In commercial real estate brokerage, the clients that you work for or connect with will always have diverse property needs and requirements when it comes to their challenges and outcomes. Getting to the facts is quite important. (NB – you can get plenty of qualification ideas in working with clients in our Snapshot program right here – it’s free)
Qualification is a good strategy to deploy in conversation as you get to the motivations behind the clients thinking and their actions. A good understanding of the property market and the property types will help you do that. You can get to the core of their ‘decision criteria’.
Key Questions to Ask Clients
So, what questions or topics would you explore in working with a new ‘investor’ client? Try some of these for starters:
- What building types do they prefer? – You can ask questions here about group title buildings, multi-level properties, multiple tenant occupancies, standalone assets, size of property, and floor layouts. Larger buildings with multiple tenants in occupancy will bring complexity to a client and their cash flow of rental.
- What property age or configuration would be satisfactory? – There is a lifecycle to a commercial or retail property. That lifecycle will be impacted by the location and type of building, but also the improvements, services and amenities in the property. Many businesses today are looking for flexible configurations, smaller floor sizes, or layouts that can offer real flexibility in business operations and optimization over time. A good investment property must be versatile and have the services and amenities that tenants require for occupancy.
- Are they prepared to do some renovation? – Do they want some scope for redevelopment? Most properties can be improved over time, but there are some choices with that process. The question to ask the client is if they are prepared to spend money on renovation or redevelopment work when and if the time arises. Timing is everything when it comes to those activities. Will the client be moving through a property ‘improvement’ program? Can they afford to do that?
- What tenants or tenant types do they prefer? – Some tenants are better than others in the occupancy of any property investment, so choose the tenant types that suit that asset and the location. Match the leases to the tenants and the configuration of the asset and its improvements. Ultimately you are looking for stability in an office or retail property and the tenant mix will allow that with some ‘tuning’.
- How tolerant can they be to vacancy factors? – In most properties over time, there will be lease vacancies to deal with. Some investors will have a tolerance limit on vacancies. You may need a tenant retention plan and tenant mix strategy to help a client with any asset that they purchase. Vacancy risk is something to be aware of in any property selection and choice.
- What precinct would they be prepared to purchase in? – They may have a desired location they are looking to purchase in. Ask questions to understand what the customer knows about the location, the property zones, the precincts, and the locale when it comes to business activity and investment opportunities. Do they want some ‘potential’ in the precinct that the property may be in? The zoning of the asset will have something to do with that fact.
- What would be the ideal timing of finding and or purchasing the property? – Understanding the local property cycles, there will be timing factors that will influence the customer’s property choices of purchase and timing. When is the best time for a customer to purchase the asset and how much due diligence should they do in the purchase process?
- What price budget would they be working to? – Every investor will have limitations on the purchase when it comes to price. The lending policies of local financial groups will have something to do with the purchase decisions of many investors. Understand if your client has spoken to their financier and what the guidelines for purchase may be.
Taking these things in balance, there are some real issues and factors to understand if you are going to match a client or prospective client into a commercial property investment in your location. A checklist will help you ‘steer’ the discussions in the right way and achieve the best outcomes. Develop your checklist using these topics and others that are relative to your location.