Slowing Market... What we must do to work smarter for our clients

So the market is slowing? What are we doing to work smarter on behalf of our clients? This is the crux of the soul searching that we commercial real estate brokers must be doing right now. Below are a few of the underlying questions that we must answer and which clients are already asking those of us who are listing agents for Landlords and Sellers. These are questions that must be asked and answered if you are going to provide good service in a soft market.

1. How do we review and present information to the Landlord or the Seller that communicates realistically what the market price or the market rent should be? Is it priced fairly and competitively?
2. What are we doing to feature the positive attributes of our client’s property? What differentiates the property and what is the value proposition for a future tenant?
3. What are we doing to maximize exposure?
4. How do we increase the number of prospects for a property?
5. How do we alert the other Brokers that this is a good deal and that we the owner and the listing broker are doing to be “broker and client friendly”?

I have been in this business nearly 30 years. Right now it is tough for sure and the market has changed dramatically, quickly and will probably get worse before it improves. But you don’t serve the client and help them achieve their goals by blaming the market and sticking to the techniques that worked when it was a “Seller or Landlord’s Market” and the average broker could get by as an “order taker”. It is time to work smarter and to make sure that properties show well and are priced at the market.

Here are a few steps to take so we as brokers work smarter on behalf of our clients.
1. Do a Broker’s Price Opinion. Base your analysis on recent sales or leases, including an analysis of incentives and concessions and how long a property was on the market. As importantly, list and describe competitive properties currently on the market. How many properties compete directly with the subject? What are they priced? What are the terms? Are there any incentives and concessions to the tenant or his broker? How much TI allowance was or will be provided?
2. Review the property in detail. What needs to happen for it to show well? Does it need to be cleaned up? Are there items of functional obsolescence? Will paint and carpet help? Do you need to order and evaluate 3rd party inspections for hazardous materials, termites, mold, Zoning, Code Violations, Conditions of Title and etc? Are there TIs that need to be planned and constructed? (Can you compare these matters with the other competitive offerings?) Prepare an estimate of the TI allowance and schedule to complete needed work if a tenant were found.
3. How descriptive and easily available is property information? Do property brochures and offerings have accurate financial expenses, floor plans, photos, aerials, maps and etc? How many web sites contain information about the property? Is the property advertised? Where does a prospect look to find information about the offering? Is information available in multiple media channels including the local newspaper, Craig’s List, Ecommerce sites such as LoopNet and Costar? Can someone Google their need –say 5,000 square foot office to lease in Sacramento-- and find your client’s building? Have you prepared a targeted marketing plan to address these matters and to “brainstorm and make a list to call” of who are the “low hanging fruit”, the likely prospects to reach out to?
4. Prospecting is about getting exposure to the kinds of business users and investors who would be most interested in the site. Are there alternative users—if it is a medical building with a vacancy have you also contacted labs, specialists, group practices, dentists, chiropractors, optometrists, and other allied health professionals? Have you reached out to the likely users and let them know that there is a good deal in the market? Can you provide free rent or moving expenses or lease buy-outs at existing properties to get a prospect interested?
5. Our business is not rocket science. If you can convince other brokers that the property offering is a good one and that they will be paid competitively and promptly if they bring a tenant or buyer to see the property you will get more showings and tours. What are you doing to communicate to the other Brokers that this is a good deal?

These are not guarantees in a slow market, but they will increase the likelihood of success. It is time to work smarter on behalf of our clients. There are no commissions to be made waiting for the phone to ring. Get busy, set realistic expectations with landlords and owners, price properties competitively, experiment with emerging media and marketing technologies, and learn to make good deals to attract buyers or tenants. Be nimble, be creative and work smarter.
If you would like to discuss this post or if you would like to discuss a Broker’s Price Opinion or a Targeted Marketing Plan , please call or email us Jim Gray at (916) 617-4255 jgray@naibt.com or Nahz Anvary at (916) 617-4257 nanvary@naibt.com

Intelligent Buildings from the Executive's Point of View

At the recent Realcomm Conference in San Diego there were a number of break-out sessions on the whole topic of "Intelligent Buildings". This is an important emerging trend that involves more than just energy management and enhanced security. This is conceptualizing , designing and then constructing buildings that incorporate technology and processes to enhance the work space.

Any discussion of this topic can move quickly to new and often expensive technologies but it also can focus on meeting the needs of tenants and users and creating better workspace -- which are healthier, safer, with enhanced communications, design, and other features. Resulting potentially in a strong branded building with real estate differentiation.

Here is a quick list of some of the areas getting discussed in this whole area of Intelligent Buildings.

1. Power



2. Communications



3. Computing



4. Security



5. Control



6. Digital Signage



7. Much More
   

It is really clear that to develop these Intelligent Buildings you have to work early on to bring a team together to create a "common vision". What do you want to accomplish? What should performance standards be? How much will it cost? How much will it save? Can we calculate a "pay back period"? What features should our building have? Also you should probably develop a checklist to talk about the perceived benefits of:

• Special HVAC Systems, and their controls?



• Security and Access control to the building and to parking?



• Security Camera Systems? Swipe Cards or BioMetric Access.



• Incorporating and Integrating Security System to Time Cards, to turning on or off lights, computers, and etc.



• Digital Signage and Digital Media. inside, in lobby's in elevators and potentially on the external skin of the building?



• What kind of Cabling for Computer and Communications?



• Wireless and WIFI and Cellular Rebroadcast Enhancement?



• Emergency Power?



• Redundant Air?



• Dry Fire Protection?



• Racks and Cages for multiple tenants.



• Integrating these items into a centralized(web based) control room.
  

We know , you think this all costs money, and it does... but you do this because it saves you money and creates enhanced net operating income and long term value. You do this because you can differentiate you product offering, and increase operating performance, save energy, provide better and fuller services to tenants and users, increase health and safety at the building, increase rents, and reduce costs. You do good and you do well as a result. These are the right things to do and they make financial sense.

The CEO of a building and the CEO of the tenant should focus on a few high level questions.

1. What is the value proposition to the tenant?



2. What is the value creation to the owner?



3. Branding and differentiation for owners and users?
   

As we listened to these presentations and participated in the full discussions of these matters it becomes apparent that these are the right things to do -- but in the real estate industry there is a lot more talk about it -- and planning for it -- than actual success stories. That is changing though.

One of the panels was; "Intelligent Buildings from a Real Estate Executives Point of View" ; and it included leaders within this industry , including Tom Shircliff of a firm known as Intelligent Buildings, as well as representatives of GE Asset Management, Tridel Corporation, and Colonial Properties Trust.

Tom LaDow, and executive with this REIT Colonial Properties described a mixed use project with a 170,000 square foot office building which they developed in the "progressive green capitol" of Birmingham Alabama. Here is a list of their amenities:

Attached to Mall anchored by Macy's, Belk & many others
Concierge Service
Covered Parking
Dual power feeds from two separate power substations
First LEED Gold certified multi-tenant building in Alabama
Highly efficient floor plates
Locker Rooms with Showers
Multiple On-Site Restaurants
On-Site Maintenance
Wireless capabilities

And here is a picture of this building that was finished in 2007. It is 100% occupied.

As Tom explained the development and the marketing process it made great sense. But the financial performance really caught our attention. The Building is 100% occupied, and was totally leased up within months of completion. They got a 36% rent premium to the market! Their rents are about $8 per foot higher than market. Their utility costs are 6% less than other buildings. The tenants loved a focus on the "21st Century" features and design. They are proud that they are occupants at such a high quality --environmentally responsible business location.

The other part of the story was how they marketed the property. They created a story and deliverables about the benefits of the building. ( WIFI, Enhanced Cell Phones, Safety and Security,a Webport for the Building and it's tenants, LCD Screens with Digital Signage, Data Recovery, Back-up power, Web based work order system for tenants, etc etc..) They made their presentation based upon benefits and attributes not just to the Real Estate and Facilities decision makers but they also targeted and pitched to the CFO and the Chief Information Officer(s). They shared information that resonated with the IT and financial folks as well. This is a real case example of it working.

I asked Tom, if they were thinking of selling the property and making a quick gain based upon the NOI. He said to me " Why no it is doing just great we are working on developing and building our next one."

Here is a link to Colonial Properties Birmingham Alabama property offering. http://colonialprop.com/property-info/?cid=1326

If we can help you with strategies about an Intelligent Building and the related elements of ; vision, innovation, collaboration, sustainability, and consideration of utilizing technology and targeted marketing please give us a call. For questions about this post or to discuss please contact Jim Gray or Nahz Anvary at (916) 617-4255 or (916) 617-4257