In commercial and retail real estate agency today, there is generally an abundance of stock and not enough buyers or tenants. When it comes to presenting and listing your services to clients, you really do need to convey the correct terms and conditions of the market and the right solutions that will help the clients solve their property pain. Here are some tips from our Agents Newsletter.
Be a Relevant Agent
It really doesn’t matter how difficult the retail property market is, but it does matter how you approach the marketing, inspection, and negotiation process. These factors can be fed into your listing presentation so that the client understands your relevance as a top agent to help them through the difficult task of selling or leasing the property.
As part of your regular weekly team meetings, you should role play your listing presentation for the different property types over which you work. The prevailing market conditions and local area will also have some impact to your presentation.
What’s Your Listing Strategy?
Here is a strategy that you can merge into your presentation with property owners.
- From the outset, make sure that you are talking to the real decision makers when it comes to the particular listing. In some businesses, the decision makers can be hidden behind others.
- Check out all of the other competing properties in the local area. They will have some impact on your listing when it comes to marketing strategy, price, and or rental.
- Provide a method of sale or a method of lease that satisfies the current level of enquiry relative to the property type. This means that you should make particular recommendations to the clients that are clear and concise. Tell the client about the local levels of enquiry, and how you intend to refer that enquiry to the subject property.
- The best listing alternative today is an exclusive listing. It gives you control of the client, the listing, and the enquiry so that you can put together some reasonable momentum on the particular listed property. At the end of the day, the client simply wants the property to be sold or leased at a reasonable figure. The exclusive listing process can do this. Top agents will only list on an exclusive basis. Get away from open listings as soon as you can. In this market you simply have to control your stock and the exclusive listing process is the only way to do it.
- Give the client some alternatives of marketing that can be applied to the property listing. In most cases, three alternative marketing packages are recommended. The client will usually choose the one in the middle. Importantly, the marketing package should be designed to reach the target audience in a timely way to encourage inspections. If the property is of some quality, you will always get inspections and enquiries regardless of any market conditions. That being said, you should be satisfied that the rental or price that you are asking is in the realms of reality when it comes to the existing property market.
- In any role play situation for a property listing, you should be asking for the listing. The best time to close on the client is when you are in their presence and before they have had the opportunity to involve other agents in the property.
As logical as the role playing situations seems, many agents will avoid the process or overlook it. When you deliberately practice your listing presentation and pitch, you can improve your conversions of listings quickly and effectively. A quality listing that is a controlled listing will always bring you better enquiry. Over time at least 75% of your listings should be controlled.
You can get some more tips like this in our Real Estate Agents Newsletter.
When it comes to leasing a retail shopping centre, the mechanism of leasing can be quite specific and specialised. That is why some leasing experts only specialise in retail property. It is a very special part of the property market requiring good market knowledge and excellent tenant contact.
A shopping centre or a retail property is a vibrant business environment and it needs to be understood for the best leasing results to be obtained. To a great degree, the success of the tenants will be generated from property performance, tenant mix, customer interaction, and the landlords support. There are many ways that these issues need to evolve if the retail property is to succeed for the long term.
Here are some tenant mix strategies to apply to a retail shopping centre to assist the leasing process and the overall tenancy mix.
- The tenants that are chosen for the property should be the tenants that satisfy the demands of the local community and customers. Tenants that are well matched to the local demographic will attract more customers to the property over time. Tenants of this type should be integrated into the overall tenancy mix at strategic places and within specific retail clusters. Clusters of tenants generate more sales in the property. A cluster is a specific retail tenant mix strategy.
- Get to know the franchise groups in the local area that may require premises in your property at any future time. There will also be other franchise groups that are not yet located in your region or town. Connect with all the franchise groups that have a reasonable retail offering and therefore potentially an attraction to your customer base. Understand what these franchise groups require of a property, and population demographic. They will also have certain terms and conditions that relate to their lease occupancy and property selection. In many cases they will share that information with leasing professionals in preparation for identifying the right property. Get to know the franchise groups.
- Monitor the activity of all competing retail properties locally. That will include the rental profiles, vacancy activities, and lease occupancy. Selectively approaching the tenants within these properties will help you with market intelligence and leasing strategies.
- Identify any new property developments that are soon to be released on the market. They are likely to shift the balance of available space and rental across the region. They will also try to entice tenant movement through attractive incentives. That can then make any older properties in the area less attractive to some tenants. The only way to combat this problem is through competitive rentals, and exceptional property performance. Retail tenants will always be attracted to properties that integrate well into their customer base. Make sure your retail property does exactly this.
- Your existing tenancy mix will contain tenants that are more or less attractive to the future of the property. You will require a tenancy retention program to define the differences between those tenants. Over time the retention program can remove difficult tenants, reposition better tenants, and reduce your vacancy profile. The tenant retention program is a significant business tool and point of difference for many retail leasing experts.
So all of these things will help you with the necessary momentum to improve your leasing activity; over time you can lift your tenancy outcomes. Respect the differences in retail property leasing, and understand the specialised nature of lease negotiation. Many commercial property agents have made a significant and very rewarding career from retail property. You can too.
The success of your commercial real estate office and you individually as a commercial real estate salesperson will have a lot to do with your prospecting plan. The prospecting plan is a particular process that is developed by each salesperson relative to their property type and local area. If you want to be successful in this industry, it is very wise to establish your plan as early as possible in your career.
It is notable that most salespeople in the industry are of an ordinary performance level. This then leaves a significant opportunity wide open for those that can move to the top of their industry through established prospecting activities and professional skills.
So let’s look at some prospecting rules that will help you build your market share.
- Clearly define the type of property that you are to specialize on. That property type should be comprehensively incorporated into all of your marketing efforts. When you work exclusively on a particular property type, it is easy to be seen as the local property expert. You will also achieve higher quality listings over time because of this relevant and comprehensive knowledge.
- It should be said that your specialist property type should be in significant abundance throughout your territory. You need to know that the property type churn will produce necessary sales and leasing opportunity as the case may be.
- Review the history of your area for property changeover and property leasing activity. How much commission has been generated by your territory over the last 12 months? How many sales have occurred in your area over the last 12 months? How much leasing activity has occurred in your area over the last 12 months? All of these questions should be answered so that you have a clear future in your property type and sales territory.
- Get to know your competitors and the listings. You will soon understand the difference between top agents and everyone else. When you have identified the top agents, study their business activities and their points of difference. Is there sufficient room for you in the same market with similar points of difference? Should you develop alternative points of difference, or work on different property types?
- Commercial real estate is an industry where personal branding is a significant part of your listing generation and commission opportunity. You will need to have a significant personal marketing plan implemented on a daily basis to encourage new clients towards you. That is the best way to attract property opportunity.
- Whilst you may work for a prominent local or regional commercial real estate agency, you will be the reason for any listing to be converted to a transaction. The industry is based on people and the knowledge and skills behind those people. Whilst your agency may attract some enquiry to you, it is your personal skills and knowledge that will convert the listing and drive the enquiry. On that basis, you should optimize and grow your specialized skill at every opportunity.
Prospecting in commercial real estate is a personal process, as we have mentioned above. When you truly understand that fact and develop the prospecting systems around you, the property market will open up for you in opportunity. This opportunity is always available in any economy and in any location.
The top agents of the industry are always prospecting for new clients and new opportunity. Your existing database and client list will eventually become tired and restrictive when it comes to commission opportunity. Always be on the lookout for new people and new properties. That’s what prospecting is all about. Over time you can build a significant commercial real estate business with fresh people in your prospecting model.
Managing a commercial or retail property is not easy and we should not presume that it is. Commercial real estate agents specialise in it and bring many skills to the process. There are however some people and property owners that prefer to manage their own property.
It should be said that the commercial property management process is both time consuming and demanding. It requires knowledge and commitment on the part of the property manager or the building owner. Any mistakes made in the management process can be severe and impact the performance of the property for many years.
Given all of these facts, some landlords still prefer to manage their own property. That being the case, here are some tips and ideas that can apply to the process.
- Lease documentation will always be a key component of the commercial property management process. It is the lease documentation that underpins the income from each and every tenant and improves the performance of the property for the landlord. A commercial property or commercial tenancy without a good lease document can be a real struggle to manage. In many such cases you will find that the control of the tenant and the recovery of income become much harder. It is notable that some property owners prefer to avoid high documentation and legal costs when it comes to the establishment of a new lease. You would think that the reverse would be true given that a good lease will underpin the performance of the property. A cheaply prepared generic lease will invariably miss out on the important parts of property performance and tenant control.
- Income establishment and growth will be a part of the commercial property management process. There are many different types of rents to consider when it comes to establishing lease occupancy from any lease negotiation. In many respects, some landlords do not understand the differences between gross and net rental, and how those rental types can be optimized in leasing strategies. That is why the commercial real estate agents specialise in this part of the industry and act for the landlords of quality properties. A good commercial real estate agent can add significant value to a commercial or retail property over time.
- Vacancy factors will change throughout the year when it comes to a property of multiple tenants and variable occupancy. That being said, the vacancy factors of a property really do need to be pro-actively managed. That will usually involve some type of business plan that sets the targets when it comes to property income, expenditure, and redevelopment. The vacancy strategy will form part of the business plan for the property and will also feature as a component of the tenant retention plan.
- Expenditure management is not simply a matter of paying the bills. Expenditure should be budgeted at the beginning of any financial year. The landlord for the property should approve the budget and timing of the major items of expenditure. Municipal rates and taxes will form a large part of the property expenditure process. Those rates and taxes will be a critical timing factor to consider in the property cash flow. Setting aside sufficient funds for those larger expenditures is really important.
- Tenant relations should be maintained throughout the property management process. Good tenant relations will always help future lease negotiations and rent reviews. This is highly important when it comes to any retail property given that the tenant in such circumstances is relying on the business and the tenancy to provide regular income.
- Code compliance applies to building structure and building occupancy. The codes in particular relate to occupancy standards, occupational health and safety, building usage, and plant and equipment. As part of the commercial property management process, the compliance to codes should always be respected by the property manager and the landlord. Any building that is found to be lacking in this respect may very well be shut down until the matter is rectified.
- Maintenance of the plant and equipment within the property should be established to a plan given the requirements of occupancy, the age of the property, and the recommendations of the maintenance contractors. Cutting corners and delaying maintenance will invariably lead to property failure and the breakdown of plant and equipment. Each year it is preferable to establish a maintenance plan relating to the essential elements of plant and equipment in the property. That plan can be merged into the business plan for the property.
- Laws and legislation relating to commercial and investment properties will change from time to time. For this very reason, it pays to have a very good property solicitor representing the landlord and checking for any changes in property legislation that can have an impact on the property performance and operation.
So these are some of the critical components of commercial property management today. It should be said that every property will usually have other factors to add that are unique to location and occupancy. For this very reason, the property manager undertaking the management of the property should be well chosen and highly experienced.