The commercial real estate leasing process is quite special. You can work with tenants or landlords, but either way you will need some local area information and the tools to help you through any property inspection and negotiation.
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.
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.
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.
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:
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.
In commercial real estate today, the leasing process will offer a typical agent or broker with many leads and opportunities servicing local landlords and property investors. Over time that leasing arrangement can be the precursor to selling properties for the same client.
So the smaller commissions earned in the leasing process, can give you the opportunity to move on to a sales commission with the same client in the future. One thing can lead to another when it comes to working with different clients and high quality properties. Be selective when it comes to choosing the right properties to lease.
Establish long-term relationships
Commercial real estate is all about building relationships with the right people, and the leasing service that you offer today can help you start that. Be selective when it comes to establishing long term relationships with the right property owners. It stands to reason that the quality of your leasing service can help you convert more clients over time. To find those clients in the first place, it is a matter of understanding the factors of attraction when it comes to office leasing. Why will someone use you as a local property leasing expert?
Here are some ideas to help you build on that opportunity cycle in a professional leasing service; to help you work for those high quality for property owners and investors in your local area:
The size of your tenant database – It is a fact that the size of your database of tenants will help you attract landlords when they require a vacant property filled. Market your services to landlords using your database as a factor of attraction.
Property pressures – Some tenants and businesses will be put under pressure when it comes to property occupation; changes in the economy or business sentiment can do that. You can find those tenants by staying in constant contact through a direct approach, be it in cold calling or door knocking. Look for those businesses that are under pressure.
New People – Generate leads and opportunities every day in your local area; make it a priority to meet new people in your territory. When visiting one property or business in any location, leave your business card with nearby businesses inviting future contact if they have a property pressure issue or need to relocate.
Lease expiry – As part of building your database, track the upcoming lease expiry and option dates in every major office building and with every good quality tenant. The only way you will know those dates is in making the regular cold calls to local businesses. When you know an upcoming lease expiry or option date, you can work the tenant in the 12 months leading up to the critical date. Relevancy is a way of attracting their interest; they will have a need to understand market rents, vacancy factors, new property developments nearby, and lease incentives. A tenant will seriously consider relocation if the current pressures of occupancy are high; that can be in rent levels, available space, car parking, transport, customer locations, and occupancy costs. Ask the right questions and you will soon find some pressure points that may interest them.
Current vacancies – Some landlords will have a problem with current vacancy levels or upcoming vacancies. Look for properties that appear to be under vacancy pressure; contact the owners directly to see if you can help.
Rental and leasing strategies – When you know a lot about lease and rent structures you can offer real strategy as part of leasing a property. Some landlords have little understanding of the ways to improve property returns and cash flow through a lease; they will just focus on finding a tenant. You can explain to the landlords that you serve how a gross or net lease can bring benefit to their property returns, and you can add some strategy around rent reviews, options, relocations, renovations and occupancy costs.
So as you can see it’s quite easy to offer a professional leasing service to landlords in your area. Lift your leasing skills and market yourself as the property expert that the landlords and property owners require.
Tenant retention today has become an important strategy in property performance, particularly with retail shopping centres and retail investment properties. Every commercial and retail leasing agent should provide a comprehensive and detailed tenant retention strategy to those property owners that need the service, or own the larger properties.
A good retention plan will give you as the retail leasing specialist opportunities for future leasing, renewal negotiations, tenancy relocations, and property changes. All of that means better commissions.
A leasing expert in this market is of high value to any landlord with a high quality retail property. This leasing churn produces fee opportunity and market intelligence. Most property owners and landlords will not have the tools or the market intelligence to design their own tenant retention strategy in this regard.
So a good tenant plan will have particular factors to help property performance, and strengthen the tenant profile for the landlord. Ultimately this will encourage rental income and lower the vacancy factors.
Here are some factors to help you establish the retention plan in properties and listings of suitable size and complexity.
Get to know the existing tenants within the property. This will normally involve meeting with those tenants to talk about customer activity, customer trade, and property requirements. In most circumstances, the tenants within a retail property can give you significant and valuable feedback to help your plan creation and consolidation.
Get professional surveys undertaken of shoppers using the property on various days of the week. In medium to larger shopping centres, it is quite common for the survey to occur on a quarterly basis. The survey would normally take two weeks to implement so that you cover the necessary variables in daily shopping. The results of the survey will tell you what customers are looking for and what they think about the property today.
Visit the local council or planning approvals office to understand the activity of other property developments coming into the market soon. Obviously you should look for new property developments that could destabilise the balance of supply and demand when it comes to tenancy leasing.
Review other properties in the local area to understand their factors of vacancy, market rental, and customer base. You can also selectively talk to some of their tenants to get feedback regards shopping trends and property performance. Obviously it should be said that this approach should be suitably confidential and sensitively handled. Many other property managers and property owners may feel threatened if you make this process too public or obvious. Simple questions asked in a creative way as you purchase a newspaper or an ice cream can give you some good tenant feedback to work with.
Given your existing retail property, determine the tenants that are more attractive and less attractive to the future of the asset. The attractive tenants will feature in the retention plan differently and more intensely. Some of the less attractive tenants will disappear from the plan when you can find better ones.
If you have an anchor tenant or perhaps a few anchor tenants in your retail property, it pays to talk with them regards property trends and sales. They will give you valuable feedback from their perspective as a major retailer. Most leases with anchor tenants go for many years. Make sure that the tenant is locked in for the longer term and that they are well integrated into the overall tenancy mix activity.
So these are some of the foundational factors that will help you move towards a good tenant retention plan. Over time you can consolidate our real strategy across the entire tenancy mix.