Mike Lipsey Shares How Landlords & Agents Can Succeed in Current Market
One of my favorite parts of the New Year is my annual radio show interviews with commercial real estate trainers and coaches. This year I once again had the opportunity to question renowned commercial real estate consultant Mike Lipsey about some best practices for landlords and agents in the current market.
Lipsey, who is president of The Lipsey Company, a training and consulting firm for the commercial real estate industry, shared some great tips for leasing space and for creating more transaction opportunities.
Among many interesting insights, he discussed the best approaches for leasing office space, more effective compensation for landlord reps, the growing number of tenant reps and how community involvement can boost a real estate career.
No “I” in Team
Mike says that to succeed today commercial agents should build teams featuring diverse skill sets, and they must also invest in customer relationship management (CRM) databases the entire team or company can access.
“I don’t feel lukewarm about this – I feel very strongly,” he said. “Making sure that you have a state-of-the-art CRM is one of the single most important investments that a team can make … It’s the logical way to glue a team and glue an organization.”
A successful team is one that features not only senior brokers skilled at transactions and business development, but team members adept at compiling reports for clients and maintaining databases as well, Lipsey added.
To ensure the future success of their organizations, companies should pair young brokers with senior mentors and, after exposing the young workers to a variety of tasks, get them to focus on a particular sector, such as tenant representation. “If you can get a potentially very capable broker on your team and [give that person] daily mentoring and get them to focus [on one sector], their career will accelerate at an astounding pace.”
More Effective Landlord Leasing
To lease their spaces, landlord and or landlord brokers should compile information on the fastest-growing industries in their areas and should also make sure their property tours make strong impressions on prospects, Lipsey said. Reserving a parking space for the tenant broker, serving refreshments, and giving the potential tenant and its broker gift cards are some ways to create a strong impression, he added.
Landlords should also make sure they are pricing their space properly and streamlining the amount of paperwork used in negotiations. Mike suggests pricing various floors and views differently, rather than one rate on the building and saying let’s dance.
“Have a variety of documentation,” Lipsey said. “Don’t use a 40-page lease with two pages of rules and regs for every lease negotiation. If this is a user of less than 2,000 square feet looking for space almost as is, use a service agreement.”
Some landlords are benefitting by crafting arrangements with brokers through which the brokers receive monthly retainers for marketing efforts and promotion budgets in addition to commissions on leases, according to Lipsey. Such an arrangement enables a landlord rep to not have to take on so many assignments and can in turn devote more attention to proactively pursuing tenants.
Even though such arrangements obviously cost a landlord a little more, it’s important to note that it pays off in increased leasing activity and improved occupancy.
Tenant Rep Growing in Popularity
In part because of the commission disparity – tenant reps collect 70 percent of a transaction commission in some markets – the overwhelming majority of brokers entering commercial real estate are opting to become tenant reps, Lipsey noted. “The industry has shifted dramatically,” he added. “Long story short: the tenant rep business is becoming very competitive.”
Both tenant and landlord reps can bolster their careers significantly by becoming heavily involved in community organizations such as United Way and Big Brothers Big Sisters, Lipsey said. Working on committees in such organizations can enable brokers to make valuable connections with business leaders and potential clients, he added. Tenant brokers have generally been more aggressive in this arena, Lipsey said.
Prepare to Work
Commercial real estate is a full-time job – and then some. Lipsey drove this point home in the closing minutes of the show, when I asked him to give our listeners some parting advice. “Be prepared to work 60 to 70 hours a week,” he said. “It’s a 7:00 to 7:00 business, [not 9:30 to 4:00].”
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