The commercial office leasing market will always produce leads and opportunities for any real estate agent or broker. It is a good segment of the market to work within as you start to build knowledge and skills in the industry.
Here are some of the things that you can learn and focus on when you start your career in commercial office leasing:
- tenant selection processes to optimize rental return
- leasing strategies for landlords with different property types
- leasing documentation relating to different property types
- negotiation skills when it comes to market rent
- marketing strategies as they relate to quality properties and listings
- commission negotiations with landlords as part of the leasing process
- renovation and relocation strategies to improve tenant mix and rental return
So there are plenty of things to get involved with in building your market share as a leasing agent. If you work in a large town or city, it is quite likely that the ongoing level of enquiry for vacant space will produce a stable source of commission income over time.
If there are plenty of quality buildings and vacancies in the city, then the commissions created from the larger deals and the higher quality listings can be quite substantial. It directly follows that you can and should focus your marketing and prospecting efforts on quality buildings where ever possible. Good quality listings and the higher quality buildings generally create better levels of inquiry from companies and corporations seeking to relocate or grow their business operations.
If office leasing is the market segment for you, then take the time to understand current levels of property activity locally. The landlords and the tenants of today are looking for specialist leasing services when it comes to leasing vacancies and tenant advocacy; for that reason specialize your leasing services within the location and within a property type.
Leasing Skills and Focus
Here below are some important factors to understand and control as part of your business approach and lease negotiation activities with landlords and tenants. Compare your current levels of skill and knowledge to the items in the list:
- Market rentals – Current market rentals will change from time to time particularly when it comes to a town or city under change or where plenty of other property developments are coming into the market. Those market rentals will be impacted by incentives and the supply and demand by property type both currently and into the future. Track and measure those rental numbers as they apply to quality listings in good locations. Understand how to achieve better levels of return for the landlord through both gross and net rental applications.
- Outgoings strategy and recovery – when it comes to any tenancy agreement or lease, the outgoings for the property should be understood and carefully considered, so that a recovery process achieved in any lease document can improve the net income return for the landlord. Market expectations coupled with individual lease negotiations and tenant expectations will have an impact on the net income for the landlord. As the leasing specialist, it is your job to achieve the best net rental return for the landlord, and that will be through the rents negotiation process.
- Vacancy factors – Any new property developments in the local area are likely to have an impact on current vacancy factors. Any upcoming property developments will also pose a challenge when it comes to filling existing vacancies in established properties. The older properties may find it difficult to attract tenants if levels of presentation and property performance are marginal.
- Tenant requirements – Understand exactly what tenants are looking for when it comes to property choice and lease occupation. Companies and corporations today place a high priority on things such as car parking, staff amenities, and flexible fit out arrangements, large floor plates, and the quality of improvements. Every vacant tenancy should be assessed for tenant compatibility and leasing attraction. Look for the strengths and weaknesses with every property listing currently vacant. Market the vacancy based on the strengths of the listing whilst resolving any weaknesses that the property may present.
- Tenancy movement – If you work in a large town or city, it pays to understand and track the movements of tenants and the upcoming lease expiry dates. A good database will help you with that process. Make it a daily focus to talk to new tenants through the local area; ask about space requirements, lease expiry dates, and property pressures.
- Incentive strategies – The levels of incentive that apply to the property leasing process will change from time to time based on the current levels of supply and demand as they apply to the property type. Whilst a tenant may ask for an incentive as part of the lease negotiation, it is your job to achieve the best incentive outcome for the landlord that allows them to fill the vacant space, optimize the rental income, and improve the tenancy mix. Be careful when choosing an incentive to close on the lease deal. It is not always productive to put a rent-free period incentive at the start of the lease frequently you will find that the tenant cannot pay the full rent when the incentive has expired. It is better to allow a reduced rental period at the start of the lease rather than a full rental rebate or rent-free period. Incentives based around fit-out are also useful and have a relationship to tax and depreciation. The choices made in this type of incentive should be considered with reference to the landlord’s investment targets and tax position.
- Lease documentation – Top leasing agents understand the critical negotiation factors that surround and apply to a good lease document. The occupancy arrangements between the tenant and the landlord should be well structured to ensure that the lease document supports the property investment performance. In any property, be it large or small, a good lease document will always help when it comes to future sale, financing, and investment opportunities. An agent should understand how to achieve that.
So there are some good things that can be done here when it comes to providing specialist leasing services to commercial property investors and owners. Understand the leasing market for the opportunities it provides to you as a property specialist in helping your clients. Take the time to improve your relevance and commitment to the landlords that you serve.