Prospecting and Strategy

In this volatile property market you need tenants in your commercial or retail investment property, and those tenants that you already have in occupancy, you need to protect. Vacancies are to be avoided at all costs. Your rent and cash flow must be protected.

The landlords and the mortgagees of assets have to know that discounted rent is still OK if it gives you rent stability and avoids a vacancy. Property pain and lower rental can be tolerated for some time if it is well managed to a plan. Everyone must share the economic slowdown when it comes to commercial and retail investment property.

The leasing managers of your competitor properties are on the prowl to take your tenants and will do all types of lease deals to attract new tenants away from your property. So how can you find new tenants for your property portfolio? In this market it is personal contact on a massive scale that will support your tenant stability and prospecting process.

Business still goes on, and there are indeed tenants in most cities and towns that need quality premises from which to operate. Your skill as a commercial or retail real estate agent in finding tenants is now becoming more important than ever before.

The qualities that you bring to your clients should include:

• A constant focus on prospecting for tenants
• Creative lease and rent packages that help the tenant get started in the new location
• A sound awareness of the regional demographics that affects your property
• Constant contact with your landlords as they adjust their property plans
• A toolbox of services to assist distressed properties with any vacancies
• A toolbox of services to assist existing tenants with business pressure

Incubation of New Tenants

One concept that works well in this type of market is the use of 'incubator tenants'. As the concept suggests, you allow tenants to grow within the occupancy of the property. There is no point in quoting or charging a full rental unless the tenant is a large corporate with an established business cash flow. Smaller tenants need help to create new trade in a new location.

The incubation of the tenant can be a solid business initiative that starts to handle vacant areas in distressed properties. Whilst you do not want to give space away for free, it is the lower rent start tenant that can be incubated to a fuller rental level over a period of 12 to 18 months. Most importantly the key question you must satisfy now is that the tenant brings to you the type of business that enhances the property for the long term.

When the property market starts to respond (and it eventually will), it is those properties with a good tenant profile that will improve faster than the competition properties.

In today's market, you should seriously monitor and optimise the following issues:

• A tenant mix across the broader property
• Develop a sound tenant mix strategy for the coming 3 years
• Manage your tenants within a groups and categories so that you achieve a variety in your tenant mix that serves the customers to the property
• Know what your customers want from the property and when they visit the property
• Listen to and survey the people that visit the property at least quarterly
• Maintain a high level of presentation on the property that shows that the landlord cares about the tenants and the customers.

Promotional Plan

Develop a promotional plan now to attract tenants. A promotional plan in this market needs to be constantly active. In itself, it will generate opportunity and market intelligence which is invaluable at this current time.

So what is in the promotional plan?

Promotion is about informing your target market about the leasing product and the property. More importantly your plan is mostly about feedback. You should know what is needed in the market and what channels of property promotion really work for you. Your strategy will usually include one or more of the following:

1. There is always high value with on-site signage promoting the leasing of vacant area.
2. Talk to existing tenants to see if any of their business friends may be looking for a new location from which to trade.
3. Ask existing tenants if they would like to trade from the vacant area at a reduced rental for a period of time or until any new tenant requires the area.
4. Any vacancy must be kept clean and attractive so that it does not detract from the other tenants in occupancy. This also has some reflection on the landlord of the property. A neglected property vacancy shows potential tenants that the landlord really does not have a good property focus or maintenance routine. Poor presentation also suggests that the landlord has no money to put to the property.
5. Special offers regards lease incentives should be clearly conveyed to any interested tenant. The existence of incentives can also be put on the signage and the internet advertisements applying to the vacancy.
6. Newspaper advertising is partially successful although it has limited use given the short life cycle of the daily newspaper. Newspaper advertising is also very expensive for the value you get back. My friends in the media will dispute this fact.
7. Professional brochures or flyers should always be distributed by direct mail and by personal contact through your area and in other competition properties. Where possible, all direct mail brochures should be followed up with a direct telephone call. This is an excellent channel of market intelligence that can be entered into your database for future use.
8. All vacancies should be lodged on the internet so that any enquiring party can conveniently get the information they require. The internet today is the most effective marketing tool we have. It is also low cost and can retain the details of the listing for a significant period of time. Freshen up the advertisements at least every 2 or 3 weeks. This also helps with your ranking opportunities with the search engines.
9. Use well researched keywords when designing your adverts for all commercial and retail property. Given that you are using the internet as your main marketing tool, it is the key words that will attract more hits to the advertisement.
10. For new property developments and any significant prime property, it pays to develop a dedicated property website that informs tenants and members of the public on any property matters. The domain name and for the property must be well chosen so that it reflects and identifies the image you require for the asset.
11. A vacant area in a significant property should be supported by an extensive high quality brochure that can be made available to prospective tenants. The brochure can also be made available and downloaded from the Internet as a pdf file. In some circumstances, it is necessary to exchange a confidentiality agreement with the prospective tenant before sensitive information regards the property is handed over.
12. Personal canvassing today is essential. Market research is sometimes a good icebreaker for any discussion with tenants elsewhere. There is high value in personal canvassing. It keeps you in touch with your immediate marketplace and will give you a wide variety of leads and opportunities for the future.
13. Keep in contact with other commercial real estate agencies. One of the most common ways of leasing vacant premises in a distressed market is through the broader cooperation with the other real estate agencies in your area. Your business can become a coordinating leasing agency for the property, where an "overriding" fee is paid to your agency for coordinating the leasing of a building using other agents operating in the marketplace. The agency that achieves the introduction of the tenant will also get a fee or commission. This is a greater commission cost to the landlord but it does remove vacancies as quickly as possible.
14. Special leasing functions should be strategically located on the property. These can be very effective at times with newer properties, given that they expose the property to the people that do the deals. The more that you can expose the property to the broader real estate agency community, the better chances of achieving a successful lease.
15. Meet with all existing tenants every 3 months to ensure that they have what they need from the property or from the landlord to trade at the best possible level. Seek to identify any elements of expansion or contraction that the tenant wants or sees as an advantage.
16. Successful tenants in a retail property will help generate trade for other tenants nearby. Many a distressed property has been managed through difficulty by maximising the tenant mix and tenant placement.
17. Know where the 'foot traffic' moves through and in the property. These areas will be your focus points for property improvement. You can expand on a good location by creating themes and places for people to sit and spend time in the property.
18. You are the key part of the equation! You as the contact key person can help the landlord find a tenant to suit the space and tenancy mix for the property. You just need to be out in the market on a daily basis talking to people and business leaders as much as possible.

Where and when you direct your promotional efforts will depend on individual circumstances. Your experience and feedback over time will help you determine which avenues of promotion you should use locally and in what situations. There's no right or wrong answer really, but you must be able to justify your recommendations and promotion choices to the landlord. You won't always get it right, but if you base your strategy on sound research, most landlords will support you all the way. They need your help.

Get active and focused on property promotion. The leasing opportunities are out there, even now!