If you work in commercial real estate brokerage, you will soon understand that the property marketplace changes regularly and frequently throughout the year. There are also changes that occur across the investment cycle that are identifiable and somewhat predictable over a number of years.
Essentially prices and rents with commercial property will change based on consumer sentiment and business activity. As an agent or broker, your job is to identify the status of those cycles and where things may be heading when it comes to property supply and demand. That is how you create listing opportunity in sales, leasing, and property management. Look for the factors of churn and change in your property segments and across various locations in your town or city. Track the rental levels, pricing results, and capitalization rates within property types.
We all understand the costs of property acquisition and construction. Whilst that may be one way of valuing the property, the sentiment of the local business community will provide the momentum and the demand when it comes to any sale or lease. Look for the business types experiencing growth and change. Connect with business owners and property owners deliberately as part of a cold calling and contact management program.
Look for Commercial Real Estate Development Opportunities
Here are some ideas to help you as a real estate agent or broker tap into the characteristics and opportunities of commercial property development locally:
- Approvals Underway – At least once a month visit the planning office for your local area where building approvals and planning approvals are processed. As part of that activity you can identify the new planning applications underway and the new projects about to commence. Make direct contact with the relevant builders or developers in each case. In working with property developers you will find that the listing and commission opportunities are high over time, however the cycle of the approval process and the development can be some years; it can be a long time before commissions are achievable and generated from the project. If you are going to work on a major new development project, you will need other more traditional sales and leasing activities to help you in filling the lengthy time gaps in commissions and listings as the project gets underway.
- Supply and Demand – Look at the supply and demand factors impacting commercial and retail property. Business sentiment will change throughout the year and across a number of years. The levels of activity in local business and/or the major industry segments in your town or city will change; there will be an impact on property occupation and ownership. Look at how manufacturing and specific industry segments are changing for your city. Industry activity will flow through to the labor market, the customer base, the economy, and small business. Successful businesses look for property expansion or change as part of growth. Property prices and rentals will be underpinned through business activity and sentiment.
- Vacant Land and Redundant Property – Understand how much vacant land may exist locally. Review each parcel of vacant land to identify the locations that may be suitable for future property development opportunity. Check the zoning or the planning regulations that may apply to that land. It can take a number of years for a new development to move through the planning processes and for construction to get underway. If your town or city has a reasonable base of business activity, and perhaps some industry segments of growth and change, then there is a reasonable chance that future property developments will work. Look at the prices of land and the availability of land through your town or city. You may also find or identify redundant properties moving to the next phase of property change or lifecycle and material change of use. Some locations will be better than others when it comes to property occupancy or investment. Focus your prospecting efforts into those segments.
So there are some valuable characteristics and attributes that can be studied and optimised in commercial real estate today. As the local broker or agent, those characteristics will give you many leads and opportunities to work on.