I was asked recently to attend a meeting with a property owner by a broker associate of mine. I kindly accepted and was grateful that my associate asked for my involvement.
The owner will soon have a vacant space in a building that he owns and occupies. The owner would like to attract a tenant to his building as quickly as possible to avoid a lengthy interruption in his income stream.
Our discussion with the owner struck me as important for ALL owners of commercial real estate to know…thus the genesis of this post. Please stand by for a word from our sponsor…
I provide Location Advice to owners and occupants of industrial buildings in Southern California…AKA, I sell and lease industrial buildings for a living and have since Reagan was President (his first term). I have advised numerous owners over the years but have rarely written about the owner advice that I give. I believe this is a post worth reading…for ALL owners.
So what is TRULY important to an owner of commercial real estate?
What is my property worth. Any broker should be able to emphatically tell you this. If there is any hemming and hawing, the danger Will Rogers lights should flash. Qualifiers are OK…”given a reasonable marketing time, I believe the building is worth X” OR “if you paint and carpet the offices, we should lease the building for Y.”
How is the market: Your broker should be conversant with the overall market in which your building competes, the trends up or down and the prospects for the next six months. Such as, “there is a new project being completed down the street which will add X number of square feet to the market and none of the space is pre-sold.”
What specific buildings are competition to mine. The broker should be able to tell you specifically, including addresses, amenities, ownership structure, and motivation.
How many similar buildings are on the market. In our case, there were four. GREAT NEWS for our owner, but this can be a bellwether as to how long your building may sit with no income.
What are the three most recent comparable transactions and how do they compare to my building. Names, dates, terms, EVERYTHING about the deal. Most importantly, HOW does the comp compare to YOUR building…other than square footage? We believe that our owner may have an issue with his building’s fire suppression system, which could limit stacking height in the warehouse. NOW is the time to understand these issues.
What are your brokerage qualifications. Tenure, specialty, reputation, area, expertise, references…ALL should be provided. Ask your broker what how his competition would describe him or her.
How much do bill for your services: SPECIFICALLY outlined
How will you find a tenant or buyer for my building. Your broker should employ a good mix of new world (video virtual tours, social media and internet canvassing) vs. old world (brochures, multiple listing services, mailers, cold calls, and signs) marketing techniques.
How long can I expect the vacancy to last. Included in the COMPS and AVAILS list should be an understanding of the marketing time (vacancy) of each deal.
I believe you will agree that ALL of these items are necessary to understand and EVERY owner wants to know.
Image Attributiom: articles.latimes.com