Commercial Agents – 3 Tips for Leasing Commercial Property

When working as a commercial real estate agent, you will come across the opportunity to do leasing in addition to the normal sales activity in the local property market. Commercial office, industrial property, and retail property, all offer leasing opportunities for your agency listing diversity and future commissions.

Knowledge of market rentals, incentives, lease documentation, and tenant needs will help you with the process of putting a lease together on a vacant property.

The Main Factors in Leasing

When considering the listing of a commercial property for leasing, there are three main considerations or tips that can be incorporated into the listing and leasing process. They are as follows:

  1. Make sure you understand your target market of tenants and what they looking for. In each and every location there will be tenancies looking towards change and relocation. From time to time tenants are also looking to upgrade their premises or adjust their occupancy costs and commitments. This is a fresh and new opportunity for the leasing of new premises. Property agents should spend time in connecting with all the local businesses to identify their property needs, the expiration of their leases, and any tenant requirements for expansion or change of occupied area. You should expect that other specialized leasing agents in the local area will also be speaking to tenants in your managed properties on a similar basis. It is therefore critical to implement a tenant retention plan to retain your tenants and minimise vacancy situations.
  2. Comprehensively market the vacant property into the local business community. When it comes to the leasing of commercial office space, history has proven that most tenants come from the existing local business community. Those businesses are simply seeking to improve their standards of tenancy occupation, or adjust their business commitment to rental and other occupancy costs. They know the local area but they need to change property. On this basis, the marketing of vacant space should occur through both the traditional and non-traditional marketing processes into the local businesses. Firstly, the property should be listed on the Internet plus suitable signage placed at the front of the property or the tenancy. Secondly, the complete details of the property should be itemised in an information brochure to be circulated through the neighbouring properties and local businesses. The process here can be greatly aided by a follow-up telephone call. Even though an existing business may not be seeking to relocate currently, they will usually advise you of their existing lease termination date. Capturing this information into your database will greatly assist future marketing processes.
  3. Identify the competition properties that have an impact on your marketing promotions. These properties may have been on the market for some time; they may even be considering a rental adjustment to lower levels to attract more enquiry. These properties will have a direct impact on the levels of rental and the marketing strategies that you adopt for your subject property. In this case the landlord should be suitably briefed so they understand the impact that these properties could have on your vacant area. Logic says that a competitive rental should be offered in your property to offset the pressures of other competition properties.

These three simple tips have significant impact on the success or failure of the leasing campaign relative to the vacancy. Set your leasing targets so you can proceed through the campaign with clarity and focus. Adjust your rental should enquiry not be generated within the first few weeks of the campaign.

Commercial Law – Payment of Commission – Commercial Agency Regulations – Commercial Agent

The case of Heirs of Paul Chevassus-Marche v Groupe Danone and Others (Case C-19/07) [2008], involved a determination on community laws relating to commercial agents. According to Article 7(2) of Council Directive (EEC) 86/653 (On the coordination of the laws of the member states relating to self-employed commercial agents) (“the Directive”):

“A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract either where he was entrusted with a specific geographical area or group of customers… And where the transaction has been entered into with a customer belonging to that area or group…”.

Article 10 provides as follows:

“(1) The commission shall become due as soon as and to the extent that one of the following circumstances obtains:

(a) the principal has executed the transaction; or the principal should, according to his agreement with the third party, have executed the transaction; or…

(c) the third party has executed the transaction.

(2) The commission shall become due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction, as he should have”.

In 1987, the first respondent in this case concluded an exclusive mandate with C. The applicants in this case were heirs to C’s estate. The exclusive mandate concerned the first respondent’s representation of C’s subsidiaries, namely the second and third respondents, in their dealings with the importers, wholesalers and retailers of their goods in a specific geographical area.

Before the termination of that contract, C requested payment of various sums. Such sums included commissions relating to purchases made by two companies established in his geographical area.

The requests for payment were refused on the ground that the purchases concerned had been made from central buying officers or dealers in metropolitan France, an area outside the control of the respondents, and without any action on C’s part.

C then brought an action concerning payment of commission.

The national court made a reference to the Court of Justice of the European Communities. The question concerned a request for a preliminary ruling on the interpretation of Article 7(2) of the Directive. The question referred by the national court was as to whether Article 7(2) of the directive was to be interpreted as meaning that:

“A commercial agent entrusted with a specific geographical area was entitled to commission where a commercial transaction between a third party and a customer belonging to that area had been concluded without any action, either direct or indirect, on the principal’s part”.

It was held as follows:

The court was of the opinion that

· Article 7(2) of the Directive had to be interpreted as meaning that a commercial agent entrusted with a specific geographical area did not have the right to a commission for transactions concluded by customers belonging to that area without any action, direct or indirect, on the part of the principal.

· Article 7(2) merely refers to any transactions concluded during the period covered by the agency contract. There is no requirement that those transactions had to be entered into with a customer belonging to a geographical area or a group of customers for whom the commercial agent was responsible.

· There is not an express requirement for action on the part of the principal, and there is no requirement for action on the part of the commercial agent.

· However, it should be noted that when considering Article 7(2) in conjunction with Article 10, the commercial agent’s right to commission arises either:

§ when the principal has (or should have) carried out his obligation; or

§ when the third party to the agency contract, namely, the customer, has (or should have) carried out his obligation.

· The presence of the principal in the transactions for which the commercial agent could claim commission was indispensable. It therefore followed that the commercial agent could claim commission. The commercial agent’s claim for commission could be made on the basis of a transaction only to the extent that the principal had acted, directly or indirectly, in the conclusion of that transaction.

· As a result, this meant that it was for the national court to establish:

“Whether or not the evidence before it, assessed in the light of the aim of protecting the commercial agent and of the obligation on the principal to act dutifully and in good faith, allowed it to establish the existence of such action, be that action of a legal nature”.

© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Commercial Agents – Tips to Increase the Sales of Commercial Property Today

When it comes to the sale of any commercial property today, there is plenty of competition to contend with. In most cities and towns, there are many good properties listed and being actively marketed. The biggest frustration in selling commercial property today is in finding the right buyers who can act with appropriate finance. In simple terms there are fewer buyers around; the experience and expertise of the real estate agent is more important than ever before in the sale process.

From the outset of the property marketing campaign, the specific target market should be the focus. All of the advertising should be written with a view to the targeted buyer. Clarity is important here.

All of the advertising for the property should be structured around the target and what they are looking for today; the advertisements, promotional material, Internet listings, and direct mail campaigns should all be similarly structured.

To understand this target market ask yourself these questions.

  • Where is the buyer for the property coming from?
  • What is the buyer looking for in selecting a property?
  • How much can they spend and on what terms?
  • What are the real features of the property that the advertising should be built around?
  • What is the best time of year to attract a buyer to the property?
  • What is the best method of sale that will attract the buyer to enquire and then to purchase?
  • What are the negative issues relating to the property that should be addressed prior to the campaign commencing?
  • What are the comparable properties nearby that frustrate the marketing process?

So these questions are critical to the property promotion strategy. The buyers in today’s property market are selective and fickle. There are fewer buyers around and negotiations take longer. That being said, the experience and skills of the real estate agent in the promotion, inspection, and closing of a property transaction is now more important than ever before. Knowledge and practice will help the process.

Every marketing campaign has to address the target market and promote the individual property. The days of generic marketing are gone. Specific target marketing with dedicated advertising that really encourages enquiry should be the main focus of every campaign.

The best ways to increase the levels of enquiry in every commercial property campaign include the following:

  1. The buyers of commercial property typically come from the local area. This means that your campaign should be directed to the local property owners and the local business owners. To achieve this focus, it is best to direct mail and telephone the owners and the businesses that own or occupy local property. Every piece of direct mail should be followed up to optimise the enquiry and the information.
  2. When any property comes on the market, within the first 24 hours ensure that flyers and information brochures are personally delivered to the neighboring properties and businesses within a radius of 500 metres.
  3. Place a prominent signboard on the property at the start of the campaign. This is perhaps the best and most cost efficient way of promoting any property. If possible ensure that the signboard has specifically been created with property information and sale details.
  4. When you draft your advertisements for the property promotion, use the keywords that apply today to the property type and location. These keywords will help the Internet Marketing and Internet listing. You can research the keywords from the larger search engines on the Internet. These keywords will be the words that the buyers of property are entering into the search engines when looking for properties to purchase.
  5. When the promotion of property commences, make personal contact with the database within your office. This means telephone calls and meetings with the appropriate people. The information and leads that you gather from the campaign will be helpful in other property promotions at a later time. All the information should be entered into your database.
  6. E-mail marketing will be a useful tool for every property promotion. Most agents are selectively sending out e-mail marketing each week. Any property promotion can be merged into this process.
  7. To sell a property today, the best method of sale should be selected. That will be the method that buyers respond to and act within. Do not choose a method of sale that can frustrate the potential purchasers. The
  8. Vendor paid marketing remains the normal and sensible alternative in every marketing campaign. Any serious property vendor will commit marketing funds to the promotion of their own property. Always ask for vendor paid advertising to comprehensively cover the target market.
  9. Create an inspection process and strategy that covers the property and its features. Understand exactly how you will take people to and around the property. Identify the right things to talk about with buyers, and get market information to support your presentations or inspections.

Even in this tougher property environment, good properties will sell. It is a matter of the agency working hard to locate the buyers and then promote the property effectively. This is a personal process when it comes to each and every property.

Open listings are generally a waste of time today as they always take longer to sell. Every serious vendor that needs to sell their property should commit to an exclusive listing and marketing campaign with one specialist commercial agency for a period of at least three or four months. If the property is unique then that time line will be longer.