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Why Price Reductions are Critical Today

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Its time to engage with your commercial real estate clients and help them understand what is happening with property investments from a value and price perspective.  Last years prices are precisely that; they have no relevancy today. 

Sales Skills Today

Your skills in conditioning the parties of a property transaction for today’s property trends are now especially necessary as part of ongoing daily agent activity.  Engage with the people locally and ensure that you have your facts ready about recent enquiry and completed transactions.

Remember this fact below, as you speak to property people on all sides of the property market. 

We do not set the prices or rents.  We facilitate the best outcome possible, given today’s property market trends.

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Looking for Listings Now?

There are plenty of properties on the market for sale now in most locations; that will remain so for a reasonable time.  A new cycle of property activity has begun, and the ‘floor level’ of pricing and value is yet to firm up, and we should work with that.  Client conditioning and awareness is a big part of taking a property to sale.

The property prices and values achieved in commercial property are driven by several factors that are all aligned to current market circumstances, including:

  • Enquiry from buyers – there are buyers out there looking for the next purchase opportunity in commercial and retail property.  In saying that, they are selective, and they know that they do not have to pay a price that is inflated by the seller or reflective of last year or history.
  • Capability for lending and borrowing – some buyers are ‘cashed-up’, and they are waiting for the right purchase situation.  Banks will generally lend to well-established clients, but they will be selective when it comes to the loan value ratio.  They will also have a close look at the tenant mix, and review the stability of that mix in the future of the property.
  • Market evidence – the sales and leasing activity today will set new benchmarks, so watch for the facts of price and rents from today’s transactions. Indeed, excellent properties in top locations will generally sell anyway, but the price and rent trends should be reviewed.  When you find the evidence of a transaction, get photos of the property in question, track the time on the market, and discuss the tenant mix or lease stability.  There are facts in that information that will help you understand today’s property trends and demand.
  • Local and countrywide economic sentiment – these factors impact business activity.  Some business activity will be trending positive while others negatively so.  Look for the business segments that are changing and assess what they are, as they will impact property occupancy and investment in your location.

So, what is the message here that you can work with? The yields and prices of last year may have been achieved then, but they are only a factor of history. 

If you are working with a property client today from a sales perspective, help them understand the five elements mentioned above and then build a marketing campaign to get the best results possible.

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