancy base.

It should be said that the client’s commitment to an exclusive agency should also be reflected in the agent’s commitment to market and service the listing.  There is no point in taking on an exclusive listing of a vacant tenancy unless you truly believe that you can market it comprehensively and intensely for the period of the agency.  The real estate world is full of disgruntled clients who have been tied to an exclusive agency and a poorly performing agent for a long period of time.

To provide an excellent leasing service for your clients today, here are some tips and ideas to merge into your leasing strategies and solutions.

  1. When you act exclusively for a particular landlord, the property portfolio that they own should be subjected to a tenant retention plan and business strategy.  In that planning process you can set the key criteria that should apply to ongoing leasing activity and tenant mix changes.  When the landlord can clearly see the leasing road ahead when it comes to rentals and vacancies, they are more likely to stick with you as the leasing expert that they require.
  2. The market rental in your local area will change from time to time given the supply and demand for rentable space.  New property developments will place pressure on market rentals through the introduction of lease incentives and enticements.  Keep your client up to date with some form of market rental update on a monthly or quarterly basis.
  3. The expenditure or outgoings costs for a given property asset will be based on both controlled and uncontrolled cost factors.  The uncontrolled cost factors are those that relate to property rates and taxes.  Like it or not they will have significant impact on property usage and will need to be paid.  It is the controllable outgoings that have some ability to be shaped relative to occupancy and building usage.  As a leasing strategist and specialist, you can keep the client appraised regards current levels of expenditure and outgoings that apply to the particular property type.  The trends of outgoings costs will to a large degree influence your rental decisions regards amount and rental type.

To be a top leasing agent today, you simply need to bring relevant leasing skills and local property knowledge to the client.  Provide the best leasing service possible to your clients, and keep in touch with the local business community for the tenancy needs that arise.

You can get some more tips on leasing strategies from our online Newsletter for Agents.

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Industrial Property Agents – Leasing Tips With Heavy Industry

man working on pipes
Industrial leasing must allow for the special plant and equipment in an industrial property.

The customization of an industrial property is achieved through the integration of the real estate, its established and new property improvements owned by the landlord, and the machinery and inventory of the tenant.  This relationship can occur as part of the lease negotiations between the tenant and the landlord.

If the customization of the plant and equipment is going to be extensive and elaborate, the terms of the lease will need to be suitably and carefully constructed.  It is important to identify the different levels of plant and equipment that are owned by each party.  The lease document is the place to do this.

If costs are to be incurred by the landlord in modifying the plant and equipment and to help the tenant in establishing occupation, then the initial property modification costs should be amortized across the lease term.  Any money outlay by the landlord should be built back into the income recovery.

You can calculate the cost recovery alternatives through a discounted cash flow with appropriate rental recovery assumptions across the initial lease term.  The rent reviews and the market rentals to be charged during the initial lease term can be modified for recovery of amortized costs.

Distinguishing the Differences

It is often difficult to distinguish between the plant and equipment owned by the tenant, and that which is owned by the landlord.  For this very reason, any new lease should clearly detail the ownership factors and the maintenance factors that apply to the existing plant and equipment within the property.

The landlord may own some of that plant and equipment; however the maintenance may be passed across to the tenant as part of ongoing occupancy.  The lease document is the way to detail this factor.  It is then up to the property manager to ensure that the appropriate levels of maintenance occur during the lease term.

Clear definitions and relationships need to be set when it comes to leasing a complex industrial property with complex cross ownership structures of the plant and equipment.

Taxation Considerations

Generally speaking, the costs incurred in establishing new plant and equipment within an industrial property will have some advantage in depreciation when it comes to taxation.  Clear relationships need to be set between the tenant and the landlord as to the initial cost outlay and the application of depreciation.

Any property landlord should consult with their financial adviser before they make the final decisions on capital costs incurred in a new or established industrial property.

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Commercial Agents – What Should You Do in Slow Leasing Markets?

commercial office tower and leasing market
Leasing strategies in city office towers

The leasing market will become difficult and slow from time to time.  It really doesn’t matter what property type you work on, you simply need to be sensitive to the pressures of supply and demand that impact your local area.  Here are some tips from our bulletin for commercial property agents.

As property leasing experts, we need to see the rental and leasing market changes before they take a real hold and then impact our clients property.  That foresight would normally involve ongoing research with rental levels, lease incentives, tenant enquiries, property improvements, and new developments in the local area.

So if you are experiencing a slow property leasing market the following strategies will be very useful.

  1. Local businesses will always be a valuable source of market intelligence and future leasing needs.  Business people talk to each other and share information about property changes, business pressures, and landlords.  When you connect with the local businesses on a regular basis you will see and experience a goldmine of opportunity and information.
  2. Competing properties exist in your local area and will have impact on the marketing of your listings.  When you are marketing a property or tenancy for lease, you really do need to know about the competition that you are up against.  Compare the rentals, the lease terms, and the property improvements.  Advise your landlord accordingly so they can make adjustments in their marketing of vacant space.
  3. Tenancy schedules should be obtained for as many large quality properties that you can get your hands on.  The quality properties will contain larger and successful businesses.  Over time you can build your own tenancy schedules within the targeted buildings by talking to the tenants and inspecting the properties.  Enter the information into a database so you can maintain ongoing contact in a relevant way.
  4. Accountants in the local area will normally serve the local business proprietors when it comes to issues of business performance and taxation.  On that basis you will find that accountants are very good sources of lease leads and opportunities.  Build relationships with these accountants so they come to respect your skill as a leasing expert.  Very soon they will let you work with the business pressures of occupancy that can apply to some of their clients.
  5. Franchise groups are always looking for new space to occupy subject to their business type and lease requirements.  Get to know the franchise groups that are active in your area and location.  Further to that you can identify franchise groups that have not as yet moved into your territory.  They will all require particular property types and lease terms and conditions.  You simply a matter of understanding the needs so that the appropriate properties can be provided at the right time.

Database tools and technologies are integral to making inroads into the local business community.  Prospects and business proprietors should be entered into the database given their property types and needs.  Over time your database should grow to at least 1000 qualified people.  When you grow the database through continual daily effort, the leasing opportunities will start to grow, as will your commissions.