Commercial Real Estate Agents – Break Down the Property Cycles to Find Opportunity in Listings and Clients

city buildings in Hong Kong

Commercial real estate brokerage is not complex.  It is a method of business that can be tracked and that tracking process can give you leverage to find new clients and listings.  New listings and clients can be found when you delve into the property cycles locally. (NB – you can get plenty of new business ideas in commercial property right here in ‘Snapshot’ – it’s free)

So how do you ‘delve’ into the property cycles and what are you looking for?  You are looking for a change and the factors that are driving that change.  In doing this you are getting to know the local property trends at a deep and specific level.  That research takes time and effort individually but it is very effective and is certainly a listing and deal generator.

So let’s help you in getting the process started.  Here are some ideas to help you:

  • Length of lease tenure – Leases expire and tenants move on; most leases are 3 to 5 years and sometimes there are options to extend occupancy. Sometimes tenants are placed under intense pressure by aggressive market rents and unrealistic landlords.  Those pressure points will take you towards a factor of change and perhaps a relocation of that tenant.  The tenant will be looking for ways to solve the pressure.  The landlord can be stuck with a vacancy.  You can help with both factors.  Who do you want to help?  It’s a good question.
  • Tenants needing to move – Some tenants get to the point where they need more or less space. Expansion and contraction factors will push a tenant to make a move.  When you know about other properties, vacancy factors, and market rents, you can work with helping them.
  • Investors needing to reinvest – At a point in time an investor will want to grow their portfolio or shift their under-performing assets. Some investors also like to move from one location or market segment to another.  You can help with that if you have your ‘finger on the pulse’ of other property changes and movements.
  • Property ownership cycles – Most property investors will hold a property for at least 3 to 5 years. After that point, they get ready for the next stage of change be it a sale, or acquisition.  Sometimes they will want to grow their asset portfolio and at other times they may want to tune it with better properties or tenants.
  • Vacancy factors – In any property market and with most properties with multiple tenants there will be the threat of vacancy to deal with. If the vacancy factor is too high then it will derail investment results for the property owner.  Look for properties that have or soon will have higher vacancy factors.  Build a database of tenants to solve those vacancies.
  • Struggling tenant mixes – In leasing and managing office or retail premises, you will see just how important the tenant mix is in a property to the overall income and vacancy factor. Look for weaknesses in tenant choices and placements.  One bad tenant in a tenant mix can radically impact property performance.
  • Redundant properties – As properties age, the quality and capability of building services and improvements shift. Modern buildings attract the successful businesses.  Older properties move closer to redundancy and lose tenants.  That fact can be accelerated by a landlord that fails to maintain the property at reasonable levels of function and operation.
  • Precinct zoning changes – A simple change to property zoning and or road changes will shift the focus of property ownership and occupation. Watch the local planning laws for upcoming changes that would impact property use and occupation.  Look for the changes to transport hubs and freeways that can have an impact on property use.
  • New developments – When a new property is in the planning phase, the factors of supply and demand for property in the location will soon change. New properties will impact market rents and market prices.  Vacancy factors will also shift and generally escalate.  Older properties in the area will struggle to maintain occupancy.  Make some predictions about how those changes will impact property owners and buildings in your listing territory.  Talk to the property owners before they get ‘jittery’ about property performance, tenant occupancy, and changes in investment performance.  Be the solution provider that they require to guide them through the upcoming challenge.

So now you can see how the property cycles locally hold so much opportunity for agents and brokers.

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