When you are to lease a commercial property, the facts about the property and the leasing process should be at your fingertips. Tenants will ask you plenty of questions as part of the property inspection and enquiry process. Lack of information can slow down or derail a property lease negotiation.
You may only have one opportunity to convert your tenant to an inspection or a negotiation. So it is important to remember that preparation is the key to converting more leasing activity in a positive way. I like to do a lease orientation in preparation for that tenant attraction process.
Let’s face a few facts about property leasing:
- Every tenant will have different demands
- Every landlord will have specific ideas about rental, lease terms and conditions, and occupancy
- Some modern and new office or retail properties are very complex when it comes to lay out, fit out specifications, and the as built factors of design
- Property improvements, services, and amenities differ significantly from location to location
So there is plenty to think about here if you are the leasing agent. There are a lot of things to understand, look into, and review. Without capturing the interest of the tenant, they will quickly move on to another property inspection with another agent. You will only have one short opportunity to interest the tenant in the property and the vacancy.
Lease and Tenant Orientation
Here are some elements of lease orientation that I recommend you undertaken as part of every vacancy assessment and marketing process:
- Size – Understand the layout of the premises and the vacancy. The size and the configuration of the floor plate will be critical to tenancy design and business function. Some businesses require floor plates that offer flexibility in office configuration and departmental interaction.
- Tenancy use – Every vacancy should be assessed so that the ideal tenant profile and permitted use can be decided. The existing tenancy mix within the property may also have some relevance to the vacancy and the new tenant selection. Understand the pressures and the priorities that apply in choosing the right tenant with the correct business orientation.
- Access and security – Understand exactly how tenants will move to and through the property as part of their business operations. Security today is also a factor of concern for many businesses as they strive to service customers and protect staff. The tenancy itself may have proximity card access within a certain zones and certain floors. Advanced levels of security help when it comes to attracting corporate tenants today.
- Fit out standards – Within certain buildings there will be a need to establish and manage the standards of fit out construction. In that way you can preserve the quality of the property and the presentation to both tenants and customers.
- Rents and outgoings – Set some targets when it comes to market rental negotiation. As part of that, you will need to consider the incentives that apply in the leasing process for the location and the property type. Do a full market assessment of rental trends and opportunities as they exist within the property type. Advise the landlord accordingly, and set some flexible rental ranges that apply to any potential lease, the associated incentives, and the terms of lease occupancy.
- Strengths and weaknesses – Every property will have certain strengths and weaknesses to be understood and worked through. The strengths can give you significant points of difference when it comes to marketing, inspecting, and negotiating. The weaknesses on the other hand will need to be addressed prior to any lease inspection or lease enquiry.
So there are some good things to be understood and optimized as part of the lease orientation process. As the professional leasing expert, you can get these things under control at the earliest stages of lease marketing and thereby improve the levels of enquiry, and the negotiation outcomes.
As a general rule in commercial real estate brokerage, every proposal that you put together should be benefit focused on the client. Show the client exactly how they will benefit from using your comprehensive services as a marketing specialist.
Use a Gantt chart to show the client the stages of listing, marketing, inspecting, and negotiating. This illustrative charting method is very effective when it comes to helping the client through a comprehensive and complex marketing process. It can also be a major point of difference in your proposal layout.
In today’s property market, the generic listing and marketing approach really doesn’t work. The competition in the marketplace is significant from other listings, and the experience and expertise of your competing agents and brokers will also place pressures on your listing conversions. Give the client some real reasons to choose you as the top agent of choice to solve their property pain.
It is worthwhile remembering that the client doesn’t want to be an experiment in marketing. They want their property to achieve the best levels of enquiry in the most effective and direct way. You hold the keys to the process and your proposal will need to clearly outline the strategies and recommendations.
Here are some tips to help you with constructing and submitting a proposal to sell or lease a commercial property today:
- Stand out as uniquely qualified to handle the property type in the town or city. You will need some testimonials and market evidence to help the client understand those situations and recommendations.
- Review the property for the strengths and weaknesses that will have an impact on the marketing campaign. The weaknesses may need to be addressed prior to the commencement of promotion. The strengths can be helpful when it comes to advertising layout and points of attraction.
- Determine the target market that will have a keen interest in the property type. Build your marketing campaign around the target market using specific points of difference and promotional processes that clearly tap into the target audience. Help the client understand those strategies and the reasons you are making the recommendations.
- Show the client how they will clearly benefit from utilizing your brokerage services and market coverage. Use your database as a point of difference when it comes to creating enquiry and spreading the message about the property. Create a shortlist of buyers or tenants as the case may be from the database; tell the client how you will be connecting into the short list of qualified parties as a priority as soon as the property is released to the market.
The focus of your proposal should be to attract the correct level of inquiry and generate inspections as soon as possible. When you get the inspections underway, you have something to work with and can then give the client feedback from those inspections.
In commercial real estate today, you will find that the competition and the market can become quite frustrating unless you are taking sustained and consistent action each and every day. The agents that rise to the top of the market are those that have an action plan and a business strategy.
It stands to reason that the best commercial agents and brokers have the best business plan. Certainly that is the case; however their business plan is supported by business activity and consistent focus.
Here are some strategies to help you with establishing your market share and business activity. You can modify the list or add to it as appropriate given your sales territory and brokerage brand:
- Don’t spread yourself too thinly in the marketplace. Concentrate your prospecting on a zone by zone basis. Each zone can contain approximately 100 properties.
- Track and measure all of your activities with particular attention being paid to prospecting and cold calling. Every day ensure that you are reaching out to new people as part of your growth of customer base.
- Determine exactly who the key clients are that you should be working with. You will need to identify them and find them. That research can take time, so each night you should be researching the calls and the contacts to make the next day.
- Check out all of the listings in the local sales territory or focus area. Understand the listings that are creating the most interest today. Look for the listing opportunities within the most commonly attractive property types and locations.
- Some properties will be offered for sale or for lease by owners. In most cases, those owners will not have the market penetration or the skills required to develop significant levels of enquiry. On that basis you can merge these property owners into your prospecting system. It is interesting to note that their motivation for self-marketing is usually to save on commission. When they list with an agency or broker, they tend to load the price accordingly so that the net price or rent result is the same. If you are going to work with these property owners, condition them to the prevailing market conditions, and be prepared to walk away from an overly inflated price or rental structure.
- Connect with the clients that you have acted for previously to understand their needs and requirements for property in the future. Ask for referral business where possible.
To be effective in this market place as a top agent, you do need to track and measure your activities on a daily basis. In this way you can see what is working for you and the things that are wasting your time. Refine your skills and your actions accordingly. Directed habits towards successful actions will take you to the top of the market with quality listings and good clients.
In commercial real estate, and most particularly with the property agents and brokers, sales team performance should be optimised throughout the year to adjust for the changes in property activity and regional demographics. In any period of 12 months, the market will change and on that basis similar changes will need to occur with prospecting, listing, negotiating, and marketing.
It is wise to have a process of tracking the key indicators in your property market. When you consider an average period of 12 months, most property markets have only 10 months of real activity in sales, leasing, and property management. Seasonal changes and market conditions will take up the other two months of downtime. Team performance needs to be suitably handled and adjusted within the agency to get the best results from 10 months of hard work.
Here are some ideas to help you improve your agency sales team performance:
- Top agents and brokers specialise in particular market segments. The segments may be geographical, or set by property type. Either way, specialisation is recommended. Specialisation process helps you cover the quality properties, key clients, and pockets of high level activity.
- Establish a prospecting model within the agency that can be tracked on an agent by agent basis. That will help you identify any weak links within the team. Some agents need help when it comes to prospecting, presenting, or negotiating. The tracking process will help you see those weaknesses and implement the necessary training and education programmes.
- Establish budgets that can apply to each agent or broker. The budget should be split into key indicators. Those indicators will normally be cold calling, meetings, door knocking, presentations, listings, exclusive listings, inspections, and closed transactions.
- Track the results that you get from every marketing campaign. The results that you get from an exclusive listing will be very relevant to your business activity. Open listings are not easily assessed in the same way given that the marketing of an open listing is random at best.
- At the end of each week, have the agency team provide a summary of activity including call numbers, meetings, listings, and inspections. You will soon see the differences between the members of the team and how effective they are when it comes to building their business.
When you track all of these numbers, you can see where the priorities lie when it comes to each agent and each broker in the team. Given that the property market changes throughout the year, adjustments will always be necessary at an individual level to ensure that quality listing stock is attracted to your business.
So what type of listings should you chase and attract? Quality listings create better levels of enquiry and will sell or lease faster. Over time that will improve your agency market share and commission opportunity.
Should you walk away from a low quality property listing? The answer is yes, if it will take you away from the other good properties in your area and sales or leasing territory. Commercial real estate marketing is a specific process needing effort and focus. Don’t waste your time.
In commercial real estate agency the goal setting process is quite important to the new business, listings, and commissions that you must to create. Without those goals and targets it is hard to know if you are improving individually, and or if that is applying across the team. Rarely will an entire team all reach peak listing and commission performance at the same time.
Any real estate agency without a successful performance management system and established goal structure is an agency that is doomed to failure. So many things happen given a seasonal listing and sales cycle that the trends and results from the market just have to be tracked; that tracking then should be related back to the performance of individual agents and salespeople. A successful real estate agency is a team effort.
Every property market is different and the same can be said of competing agencies within a market. The mix of property offering, listings available, and agency staff capability will all create challenges. Here are some rules to help you establish your goals and targets:
- Define the period and the market segment that will apply to the goals to be set. At any one time there will be differences between office, industrial, and retail property. The same can be said for sales and leasing activity in each. Assess your competitors as part of that process. What is your market share?
- Understand the history of the area when it comes to property transactions and time on market. Look for the patterns that apply to market activity. In any period of 12 months there is usually an activity period of 10 months where most of the business will come in. Look for the lag time between listing and closing on a transaction. What are people looking for in the market today and do you have plenty of those listings on your books or available for prospecting?
- What growth can you see in the property market and in what segments? Get details of the changes to population and business growth in your local area. Is there to be further opportunity for growth in those segments?
- Look for additional income or commission streams that can be built from sales and leasing activity. Generally that will be in property management, tenant retention planning, project leasing, renovation, or relocation strategies and plans. Set the critical factors of performance that matter to the business.
- Work from a basis of team goals and break that back to team members, territories, transactions, and property types. Get the team to come back with their estimates and targets given their market segments and property types.
- Set regular updates and progress meetings from those established and agreed goals.
A successful commercial real estate agency is a reflection of established business performance plans. The team targets are realistic for the available skill mix and the prevailing market conditions.
In commercial real estate agency each day, we are negotiating with many people across a number of challenging situations. Our ability to negotiate is a key part of growing market share and improving our commission opportunities. This then says that we should practice our dialogue and a negotiation skills at every opportunity.
A good negotiator in commercial real estate is one that understands the circumstances, the market, the documentary processes, and the intentions of the parties. It is sometimes a difficult equation to bring together. The clients that we serve expect their agents to be experienced and experts when it comes to the negotiation process.
So what are the negotiation stages and situations that we strike? Here are some of the main ones:
- The cold calling process is really a negotiation to establish a meeting with a new person. Your dialogue needs to be exemplary when it comes to communicating and connecting across the telephone. It is a specific skill that requires regular ongoing practice. In this way you can build connections with fresh prospects for your pipeline of new business.
- A cold call can also be something that applies to dropping into a local business to introduce yourself as a property specialist. The dialogue in that situation is totally different to the telephone process. This strategy can also reap significant rewards through practice.
- A sales pitch or presentation with a new prospective client is a negotiation to achieve a listing. That listing will involve a marketing package, marketing strategy, and listing process. It is interesting to note that the top agents within the market are very good at converting a new property to an exclusive listing. Those more ordinary agents in the market usually take the lesser alternative of an open listing. Unfortunately the ordinary agents struggle with market share as a result of this, and have little control over the deal that could possibly evolve. The message here is quite clear. If you want to convert more exclusive listings to grow your market share, then you need to refine your sales pitch and presentation process. A role playing strategy in your sales team meetings will help. Personal daily practice will also be necessary.
- When you find a suitable tenant for a buyer for a property, another negotiation stage will evolve between the parties. It is wise to remember the requirements and intentions of your client as the negotiation proceeds. Every stage of a negotiation should be carefully checked and documented. When you get to the final stages of offer and acceptance, the agreement document between the parties should be legally accurate, comprehensive, and correct. Some property transactions can be quite complex and for that reason you will need outside assistance to formulate the final document from the offer and acceptance situation.
Given these very common negotiation situations, you can see why dialogue improvement will help you strengthen your market share and commission opportunity in commercial real estate agency. Practice is required.
In commercial real estate agency, you really do need to understand what is going on in the marketplace and then make some solid choices at a personal level to improve your prospecting and deal activity. Everything comes down to a personal level and process in our industry. Success has little to do with the agency that you work for.
Outsiders and new agents to the industry are tempted to think that commissions and listings come easily. Nothing could be further from the truth. The quality and the growth of your business will come from personal focus and momentum. The choices that you make on a daily basis, and the actions that you take in prospecting and marketing will drive your business forward. The agents that struggle in the industry are those that have little or no system when it comes to business generation and market share.
Here are some strategies to help you initiate a business plan as a commercial real estate agent. Consistency in focus and the actions that you take every day are the keys to getting momentum and traction with your market share. Here are the ideas to help you:
- Understand the condition of the market today in deal activity, competing agents, and future growth. Look for the opportunities in sales leasing and property management activity. Understand where you fit when it comes to those three distinct disciplines.
- Choose the property type that you understand and can relate to. That may be in office, industrial, or retail property. The clients that we work for require specific expertise when it comes to resolving a problem with a quality property. The marketing and inspection process with any listing is not an experiment. It requires specific knowledge and expertise to tap into the right target market.
- Determine the cycles of the local property market when it comes to leasing and sales turnover. You can do that by reviewing the history transactions through the region. In most markets, a commercial or retail investment property will change hands or be upgraded at least once every seven years. It takes that long for the appropriate capital gain to occur or the client to reach the next stage of portfolio change and growth. Be sensitive to the cycles, and start prospecting the right people inside their property cycles.
- Start prospecting on a daily basis ensuring that you’re talking to new people as well as current contacts. The whole process should take you about 2 or 3 hours per day every working day. In a very short period of time you will find some new business opportunity. When that occurs, keep the prospecting process underway. That’s how top agents grow market share.
- When a competing agent puts a signboard on a property, it is an opportunity for you to talk to the property owners and business proprietors in the immediate and adjacent vicinity. This then says that the marketing processes of a competing agent give you leverage when it comes to building your market share. It is a fact that nearby property owners and business proprietors like to compete rather than cooperate with a nearby property sale or lease transaction.
- When you list a property, personally market the details of the property to the local region of property investors and business owners. This involves door knocking and telephone calls. From this process you will identify other opportunities to work on in the future. Pay particular attention to the immediate property location and the streets around the subject listing. Walk the streets and knock on the door’s to introduce yourself and the upcoming listing. Ask questions and talk to more people; it is amazing how much information you will extract from the market when you do this.
Building your market share in commercial real estate agency is a simple and yet ongoing process. You should have three or four solid strategies underway such as those above to help you connect with the right people and build the right relationships.
Leasing commercial real estate is something that can provide a good buffer of commission when sales listings and actual sales have slowed. It is also the case that a successful lease transaction can lead to a future property management or sales opportunity. This then says that all top commercial real estate agents should be prepared to lease ‘quality’ local property.
Notice that I said the word ‘quality’ when it comes to property selection. Determine the property size and type that will give you the appropriate fee for a successful lease transaction. Focus locally on quality, the good landlords, and the quality tenants. A lease transaction can take a reasonable amount of time to initiate and complete. On that basis you should only focus on the good deals and the good opportunities. Let some other agent have the small things to lease that have minimal fee results.
Here are some tips for taking enquiries from tenants today when it comes to leasing new premises or relocating:
- Make sure that you’re talking to the decision maker when it comes to the particular tenant. Get the contact details and the identity of the tenant sorted before you provide too much property information.
- Ask them about the property type that they are looking for when it comes to improvements, services and amenities, location, and permitted use. Also find out about the required lease term, the rental budget, and property usage.
- The tenant’s staff and the customers interacting on the property will create certain challenges when it comes to improvements and location. Car parking is a good example and case in point.
- There are big differences when it comes to leasing office, industrial, and retail property. Create checklists for each so you can ask the relevant questions with potential tenants.
- Is the tenant coming to you today from another property location? Are they new to leasing property locally? If they know nothing about the local area, you will need to fill in the gaps when it comes to business demographics, transport, communication, local area profile, and property usage.
- If they are coming to you from another property location, they may have some timeframe to satisfy or a property disposal requirement. Ask the right questions to get the complete picture. You may even find another listing requirement with the property changeover.
- Has the tenant looked at other listings with other local property agents? It is quite likely that they have seen other listings and may have current negotiations underway through other agents. It is good to know if this is the case so you can adjust your strategy accordingly.
Don’t be too eager to take a tenant to a property. Get all of the facts together prior to the inspection process so that you don’t waste your time with the incorrect strategies or listings. Match the tenant to the property before you leave the office; qualify them. If necessary take them to a number of properties to give them a comparison of current market conditions.
Get more tips like this in our Newsletter.
In commercial or retail property leasing, it is important that you are prepared for the property inspections that you take with prospects. You only have a short time to create the interest of the tenant prospect and move them to a lease offer.
Here are some tips from our Newsletter.
So what is the focus of the leasing inspection? It should be to create the interest of the tenant and remove any questions that they may have regards the property. To do this you have to be prepared.
Here are some leasing tools that you can use as part of the leasing inspection of vacant premises:
- Be aware of the competing properties in the local area. The prospective tenant is bound to have seen those properties with other agents or at least be aware of the space availability and the asking rent. You will have to know the differences in properties and why one rent is more relevant than another.
- The asking rents for your property should be in parity to the market rents locally for properties of similar type. Have you checked that out? Is your asking rent within the reality of the current market rents? How will you pitch the rent requirement to the tenant when they challenge you? How can you sell that rent package? You will need to have your answers ready.
- Take some measurement tools to the property. That will usually be a laser measurement tool to calculate distances, plus a measurement ‘wheel’ that you can use to walk around the property. It is important that you do not certify areas and distances as you are not a surveyor, however you can give approximations to the tenant so they know approximately what factors exist in the property.
- Always have a camera with you to take photos of relevant parts of the property. It is remarkable where those photos will come in handy in later conversation with tenants.
- Take a list of services and amenities in the property, together with fixed improvements that may be relevant and important to tenants in occupation. Some tenants are very interested in communications and power capability in the premises. Ensure that you have the information at your fingertips.
- When it comes to inspecting office premises, the tenants like to know about the finishes that are required in any fitout changes. If your property is a modern property with quality finishes, there will be some guidelines to apply here when it comes to negotiating tenant fitout design and standards. Get details of these things from the property manager or landlord.
- The plans for the property will show as built factors relating to structure, electrical, air conditioning, hydraulic, and lighting. The plans will also show you where the riser is in the building for the tenant to tap into the property services.
- Take notes of all representations made and comments given in a leasing inspection. Those comments could become critical in the ongoing lease negotiations.
- Lastly you should have a reasonable knowledge of the outgoings to be paid by the tenant in the property. Those outgoings will be impacted by the type of lease to be used. Those outgoings should be in parity with other properties of similar size and type in the local area.
When you are fully prepared, the leasing process and inspection becomes much easier. Top leasing agents are always prepared to give the right information in the property leasing inspection.
You can get more tips like this in our Newsletter.
When tenants are on the lookout for a good commercial property to lease they will visit or call many local commercial real estate agents as part of the research process. Rarely will the tenant work with just one agent.
So you have to get to the facts of their property need and what they are looking for. You also should ask about where they have looked for premises elsewhere and who they are working with currently. It is likely that they already have a significant amount of lease information about other properties available for renting locally; when you know what they have seen already, you will know how to pitch the available properties that you have on your books to lease.
Here are some questions to ask the tenants that are in the property market currently and looking for a property to lease:
- Who are you talking to? If you are talking to a business based client, who is the decision maker and what is the contact detail for them?
- In what location do they require the property or premises? That being the case, what have they looked at already and with whom?
- How big should the premises be? You will need to define that area in types of buildings and or areas of the property. For example office space, warehouse, showroom, car park, and hardstand. Different rents would apply in each area and therefore will influence the overall total lease package.
- What improvements should feature in the property and in what way will they use those improvements? Some of those improvements will be essential whilst others will be discretional.
- What is their rental budget for the premises? The budget will give you a guide as to what they can inspect and what is beyond their budget.
- There are different types of leases and rentals available when it comes to renting an office, industrial, or retail property. Some of your landlord clients will have already set their guidelines in that regard. Match the tenant to the property type and the lease terms and conditions that suit their requirements.
- What is the timing of the property changeover? That timing could shortlist some of the properties that you show the tenant.
- What will be the use of the premises? It may be that the local property zoning will need to be reviewed to ensure that the expected or required property use is allowed in the area.
- Where are they coming from now and is that property leased? You could get some reference from their previous landlord as part of the intended relocation.
- What other properties have they seen already locally? What agents are they working with locally? There is no point wasting too much time with tenants that have seen everything that is available for lease in the area. Selectively show them properties that suit. Be aware that they may have seen some properties with other agents prior to seeing you.
The more facts you can get from the tenant, the greater the chance that you can locate a property for them to lease. Leasing property is a good part of the industry to tap into. You will find lots of leads and commission opportunity if you ask the right questions.
Finding tenants for your vacant buildings can be a real challenge. The fact of the matter is that most new tenants will come from the businesses in your local area. On that basis the direct personal approach to businesses tends to work more than anything else.
To be successful in commercial real estate leasing it is best to focus on the local business community and the movements that come from there. The best marketing approach for any vacant tenancy or leasing project should be biased towards the local area. This then says that the best marketing campaign can be structured around some of the following local strategies:
- Determine the ideal target market that best suits the property
- Get a signboard on to the property as soon as possible
- Personally canvass it of the businesses in the immediate location
- Circulate simple brochures into the business postal delivery service
- Review your database for any previous leasing enquiries that may not have been satisfied
- Identify the best buildings in the general precinct that may have tenant volatility. Approach the tenants in the building to see if they are looking to move.
The leasing process will always be far more successful when you orientate it towards local businesses and local properties. Your database should contain several hundred local businesses and decision makers for those businesses.
Approaching local businesses
When it comes to the occupancy of a property, local businesses tend to maintain a local focus so that they do not lose their customer base in any property changeover. The fact of the matter is that they want comfortable occupancy at a reasonable rental.
In approaching the local businesses, the following questions and strategies will help you in gathering the right facts and building on the correct opportunities.
- Are they a tenant in occupancy or do they own the property?
- If they are the tenant, ask them some questions regarding the current lease. Most particularly the expiry date of the lease will be of great value to you, and any renewal intentions that they may have.
- Are they under any pressure to expand or contract leased area at the moment? Some businesses simply outgrow their property for one reason or another.
- What can the tenants tell you about their landlord? The detail that you get here could be useful in the future when it comes to looking for commercial properties to sell.
- What does the local business owner think about the local area from a leasing and business angle? Are they aware of any businesses that may be seeking change?
Simple questions like these can help you build a great database of future opportunity in leasing premises locally. Take action today and get out into the local business community. Make them part of your prospecting model.
In today’s property market, your current tenants in your tenancy mix are important to the future of the property. When you create a tenant retention plan, you can optimise the income potential for the property. That being said, a tenant retention program should be part of a professional property management and leasing service provided to landlords by agents. Good commercial property agencies provide this specialised service.
It should be said that tenant retention is not just about lifting the rent for the landlord; in fact, that is probably the wrong strategy to adopt in your plan. It is better to have a few priorities in balance so your retention plan forms a key part of the business plan for the property.
In particular, a good retention plan should include the following as goals:
- Stabilise and minimise the vacancy factor
- Create a group of prospective tenants for the vacancies in the property if and when they arise
- Support the tenant mix so that tenants can occupy in comfort and build their businesses
- Control occupancy costs for the landlord and the tenants within realistic benchmarks
- Underpin the market rental for the property which in turn can support sustained property values for the landlord
- Allow for tenant movements and property refurbishment strategies in parts of the property as planned at the beginning of the business or financial year
- Help keep tenants in occupancy for the long term and in balance with the landlords investment requirements
It should be said that a retention plan is highly important in retail property given that the stability of the tenant mix is required to keep customers coming to the property on a regular basis. Any vacancy in a property is quickly seen and will detract from the image that a successful retail property needs to set.
So how can you establish a plan of this type? Here are a few ideas to help you get started:
- Understand the supply and demand for tenancy space in the local area today. As part of that process get to know what new property developments are coming up that will impact the available space ratio.
- Consider your property as it is today and determine what refurbishment and relocation issues should be merged into your retention plan.
- Split your tenancies into high value tenants and low value tenants when it comes to the future of the property. Some of your tenants you cannot do without and everything must be done to encourage them to stay in a property.
- Anchor tenants will normally be secured on long leases. The instability or change of an anchor tenant can impact all speciality tenants in a major way. Find out when the anchor tenant lease expires and just what the anchor tenant thinks about the property today. Do they intend to stay in the property? When does their lease expire? Can they do more to work in with the other tenants in the specialty areas?
- What levels of trade exist in the retail property and what tenant types are more successful than others? This information will help you find new tenants that suit the customer needs in the property shopping centre or retail property.
- Is your property servicing a particular need? In retail property this could mean ‘convenience’ or ‘destination’ shopping. When you know what works in a property, you can do something more with it.
- Common area use will have impact on special property precincts such as ‘food courts’ and just how customers move through the property. Take a survey of those factors and form and opinion as to how successful they are now. Changes may be required to help in tenant sales and retention.
- Look at all the leases in the property and identify any leases that have market rent reviews, options, or expiry dates in the next 2 years. Those tenants or leases will be a major focus of your retention plan.
You can add to this list based on your property and the overall location. Importantly you should create a tenant retention plan that can help improve the performance of any property in any market. That is why you were engaged by the client in the first place; correct?
When you have a vacancy or a pending vacancy in a commercial or retail property, you need to target the right tenant to fill that vacancy. This then suggests that not all tenants will be suitable for a given property, and that observation is correct and real.
Commercial property agents should know exactly what the right tenant would be for a given vacant area in any property; and then they should know how to find that targeted tenant. Top agents do this all the time. These top agents are in touch with the movements in the local area and business community.
- How much do you know about the local business community and its leasing pressures and leasing future?
- Do you know what tenants are looking for today when it comes to new property movements and where they are moving to?
- Are you in touch with lots of tenants as part of the prospecting model that you use?
So what does an ‘ideal tenant’ look like in your property location? To a degree the question is answered with the following factors in mind:
- The needs of the local business community
- The prevailing tenant mix
- Business sentiment and volatility
- Supply and demand for new and older lettable space
- The growth of the surrounding population
- The business base and profile of the local area
In any investment property location and area, there will be ‘seasons’ and ‘peaks’ of property enquiry in any given year. In most ‘years’ the leasing market is active for just 10 months, allowing for seasonal holidays, climatic conditions, and property availability. For this very reason it pays to work well in advance with known property vacancies and leasing requirements.
An ‘ideal tenant’ will vary from property to property but many of the following factors could be on the list of ‘tenant requirements’ from a landlord perspective.
- A stable business that brings brand and identity to the property
- A tenant that integrates into the property existing tenant mix well
- Lease terms and conditions that strengthen the property rental income over the lease term
- A solid and secure market rental that underpins the value of the property for the landlord
- Tenancy design and layout that gives a good image to the property
Does such a tenant exist? Yes is the basic answer, and to find them you should make contact with all of the businesses in the local area on a regular basis. Over time you will find the good tenants, and those that want to move to other quality properties. Most businesses stay within the same general location when they relocate, so they can take their customer base from property to property.
Today it is somewhat of a challenge to find the tenants that you need to fill the vacant premises in all of your listings. Rest assured that the tenants are out there, and it is just a matter of developing a contact system to find them.
An in balance in supply and demand for new and existing lettable space means that most cities and towns can be experiencing an abundance of vacant space. If that sounds like your property market, then read on.
The Best Way?
One of the best ways to find new tenants to lease premises is by maintaining a contact system in your database where you keep going back to the businesses in your local area every 90 days to see if occupancy matters have changed for them.
- Do they need to relocate?
- Do they want more space locally?
- Do they want to sublet?
- Would they want to assign their lease?
All of these are interesting questions that require specialist assistance and that is where the local agent can be of great value. The local leasing agent understands the property market in many different ways including rents, lease terms, incentives, and lease types (just to name a few).
The fact of the matter is that most business owners just want to get on with making money. They have little or no idea of leasing trends of the local property market until they require new premises to relocate to.
Most leases go for a period of 3 or 5 years, however the 3 and 5 year term is really common. This then says that any tenant that has been in a lease for a period of time could be coming up to a lease expiry or renewal. Approaching tenants and asking the right questions is all that is required to become successful as a leasing agent in this and any other property market.
Build the property market around you so that you know what is needed by the tenants today and have all of the property information at your fingertips.
What does a ‘top agent’ look like? They look ‘busy’. Build your system of contact with your local businesses and the leasing market opportunities will open up for you.