Commercial Agents – Key Sales Pitch Tips and Objectives

Before you as a commercial property agent do a sales pitch to a client to potentially list their commercial property, it pays to understand and set the strategy you will adopt. You need to define your targets of the process. Clarity is important.

Given that each property is different, the strategy and your sales pitch should also be distinctly different and unique given the elements of the property and the circumstances of the market. You are the expert agent and you need to show exactly what is going on out there today.

Here are some ideas and processes to feed into the presentation:

  1. Firstly get to the real facts of the client and their needs today. They will have special concerns about taking their property to the market today. They will also have certain criteria that must be satisfied for the marketing and negotiation to be successful. Ask the right questions until you really know what they want to do and why.
  2. Given the previous point above, develop a clear understanding of just what the target market is for the property today. As the local agent you should have a database that gives you a typical profile of the enquiry coming in to your office at the moment and how it can be converted to the property.
  3. The defining of the target market will give you specific ideas as to how you can reach the target audience through direct marketing and consistent effort.
  4. Take plenty of photographs around the property before you see the client. You can then put the images on a rolling slide show on your laptop computer to supplement your discussions with the client. Given that the photographs are only of their property, it tends to attract their attention far better than any other laptop use or presentation material.
  5. Have some market evidence and comparable property detail to show the client and to support your discussions. Real numbers and facts from the local area are hard for them to refute.
  6. Carry a variety of marketing examples of similar local properties today. Show the client just how you would use the material to the best of its advantage in attracting more enquiry and better inspections to their property.
  7. Tell the client exactly what the market is looking for today and how you will use that to your advantage in marketing their property.

Far too many agents approach the pitch process generically without much planning. Given that you only spend a small amount of time with the client in the presentation and that the other agents in the local area will be pitching for the same listing, you really do need to think about the sales pitch process before you see the client. Preparation is the key.

Commercial Agents – Common Problems in Commercial Leasing Negotiations Today

When it comes to leasing commercial property today there are some common problems that we strike as commercial real estate agents. In most locations there are plenty of vacant tenancies to choose from and tenants will look around. We have to expect that the tenant will bargain and that they will have more commercial or retail premises to choose from if the deal they have with us does not get done or agreed to.

The tenants seeking to relocate can comprehensively research the property market and inspect a number of quality commercial properties in the same category or location, before they make an offer or negotiate on a particular property of choice. The tenant has far greater power in negotiation than the landlord in most property locations today.

The most common problems in commercial property lease negotiation today are the following:

  • Tenants are under no pressure to negotiate a particular deal. They will inspect the listed premises with you, and listen to the landlord’s rental and lease requirements however they are unlikely to put in an offer until they see a few other properties with which they can compare. Make sure that your rent and premises are prepared for the inspection and negotiation.
  • When the tenants get to the point of negotiation, they are likely to seek a lease incentive of one type or another. That could be fit out, cash, landlords works, rent free, or reduced rental. All of this could be on a relatively short term lease. The general rule is that you should not provide incentive on a short 12 month lease offer, unless the landlord is really desperate for a tenant. You could however consider incentive on a three year lease or any term beyond that. The longer lease term allows you to amortise the cost of the incentive back through the lease deal. In other words the landlord gets back his or her money or cost of the incentive.
  • When you analyse the levels of incentive today, they vary between zero and approximately 30% of the cash flow of the lease over the term agreed. The larger the incentive, the longer the lease term and larger the premises.
  • In property developments it is not unusual to see the incentive moving to a level of approximately 40% of the cash flow from the lease deal over its duration. In the case of new property developments, you are dealing with new properties and face rentals to allow the property developer to establish the value of the property during the leasing period. The financiers of the property development will want to see the levels of rental accepted by the market; the property financiers will want to see lease deals and pre-commitments as early as possible after the marketing commences.
  • It is not wise to give tenants a rent free period from the commencement of the lease. Here is why; if you give a six month rent free period to the tenant, it is quite possible that they will not be able to pay the full and final rental when it starts in month seven. If a tenant wants a rent free period, it is better to give them a reduced and discounted rent for the six month period. In this way the tenant is committing to some cash flow and giving something to the landlord for occupancy.
  • When you negotiate rental, do not forget about the outgoings costs for the premises and the tenancy. You can negotiate a net rental or a gross rental and on that basis the outgoings will be considered and structured into the negotiated deal. This then says that you should totally understand the levels of outgoings to be recovered through the rental structure within the lease, and that is before you start marketing and inspecting with tenants.

So these are some of the common problems in lease negotiation today. There will always be more problems to consider and on that basis be constantly aware of what the tenants and landlords are doing in your local property precinct. The factors of each and every deal should be analysed so you know what the real rental returns are together with the provided levels of incentive.

Commercial Agents – Marketing Commercial Property the Right Way

The marketing of commercial property can be challenging as you really do need to meet and attract a small target market segment that finds the property of relevance and attractive. The experience and marketing strategy of the real estate agent today is really very important in taking the high end commercial property to the market.

Today there is plenty of commercial property on the market for sale in most towns and cities. So it is a buyer’s market, and only a certain number of buyers can purchase a property given the difficulties in getting finance. That being said, properties will still sell if they are correctly priced and packaged in the marketing; you have to reach the right target audience.

Some property owners will find it very difficult to sell, given that their property could be quite ordinary and not be well packaged for sale. Every property has to be ready for sale; that means prepared in a number of ways:

  • Presentation inside and around the property will influence the buyers choice. Any obvious problems of presentation should be rectified.
  • When the agent takes photographs of the property, they need to be careful as to the angle and the features of the property that they capture. A lot of damage to the campaign can be done through poorly framed photographs in an advertisement.
  • If the property is being sold as an investment, it is wise to rectify any matters relating to the tenancy mix and the lease profile. If any leases have unfinished matters outstanding with any of the tenancies, they should be completed and closed.
  • If any rent reviews are still to be negotiated or are coming up soon, it is best to complete them and implement the rental change as soon as possible. The rental will have impact on the potential sale price through the process of capitalisation and return on investment.
  • If any leases are coming to the end of lease term, the pending vacancy could be a negative factor in the sale marketing campaign. Decisions need to be made regards the vacancy and how it should be handled prior to the commencement of the campaign.
  • Identify the features in the property that will attract the enquiry. That enquiry should be from the identified target market of potential buyers.
  • Check out the competition property that will be on offer at the same time that you market your property. What are the differences between the properties and how can you take advantage of the situation?
  • The first two or three weeks of the campaign are really important. During this time you will attract the enquiry providing the campaign is correctly structured. Make sure that your marketing is focused directly into this key part of the promotional activity.
  • There are lots of marketing tools to use when taking a property to and through a sale campaign. The right choices need to be made based on the right method of sale. If you make the wrong choice of method of sale, you could frustrate the levels of enquiry. A case in point is when you use an Auction method of sale and you know that most buyers cannot operate in that type of sale process.

Even in the toughest of times and in the slowest of property markets, commercial property will sell. It takes a great real estate agent with creative marketing and sale tools to attract the right levels of enquiry.