How to Crank Up Your Client Income Opportunities in Commercial Real Estate Brokerage

commercial city view of buildings

When you work with investors in commercial or retail property investment, you will know the high regard that they have for rental growth and stability over time.  You can use that focus to build your business and client list.

So what do your clients really want with their property performance?  Every tenant mix decision and lease negotiation will be based on the client’s perception and priorities of rent and income.  In saying that, consider the following questions:

  • What does your client know about the types of rents used in the property type?
  • Is the client aware of current property trends and inquiry?
  • What is the tenant mix doing with lease and tenant volatility?
  • What is the client’s exposure to local supply and demand from a property perspective?
  • What are the factors of the property that will strengthen or weaken the property performance and ultimately the lease negotiation?

Simple questions like these will help you understand and adjust to the client’s exposure to current market conditions, and ultimately the rental and income pressures prevailing.

 

Where can you start?

So the key issue here is that you must understand the client and the property before you can help with rents and income growth in any lease negotiation.  Here are some factors to work with in any lease negotiation:

  1. RENTAL TYPE: You have some choices here of working with gross or net rents from a lease negotiation perspective. The age of the property will likely dictate the rental level and type to be used for the client and the vacancy.
  2. INCENTIVE NEEDED: Most tenants will ask for an incentive to take up occupancy. Be prepared for the question.  Can your client afford a rent free period, or should they simply discount a rent over time so that they are getting some rent from the very start of the occupancy?
  3. LOCAL MARKET RENT: Check out the local rents so you know exactly how your property and vacancy solution can be more attractive to the tenants looking to move. To a degree, the starting rent can be one thing to consider, but then you will have a rent review process to improve that rent over time.
  4. RENTAL REVIEWS AND STRUCTURES: Pick the rent review processes that help the client improve rental returns. Look at the property and the location and consider how a market rent review process may enhance the property at the right time in the future.
  5. IDEAL TENANT TYPES: Some tenants are clearly suited to a vacancy. They may have a match to the location or customer base.  When you have a vacancy to deal with, look at the property, the location, and the client to choose the right tenant type.
  6. VACANCY THREATS: Like it or not, there will be other vacancies in a larger property and tenant mix over time; so you must review the total asset lease profile for your client. Look at the lease expire dates, and the pressures of the existing tenant mix, particularly where the tenants may need solutions of expansion or contraction.  Early action on those pressures will help you minimize the vacancy threat and balance the mix of tenants.

So there are some good things to do here in helping your clients with their rental income and property growth pressures.  Get to know the client and the property comprehensively, and negotiated every lease and tenant issue with the bigger picture in mind.

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