Friday, December 13, 2013

Fill a #CRE vacancy...FAST!...Here's how

I provide Location Advice to owners and occupants of industrial buildings in Southern California...AKA, I sell and lease commercial real estate for a living.

If you own commercial property, at some point you will suffer a vacancy. If you have the opportunity to "salvage" an occupancy, PLEASE DO! You can read this post where I define the cost to originate a new lease...the $$ are staggering! NET, NET, it is MUCH cheaper to maintain an existing occupant.

If you cannot salvage the occupancy, most likely, you will engage someone in our profession to find you a tenant or a buyer and represent your interests in the market.

So how do you find the VERY best commercial real estate professional for the job?

Gear your search around these points and your vacancy will be filled...QUICKLY.

Define your reality: Is your building vacant or occupied...and if occupied, will it be vacant during the marketing period? Are there substantial improvements that need to be made...office refurbishment, equipment removal, major repairs...for your building to compete for a tenant or buyer? Are you a seller? Are you a landlord? How much debt is recorded against the property? How long can you "carry" the building vacant? Are you (or a company you own) the occupant? Where will you move?
What will be the showing protocol...lock box, show card, broker meets prospects at the building?

Specialty: Most successful commercial real estate brokers are specialists...location or building category. You wouldn't seek to have open heart surgery from an orthodontist. Likewise, if you ask a "big box" tenant representative that you met at your son's volleyball game to market your manufacturing building, the results will be heartbreaking (sorry, couldn't resist).

Generally, your commercial building will fall into one of three categories...office, industrial, or retail. Each category has a number of sub-categories...Office (high rise, mid rise, walk-up, etc.) Industrial (manufacturing, warehouse, flex, etc.). The size of your available space and the location are easily determined.

You now have defined the scope...Industrial (manufacturing), 30,000 square feet, in Anaheim, California. So, you are looking for the BEST commercial real estate practitioner that sells or leases manufacturing buildings (10,000-50,000 square feet) within a 10 mile radius of Anaheim, California. Depending upon the market (urban markets drive more specialization than rural markets), you may find one or one hundred practitioners with this specialty.

Comparable inventory: The specialist(s) should be able to provide a list for you of all of the similarly sized comparable transactions they have completed and the number of similarly sized buildings they currently have available for sale or for lease. This only tells part of the story, however. A specialist may have a number of listed properties but be an absolute tool (do you want this person attached to your property? Remember, this is YOUR representative).

Competition: The specialist should be able to provide commentary on the currently available buildings that will compete with your building and a number of "market" deals that have occurred (in addition to ones that the specialist has completed). Test the specialist here. Anyone can provide the list, but only someone intimately in the market will be able to tell you "why" the deal occurred...in other words, what was unique about the deal. Ask the specialist to take you on a car tour of the competition. You want to be treated as if you were buying or leasing a building. This exercise can be very illuminating on the specialist's knowledge of the market and will enlighten you on how your property "stacks up".

Cooperating brokers: Ask the specialist (that you are considering engaging) the names of his/her main competitors. Call the competitors. Get from the competitors "their take" on the specialist's reputation, competence, etc. Remember, the specialist's competition may represent a tenant or buyer that will fit into your building. You definitely don't want to engage a broker with a bad reputation.

Creativity: Every commercial real estate broker can install a sign, create a brochure, enter the building in an MLS (multiple listing service), mail post cards, alert the neighbors, talk to the active cooperating brokers, host an open house...yada, yada, yada...what is the specialist planning which will create a unique marketing strategy for YOUR building?

Lost revenue from a vacancy can NEVER be recovered. The right commercial real estate broker choice can get your property leased or sold quicker...minimizing the lost revenue.