Guest Blog Post feature is a new idea we are trying to give all of our members an opportunity to share an article on theBrokerList blog. Since our project is open to the public via online search, writing a blog article about an area of expertise is a great way to brand yourself and your firm. Thanks to Michael Bull for providing this post.
In commercial real estate, attracting businesses that use space is essential to the success of any property. The businesses occupying the space ultimately create the value.
We have sold large office and retail properties for more than the sales comps suggested we could by marketing specifically and successfully to users.
If you’re leasing space, obviously proper contact and presentation to users is essential. However, even if you are selling investment property, users are great prospects to enable you to generate more value and better offers.
In this market particularly, a tenant might be turned into a buyer. Banks are aggressively seeking borrowers for owner-occupied properties. With 90% SBA financing available at rates below 5%, some tenants can be converted to buyers.
Investors will increase their offers if you can demonstrate interest from prospective tenants. A letter of intent from a prospective tenant in hand can increase value and buyer interest in a hurry. When the lease-up risk is reduced, the value is increased. Tenants can also become the perfect partner for an investor, which can also help the property sell at a higher price.
Users in the market may not be focused on moving or buying, so a different marketing approach is required.
First of all, if you are selling a property that has some vacancy, be sure to market it for both for sale and for lease. Even if you don’t want to lease the property and your intent is only to sell, market to users for sale and for lease. We are not suggesting misleading brokers or tenants if you don’t want to lease while you own the property. In that case, your lease proposals and counters to letters of intent should include notice that the lease is contingent upon an investor closing the acquisition of the property.
Marketing to companies that occupy space requires a different approach and more effort than typical for-sale marketing. Be sure your marketing includes both a) proper presentation and b) direct contact.
Present the opportunity in their terms and from their point of view. Users don’t relate to cap
rates; they relate to reducing and controlling occupancy costs, improving their stock value and increasing returns from operations.
Make Sure it Happens
Be sure your broker is in contact with users and has perfected the process. For example, when we market a property to users, we identify tenants in the area with leases expiring who are a possible match for the asset. We reach them directly with an enticing introduction of the opportunity by phone, e-mail and transaction-based letters.
In the Atlanta market area we have established relationships with users via e-mail and networking, and we maintain a database of all office, medical, retail and industrial users in the area – with number of employees, lease expiration and key contact information including e-mails.
If your broker has established access to users and has the motivation and know-how to properly reach them, higher offers could be just around the corner. We have sold more properties to users than anyone in Atlanta; you’re invited to contact us if you would like to consider strategies to maximize asset value by marketing to users.