Why Commercial Property Leasing is a Leverage Point in Brokerage

Having spent a lot of time working on and in various building and leasing projects over the years, I know that the opportunities of working with commercial tenants and landlords today will always bring in other business openings into the future. (NB – you can get more commercial brokerage ideas here in our Snapshot program – its free)

Everything in our industry is linked, and your clients locally will usually have diverse needs in leasing, sales, and property management at some stage.  It is all a matter of timing and relevance.  Are you ready for some property leasing action?

Landlord and Tenant Opportunity

Recognize that a simple property lease transaction can open the door for you with a key landlord or business owner.  Relationships are important.  It can also be said that if you know plenty of things relating to local rents, lease documents, occupancy costs, property performance, and fit-out improvements, you can add considerable value to a property in capitalized cash flow.  Strategy and ideas can help facilitate an agreement between a landlord and tenant.

In this audio program, I talk about the importance of the tenant and landlord relationship and how you can tap into it as part of your commercial real estate career.

You can listen to the audio right here:

 

 

Boost Rents and Leasing Strategies in Commercial Real Estate

There are many different rent strategies that you can implement in commercial real estate brokerage.  The facts of the rental matter hinges on just how long the property owner wants to own the property. (NB – you can get plenty of commercial property leasing tips in our Snapshot program right here)

You can have rent strategies for the short term or the long term.  You can boost property value in a rental lift.

You can encourage a tenant to lease a property using fair and staged rents, or you can ask for the highest levels of income from the leased space and run the risk of a vacancy occurring.

Don’t forget that you also have net rents, gross rents, and incentives to work with in any lease negotiation.  The income or rent that you start with can be enhanced over time, so look at the bigger picture when negotiating with tenants.

Don’t focus so much on the start rent, but the income over time.  Look at the rent reviews and how they can support stable occupancy for the longer term.

In this audio program, John Highman talks about the rent and leasing strategies that are so important in today’s property market.  You can listen to the audio and download it here:

A Few Powerful Secrets in Commercial Real Estate Leasing

In commercial real estate brokerage leasing, you need plenty of tenants to fill the vacancies that you will work with and will identify. At least half of your database should be filled with business based tenants and their leasing requirements.  (NB – you can get our free Commercial Real Estate Course here)

 

Given that your brokerage zone will be a section or a segment of the city, in a logical and direct way connect with all the tenants in the zone. Understand what the tenants are thinking and doing when it comes to property occupancy and change.

 

Relevance of Database and Location

 

As a special note, the size and the relevance of your leasing database as it applies to the location and the property types will be a major point of leverage in winning new business.

 

When it comes to attracting landlords and property owners to your services, you will need some form of differential.

 

To achieve that ‘difference’, consider the following questions:

 

  1. How big is your database currently and how relevant is it to the location? The businesses within the list should be locally based and or regionally connected. Split that database list into major corporations and smaller businesses.
  2. Where are the good quality buildings in your town or city? Review the tenancy mix in each case. Understand exactly who is occupying the major properties locally and for what reason. When you know the top tenants, the better buildings, and the top corporations for the area, you can hone your prospecting efforts accordingly. You can drill down into the businesses that have the capability to grow and relocate as company profits allow. You will also understand the buildings that are best suited for some companies and corporations from a branding profile and operational perspective.
  3. Have you been keeping your database list and its contents up-to-date? The data within the database will be important in several different ways. At the top of that assessment will be accuracy and timeliness of the information you have gathered. Spend time each day connecting with the people within the list to see how business pressures and changes are impacting their occupancy decisions.
  4. Have you been connecting with new people in a regular and ongoing way? You will always need fresh contacts and connections to grow your real estate business and the leasing opportunities available. You will need high quality clients and particularly the local companies and corporations to work with from a leasing perspective.
  5. What are people thinking about property now?  Understand exactly what they are thinking from a business and occupancy perspective. Look for the triggers and the pressures that influence those tenants and those companies to move. Through regular and ongoing contact, you can be there to assist them at the right time and in the right way.

 

 

So, there are some good things that you can look into and improve as part of providing professional leasing services to the local businesses and corporations.

 

Talk to plenty of people on a regular daily basis and refresh your database list with new information and upcoming property requirements.

 

The relationships that you build and encourage over time with carefully selected local companies and business leaders will help you strengthen and consolidate your leasing profile and professional leasing services.

 

How to Undertake Routine Inspections in Commercial Property Management

The idea of inspecting every property in your commercial real estate portfolio can be a bid daunting given that there are plenty of things to look at and investigate as part of the inspection.  The greater the number of properties that you have to manage, the bigger the process of review and documentation.  (NB – you can get our free commercial real estate course for brokers right here)

When you have lots of tenants in occupancy, the whole equation of inspection becomes more complex given that many tenants are in occupation and they all run different businesses.  So the inspection process has to be comprehensive and records need to be kept.  The property manager or the center manager has to implement the property inspection process regularly and in a detailed way.

In this audio program, John Highman talks about the routine inspection process that is all important in the commercial and retail properties under management.

 

6 Tips for Pricing Your Commercial Property Management Fees and Services

The services that you provide in commercial property management are quite special and should be costed accordingly. Care and consideration is required when you are considering establishing a new fee or quoting on a property management service. There are variables at play that could have an impact on your fees suitability and amount.

(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)

So what is the problem?

If you set the wrong fee in quoting on a property management service, you could position yourself for loss of income over time when compared to the time you are committing to the property and the client. Under resourcing is a big problem in our industry.

 

Don’t provide the client with a low fee quotation simply to win the new business opportunity as a property management appointment. Understand the property, the client, and the tenancy mix before you set and finalize the fees for service.  Look at the ‘big picture’.

 

So what do you do here?

You should understand all of the property issues that may put pressure on your management services. Many an agent has lost a property management client and property appointment simply because the agent has been unable to control the property efficiently and improve performance over time; under quoting the fee will very likely create that issue.

 

So what do you need?

You need the right people and the right processes to manage a complex office or retail building today. Don’t underestimate the required skills of the process and the demands of the property.  Match the people and the processes to the property.

 

Here is another error that is all too common.  As a general rule, don’t set your fees based on a percentage of passing income. Whilst that may percentage approach be an industry standard in your location, it is only an indicator and should be compared to many other factors and choices. There are other things to look at and consider before you finalize your fee structure and client services.

 

Assess all the factors

Consider the following factors as you work through this process of property management assessment and opportunity:

 

  1. Landlord requirements – some landlords are unique and special when it comes to property management requirements and services. The complexity of the property and the cash flow can very likely create pressures on reporting and financial controls. You could find yourself generating many variations of reporting to satisfy the challenges of the property and the clients requirements for information. Interview the client as the landlord before you quote on the final fees for service.
  2. Property complexity – inspect the property completely and thoroughly. There may be issues in the property to control and manage over time. Look specifically into the issues relating to maintenance, rentals, vacancies, lease management, tenant volatility, and property performance. Every property will have certain strengths to work with, and weaknesses to work through and resolve. The weaknesses are the ones that will challenge your task and time management. The weaknesses will also threaten the cash flow and property occupancy over time. Create a business plan for the property to address the known and upcoming weaknesses.
  3. Tenant mix – review the tenancy mix as you inspect the property. Understand the tenants that are trading well and those that are struggling. Identify the tenants that may be under some form of pressure and develop a base plan as to how you may manage that occupancy and improve the overall results. It is a good idea to incorporate a tenant retention plan into the property performance strategy.
  4. Time based comparisons and assessments – when you first take on the property under management, it is likely to be a busy period of time for the first few months as you work through leases, tenants, and maintenance issues. The question to consider here will be how you can get the property under control effectively and efficiently. Some properties can take months to reshape and control. If you are about to commence management of that type and intensity, be very careful as to how you set your fees for service.
  5. Lease review – look at all the lease documents for the property and the tenancy mix. To do that you will need to read the documents comprehensively and thoroughly before you make your choices on fees and management strategies. Look for the weaknesses in lease structure, property occupancy, and tenant performance. The leases will also show you the occupancy challenges in the property with fresh vacancies potentially coming up. You will need a strategy to work with those potential vacancies and optimize the result for the landlord client.
  6. Income and expenditure review – the history of the property can tell you something about financial management and cash flow. Understand how the income has been changing over time and if there are any weaknesses in market rental currently. Rental and income weaknesses need to be identified and addressed quickly and efficiently. Comparisons to the prevailing market conditions will be required, and negotiations will need to be commenced as soon as possible. Seek your landlord instructions and comments as part of an income review and opportunity assessment.  Know all the facts.  Also review the expenditure within the property and the history of net income. Has the property being improving through good financial management or are their hurdles to address? Are there issues or weaknesses of current and future income, and will there be expenditure volatility to be dealt with?

 

So there are many things to look at when it comes to pricing your commercial property management services. Understand the client, the property, and the tenancy mix before you set the final fees and commence your professional services.  Build your brokerage portfolio with care.

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)

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.