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As a market cools – we begin see a lack of activity on listings for sale and lease. Imperative in a transitioning period is pricing. You see, if an offering is priced at a crazy high level – the active buyers and tenants will simply wait until your pricing is more realistic.
Generally, you will get a “first wave” of interest. If you’re fortunate – one of these first responders will submit an offer. Don’t be shocked if the proposal is well below your asking price! Now, the tough part – take it. Certainly, your tendency is to stall until something better rolls along – but currently – that first wave is followed by a sea of tranquility.
So what should you do if you find yourself paddling in a placid pool? These five suggestions should help.
Take a look at the competition.Enlist your commercial real estate professional to take you on a physical tour of your completion. Sure. You can accomplish this on paper but if you get in the car and look at other things available – you will see the market through your buyer’s perspective. Carefully notice how you stack up – amenities, asking price, time on market.
What else has leased or sold. Have other buildings – similar to yours – traded? You’ll want to key in on a similar time frame – simply, competitive offerings marketed at the same time as yours. Why did they sell?
Have your first responders transacted elsewhere? Chances are your offeror has not made a deal. The weird thing about this evolving market is availability is still low yet buyers are proceeding cautiously. However, if that interested party leased another property – figure out the motivation.
Offer a time sensitive bonus. For a deal completed by the end of the year – rebate the cost of an environmental report. Give an abated rent schedule to a tenant willing to make a lease by the end of the month. Many times these “incentives” will jump start your activity.
Create a broker incentive. First, start with a gift for showing the space to a qualified prospect. Next, reward an offer with a better gift. Finally, offer a full commission or a two week cruise to the selling broker. With thus simple three step process – you generate showings, encourage offers, and reward success.
Allen C. Buchanan, SIOR is a principal with Lee & Associates Commercial Real Estate Services. He can be reached at 714.564.7104 or [email protected] his website is allencbuchanan.com
