There are plenty of things to consider and watch in the leasing process. Most commercial real estate landlords just want to find a tenant at a top rent without any deep consideration to the process and market conditions. As property market specialists we know that there are quite a few other things to the leasing process, given that we work with market conditions each and every day.
So what can you do here? Accurate landlord reporting about market conditions and facts will help greatly in conditioning the client to understand what is going on locally from the leasing perspective. Good client conditioning will help convert more deals and commissions. Help the client understand what is going on in the property market.
Got a Tough Client?
If a client fails to accept market conditions then you have the opportunity to move on to other clients and properties; don’t waste your time with clients that will not accept market evidence. One fact to remember here is that there are plenty of properties and clients to work for at any time so you don’t need to struggle with one client over one property problem. There are other clients out there that you can serve. You just need to find them.
Landlord Report Structure
So there are ways to handle the situation and a leasing report compiled for the project and providing details about the prevailing local market conditions will help a lot. Here is a formula that I have used many times with landlords in providing a high quality leasing report:
- Vacancy Rates – Keep a keen eye on vacancy rates as they will impact inquiry rates. If vacancy rates exceed 5% to 7% within a property type and in a location then there will be issues with rents and time on market. That is where incentives will give a competitive edge. The question then is what will be the incentives for today that will help in converting tenant inquiries to offers. Track the costs of your incentives as a percentage of the overall lease cash flow.
- Market Rents – When you talk to the client about market rents, explain the differences between net and gross rents. Also indicate how rents are impacted by incentives creating a face and effective rent structure.
- Incentive Types – Typical incentives usually involve rent free for a period of time. That being said it is important to get a reasonable bond or bank guarantee at the start of the lease arrangement to support the payment of arrears if the tenant goes into default after the rent free period.
- Inquiry Results – During the year the rates of property inquiry will change in so many different ways. A lot depends on the type of buyer or tenant suited to the listing. If you keep good database records it should be relatively easy to explain to your client how inquiry is tracking for the property type.
- Marketing Updates – As part of any property promotion, regular marketing updates should occur with all listings as to internet hits or clicks, inbound telephone calls, inspections, and the best ways to get inquiries in today’s market. Help the client understand what is happening; if you have no great numbers of enquiries coming in then they still need to be told about it together with the best recommendations that you have to solve the problem. Put yourself into the marketing process. You are likely to be the real difference when it comes to closing on an inquiry and attracting a positive result for the landlord.
- Inspection Updates – When you hold an inspection on a property, you will have some valuable feedback that you can redirect to the client. Third party feedback from inspections helps greatly in the conditioning process. What can you tell the client about recent inspections? What are the tenants saying about the property and the way it presents? Do they consider that the property is reasonable value to lease in today’s economic conditions?
- Property Presentation – First impressions really matter when it comes to taking a qualified tenant through a vacant property. Tell the client what you think about presentation and how it can be improved. If a property doesn’t excite the tenant to make an offer then presentation issues should be addressed. That normally involves the landlord spending some money.
From these simple and yet effective things you can see why the landlord reporting process is so important in solving a vacancy issue in any vacant property. Craft your landlord reports with skill and market relevance.