First National Commercial Operation Manual Volume 1

COMMERCIAL

O P E R AT I O N S M A N U A L volume 1

DISTR I B U T I O N Principal

Commercial Manager

Property Manager

Administration

Commercial Sales People

CON TA C T National Commercial Manager Direct : 03 9418 9137 Phone : 03 9418 9111 Fax : 1800 653 666 89 Hoddle Street Richmond VIC 3121 e n q u i r i e s @commercialfn.com w w w. f i rst nationalcommercial.com.au

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

C O M M E R C I A L O P E R AT I O N S M A N U A L

volu m e 1

Introduction

2

Administration

5

Client Prospecting

17

Marketing

31

Definitions and Terms

65

COPYRIGHT All rights reserved: these materials are copyright. Apart from any fair dealing for the purpose of private study, research or as permitted under the Copyright Act, no part may be reproduced or copied in any form or by any means without prior permission. First National Commercial believes that all information, in this Manual is accurate and reliable. However, no warranty of accuracy or reliability as to such information is given and no responsibility for loss arising in any way from or in connection with errors or omissions in any information provided (including responsibility to any person by reason of negligence) is accepted by First National Commercial or by any of its agents or employees or by any person.

DISCLAIMER Every effort has been made to ensure that this manual is free from any error or omission. However, you should conduct your own enquiries and seek professional legal, financial or other advice before relying on any fact, statement or matter contained in the manual.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

INTROD U CITNIO T RO N D U C T IO N This Commercial Operations Manual has been developed to assist commercial real estate offices to effectively manage their business. Managed correctly commercial property can be very rewarding for those involved in this area of the real estate industry.

The Commercial Operations Manual is divided into three volumes:

2

Volume 1

Office Administration, Prospecting and Marketing

Volume 2

Property Management and Leasing

Volume 3

Sales

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

INTROD U C T IO N Volume 1: Office Administration, Prospecting and Marketing This volume is important in that it focuses firstly on personnel management and staff performance. Having an effective commercial administrative sales and property management team is the first step to ensuring an effective business.

Effectively managing staff is important, however, the need to prospect for new clients is paramount to business success and this is covered in ‘Client Prospecting.’

With new clients comes the need to establish marketing plans and in ‘Marketing’ this is covered comprehensively. Communications strategies, advertising strategy and a property marketing plan are all contained here.

Volume 2: Property Management and Leasing Property management is a vital area of any commercial real estate business. With over 40 templates to work from, this volume will assist property managers in the day-to-day operation of their property management portfolios.

Members should look for the comprehensive commercial listing form which contains all of the elements and fields contained in First National’s business management system - Platform.

Volume 3: Sales Selling is an important aspect of your real estate business and this volume provides many tools required for the commercial real estate professional.

Topics in this volume include vendor presentations, investment analysis through to a sample commercial submission.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

3

4

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADM I N I S T R AT IO N Organisation and Time Management

6

Office Administration

Property Meetings and Reports

Agenda

Daily and Weekly Activity Reports

Monthly Property Summary Report

9

Staff Performance Review

14

Key Performance Indicators (KPI’s)

15

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

5

ADMINISTRATION

ORGANISATION AND INTROD U C T IO N TIME M ANAGEMENT OFFICE ADMINISTRATION • The diary • Mobile telephone • Filing • Standard letters • Summary • Reports The notes detailed below are not intended to set up the ideal framework, but to highlight the areas that staff must be aware of and efficient in. The final system the individual adopts will be a function of their preference.

1.

The Diary Commercial real estate staff should possess and use a diary or PDA. Whichever you choose, they should be used to set appointments, and as a daily, weekly and monthly planner. Each evening staff should write a list, in order of priority, of all tasks to be achieved the following day. Tasks can be ticked off as they are completed. It is important that you strictly adhere to the use of the diary as it provides a written checklist to work from, and a record to refer to.

2.

Mobile Telephone A mobile phone is essential in business today and sales people should ensure that they have one. Be mindful of its use and avoid, at all costs, answering the phone during a client presentation.

Observe all standard protocols when using your phone. This list of handy tips will assist to maximise your efficient use of the phone.

• Have it on silent when in meetings or presentations

• Utilise the address book for regular clients and contacts

• Do not drive whilst using the mobile phone - if you must, then install a hands free car kit

• Minimise the use of text messages, particularly if your clients or staff do not like you communicating this way

6

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

ORGANISATION AND TIME M ANAGEMENT 3.

Filing Introduce an efficent and effective filing system for all incoming and outgoing correspondence. Property files should be created for the following:

i.

Each property negotiation including a front page property summary sheet where it is likely that you will either list or lease the property

ii.

Worksheets from initial enquiries

iii.

Sundry or accompanying correspondence

iv.

Listings that may have special interest for other sales people

v.

Office leasing memos

vi.

Standard leasing letters

vii.

Any other unique matters

The importance of a filing system lies in being organised. Correspondence over a period of time can be voluminous and needs a rational sorting system. Staff need to be aware of this and diligently follow the office system. Your professionalism is essential in this regard and is the key to your success.

4.

Standard Letters Standard letters should be used and it is important that staff are aware of these letters and have copies on file. Ensure that you communicate professionally at all times and that you enclose your business card in all letters. Page 8 highlights an example of a ‘Standard Letter’ as used by a Commercial Property Manager.

5.

Summary Work efficiency increases if you operate in an organised environment. This must include effective daily work planning and a workable filing system. The last part of each day should be spent tidying one’s desk and assessing what has to be done the following day.

In any given eight hour day, a person is quite productive for only five hours. How you spend those hours is critical to your success.

6.

Reports Commercial real estate managers and representatives need to consider the use of reports to assist them in their day-to-day operations. Following is a selection of reports which should be used on a daily, weekly and monthly basis.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

7

ADMINISTRATION

STANDARD LETTER Contact 9111 T (03) 9418 22 91 F (03) 9418 .com.au urcompany yo o@ inf E ial.com.au nalcommerc W firstnatio

Address Your Street Town PO Box VIC 3196

Date Name Company Address City

Attention: am

Dear Sir/Mad

Rent Review

Re: Property:

vise that the

se - CPI Increa

re

e

r review on th

ises is due fo

bject prem ntal on the su

of

% which is in of $ an increase of e, as Le e th esent rental ied to the pr view clause of pl re ap e th be of to s is ition elbourne, rms and cond e Index for M Under the te onsumer Pric C e th ith w accordance month in per calendar per annum. id at $ pa be to is d per annum an be $ will therefore al nt re w ne The hen due.

GST of $ forwarded w advance plus al amount is nt re w ne e ensure th t records and d your paymen en am ly nd ki act our office.

Would you sitate to cont se do not he ea pl en th r, this matte s in regard to ve any querie ha u yo ld ou Sh

We wish to ad

lly

Yours faithfu

JANE SMITH ager Property Man Commercial

endent Real

ep l Group of Ind First Nationa 2 192 ACN 005 94

8

ts Limited

Estate Agen

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

PRO PER TY MEETINGS AND REPO R TS AGENDA It is good practice for Principals and managers of a commercial real estate office to hold weekly and monthly meetings with their administration, sales and property management staff. These meetings bring the Principal up to date on the status of current sales, listings and properties for lease.

Following is a selection of forms which should be used during office meetings. The use of each is explained with the respective form.

Meeting Agendas The agenda shown below is typical of the items covered in weekly or monthly commercial property meetings.

Sales and leasing representatives and managers need to be prepared with relevant information for presentation to the Principal or Manager.

1.

REVIEW OF PREVIOUS MINUTES (WEEKLY)

2.

REPORT FROM DEPARTMENT HEAD (MONTHLY)

Include

Income of department for the last month

Budget versus actual expenditure

Details of who earned the income

Date when fees are due

3.

REVIEW QUARTERLY/HALF YEARLY/YEARLY BUDGETS

4.

PROBABLE TRANSACTIONS TO BE CONCLUDED (WEEKLY)

Name

Property(s)

Prospect(s)

Likely Fee

When Payable

Negotiating Agent

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

9

ADMINISTRATION

PRO PER TY MEETINGS AND REPO R TS

10

5.

POSSIBLE TRANSACTIONS TO BE NEGOTIATED (WEEKLY)

Name

Property(s)

Prospect(s)

Likely Fee

When Payable

Negotiating Agent

6.

HOT PROSPECTS (WEEKLY)

Name

Prospect(s)

Size Requirement

Type and Location

Negotiating Agent

7.

REVIEW OF CURRENT LISTINGS (WEEKLY)

8.

REVIEW STATUS OF NEW LISTINGS (WEEKLY)

9.

CURRENT SUBMISSIONS FOR NEW LISTINGS (WEEKLY)

10.

MARKETING ISSUES

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

PRO PER TY MEETINGS AND REPO R TS Daily And Weekly Activity Reports On a daily and weekly basis the activity on a range of properties may be updated using the below report. Showing the week commencing and the person’s name, it provides the Principal with a snapshot of properties and relevant activity.

WEEK :_______________________ NAME : _______________________________________ Controlled Listing 1 2 3 4 5 6 7 8 9 10

Auctions 1 2 3

Advertising 1 2 3 4 5 Enquiries 1 2 3 4 5

Date

Boards Erected 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Prospective Listing

Sales

Monday 1 2 3 4 5 6 Tuesday 1 2 3 4 5 6 Wednesday 1 2 3 4 5 6 Thursday 1 2 3 4 5 6 Friday 1 2 3 4 5 6

C O M M E R C I A L O P E R AT I O N S M A N U A L

Actions

volume 1

11

ADMINISTRATION

PRO PER TY MEETINGS AND REPO R TS MONTHLY PROPERTY SUMMARY REPORT Whilst weekly meetings are held it is also necessary to engage in a more comprehensive meeting each month.

The purpose of a monthly meeting is to encourage an open discussion on sales, fees negotiated, settlement dates, lease start and finish dates, and any actions requiring attention in the next reporting period.

The ‘Monthly Property Summary Report’ (shown on page 13) provides the necessary information in relation to properties being managed by a particular salesperson.

12

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

PRO PER TY MEETINGS AND REPO R TS MONTHLY PROPERTY SUMMARY REPORT MONTH :_______________________ SALESPERSON : ___________________________ Date

Sale / Lease / Auction

Address of Property

Suburb

Client

Listing Agent

Sales Value $

Fee Amount $

Settlement Date

C O M M E R C I A L O P E R AT I O N S M A N U A L

Solicitor’s Instruction Date

Lease Start Date

Lease Fee $

volume 1

Action/Report (Current Conditional) Contracts/ Negotiations

13

ADMINISTRATION

STAFF PERF ORMANCE REVI EW Staff performance is critical to all businesses and the ability to provide feedback is essential for the development of the commercial property team.

Competent

Very Good

Outstanding

PERFORMANCE CRITERIA

Poor

POSITION __________________________________________

Unsatisfactory

STAFF MEMBER ____________________________________

Not Relevant

A staff performance review provides the Principal with the opportunity to appraise and provide feedback. Whilst a scoring system is shown below, it is to be used in conjunction with constructive comments and feedback, which will lead to the continuous performance improvement of an individual.

1

2

3

4

5

6

Client relations Relations with other staff Customer follow-up and liaison Ability to work within a team Appearance/grooming Communications ability - written Communications ability - oral Acceptance of responsibility Accuracy and attention to detail Ability to manage multiple projects Ability to plan and organise Ability to complete projects on time and to budget

ACHIEVING TARGETS IN: Auction listings Sales budgets Leasing budgets Vendor paid advertising (V.P.A.) Obtaining property management and leasing

COMMENTS

14

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

K EY PERFOR MANCE INDICATO RS (KPIs) Commercial property staff should strive for continuous improvement in all facets of the business. The following may be used as an audit of the individual, to identify key strengths and weaknesses, and to outline any areas requiring improvement.

In each of the categories below the individual should identify their strength or weakness along with the areas that they see as requiring improvement. A statement or action plan should then be noted alongside each category.

Category Ethics _____________________________________________________________________________________________ Reputation _____________________________________________________________________________________________ Working unsupervised _____________________________________________________________________________________________ Working efficiently _____________________________________________________________________________________________ Time management _____________________________________________________________________________________________ Profile in your community _____________________________________________________________________________________________ Centres of influence _____________________________________________________________________________________________ Public relations and the media _____________________________________________________________________________________________ Areas of specialisation (eg: warehouse, leasing etc) _____________________________________________________________________________________________ Education _____________________________________________________________________________________________ Personal appearance / grooming _____________________________________________________________________________________________ Communication skills _____________________________________________________________________________________________

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

15

16

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

CL IE N T P RO SP E C T I N G Introduction

19

Knowing the Market

20

Prospecting for Listings

22

Information Sources

Introducing yourself

The initial meeting

The introductory letter

Canvassing

C O M M E R C I A L O P E R AT I O N S M A N U A L

25

28

volume 1

17

ADMINISTRATION

CL IE N T P RO SP E C T I N G This section introduces members to the elements required to effectively prospect for new clients. Prospecting forms an integral part of commercial property sales, leasing and management.

18

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

INTROD U C T IO N The commercial agent is faced with many challenges in the day-to-day operation of a real estate business. With changes in legislation, building design, and the needs of tenants, commercial agents need to be mindful of changes that will affect their business and the way they prospect for clients.

Successful agents have a track record of obtaining solid marketable property listings. Property listings are the agent’s ‘stock on the shelf’. Income derived now, and in the future, depends on the quality and the quantity of the listings that you obtain.

The secret of success in commercial and industrial real estate is to have a clearly defined target market and a good client database. Those clients who work comfortably with you, and who respond positively to your advice in relation to their real estate requirements, are the clients you need to develop. Bearing in mind that it is your clients who pay your fees, not the tenants or buyers; they are very important people in your business life and it is essential that you represent yourself strongly to them at all times. As these people (and their organisations) readjust their property portfolios to meet their emerging real estate requirements, they will continue to provide you with listings. In addition, if they are satisfied clients, they will refer you to fellow business colleagues which may provide you with additional business.

Whilst many reports and studies have been done on identifying the effectiveness of commercial real estate agents, there are a number of attributes which stood out as being of prime importance to clients. These are: • Agent’s knowledge of the market • Quality of the advice given • Negotiation skills • Ability to act quickly • Adherence to client instruction • Property marketing skills The effectiveness of the agent, and their ability, will have a significant influence on the successful listing of a client’s property.

Investors and owners are looking for agents who know the marketplace. Information must be readily available regarding companies who are looking to make immediate decisions on their properties. Furthermore, they prefer an agent who will immediately bring the listed property to the attention of prospective buyers.

So, at the point of listing, being able to communicate effectively with the owner about the commercial and industrial marketplace, and the available prospects, will lead to a successful ongoing relationship and future listings.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

19

ADMINISTRATION

KNO W I N G T HE M A R KE T It is essential to know as much about the marketplace as possible. Learn from others in the industry and keep up-to-date on the property transactions that are currently being negotiated.

You need to be very clear as to which segment of the market you will be operating in. If it is the CBD office market that you are chasing or specialise in, then there may be no point looking for clients such as investors who are interested in retail premises in the suburbs. Conversely, if you specialise in large warehouses or industrial premises then you need to target that segment of the market and the likely owners or managers of those properties.

There are a number of ways that you can increase the knowledge and information about the areas in which you operate: • Define your target market • Establish a plan and canvass your territory each week • Develop and maintain a solid network of people in the area • Keep up-to-date on infrastructure projects that affect property • Know every property that is for sale or lease in your territory • Maintain a list of property transactions that occur • Keep an eye out for private transactions • Maintain contact with council offices and local planners • Involve the management and team members of your office through weekly property meetings Agents need to have an understanding of the factors that motivate companies in their area to move to other properties. This information will ensure that agents are well positioned to secure listings.

In the commercial and industrial property market, listings may come from: • Land that is suitable for commercial, industrial or retail development • Commercial, industrial and retail buildings that are for lease • Commercial, industrial and retail buildings that are for sale to owner occupiers or investors (both large and small) • Commercial office space in either the CBD or the suburbs

20

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

KNO W I N G T HE M A R KE T Once you have identified the market in which you will be operating then you can focus on prospecting for clients and, in turn, the listing of their property.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

21

ADMINISTRATION

PR O S P E C T I N G FOR L I S T I N G S As you get to know your clients and the market in which you operate, opportunities for obtaining listings will present themselves. There are many options open to you as a commercial agent in identifying property listings in your local area.

When prospecting, the information that you will be looking for includes: • Applications to develop or demolish

• Owners and substantial part-owners

• Building developments

• Phone numbers of key people

• Company information

• Property ownership for a given area

• Major tenancies

• Sales history

Information Sources In addition to local area information, you may wish to search further afield into commercially available resources such as the internet, construction reports and government information. Many are available on a user pays basis, however the cost of these reports is relatively small compared to the benefits that will be derived from the information. The following tables provide you with a list of useful resources and the type of people you should know which will, in turn, assist you in securing listings.

Commercially Available Resources • Australian Who’s Who

• Entrepreneurial activity

• Business Review Weekly lists

• Internet

• Company searches

• Land title information

• Cordell’s construction reports (searching for sales leads)

• Local Government records

• Government and Department of Lands sales records

• Newspaper stories and articles • Property Council of Australia publications

• Mahlab Directory

• Property managements (rent roll)

• Neighbours in immediate area

• Stock exchange information

• RP-Data computer lists

CONTACTS IN COMMERCIAL PROPERTY • Accountants

• Engineers

• Architects

• Financial institutions

• Builders

• Financiers

• Business people

• Insurance brokers

• Construction companies

• Investors

• Councils

• Land owners

• Developers

• Other real estate agents

22

• Previous vendors and purchasers • Solicitors • Stockbrokers • Tenants • Town planners • Valuers

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

PR O S P E C T I N G FOR L I S T I N G S The hint or prospect of securing a property listing comes from many sources. The following lists provide you with ideas and further information to assist you in prospecting in your local area. These are divided into knowledge and resource based resources.

Knowledge Based: • Direct mail - The regular mailing of letters, canvassing for properties, when sent to a suitable group of possible investors, frequently result in listings.

• Identify ownership - When you discover a property that you feel could provide a business opportunity, it is necessary to identify the owner.

• Intermediaries - Maintain close association with intermediaries of the real estate industry. Intermediaries include financiers, bankers, insurers, builders, architects, engineers, lawyers and accountants. Their clients will, at times, require the services of real estate agents and a recommendation from these people is invaluable. Introducing your clients to intermediaries helps to develop business relationships which, in turn, benefits both parties.

• Liquidation - A failed business is a prime target for agency activity.

• Newspaper articles - Press releases and articles which are prepared by you or in which you are quoted, bring you and your company’s name to the attention of the public.

• Private advertisements - These can indicate properties that are already on the market. The owners may be encouraged to employ your services if initial advertisements are not successful.

• Vacant buildings - Be conscious of any buildings that become vacant or derelict as these represent business opportunities.

• Your own office - In each agency there is substantial information from previous transactions which may be consulted.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

23

ADMINISTRATION

PR O S P E C T I N G FOR L I S T I N G S Resource Based: • Australian Property Review - The Australian Property Review and the Australian Property Web are published by CPM Research. It provides market research and information on commercial and industrial property for sale and lease.

• City Scope - ‘CityScope’ Publications has been compiling CBD property information for more than 30 years and has an extensive database of property information. Updated three times a year CityScope may be viewed at www.cityscope.com.au • Commercially available sources - These include journals, year books and directories - many of which are available at a cost. It may be an annual subscription, or may come as part of membership of a group.

• Property Australia - The monthly journal published by the Property Council of Australia.

• Real estate transactions - The successful conclusion of any real estate transaction implies that both buyer and seller may be looking for other options. Avail yourself of these opportunities.

• Sales results - Most newspapers list the property sales results. Look for your area and scan the results and keep them on file in your computer.

• The Yellow Pages and White Pages - Whilst the internet has taken over from print telephone directories, they still provide information on building locations which may be of interest to you.

• The internet - There are many portals on the internet. Whilst this is a useful research tool, agents should be mindful of validating any research gathered.

24

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

INTROD U C I N G YOU R S EL F Now that you have identified several people who are likely to list their property in coming months, it is time to introduce yourself to them. This can be done a number of ways - with a letter of introduction, personal contact via a meeting or even a telephone call.

The Initial Meeting You will certainly need to call prospective clients first to establish a meeting and discuss the possibility of your office listing their property. During this phone call be polite, courteous and listen carefully to what the prospective client is saying. Do not call whilst driving your car as you will not be in a position to take down important information. Take notes and do not get distracted by other things going on around you. Ensure that you make a diary note of the time and place once you have confirmed the meeting.

The initial meeting with a prospective vendor looking to list their property should be focused on establishing a rapport with the person. Get to know the person and even diarise some special interests that the person may have. Above all, listen to them and gain an understanding of their property requirements. This approach will enable you to gather as much information as possible which will assist in future negotiations.

During the meeting ensure that you explain the benefits of them listing their property with your office. Show how you can add value to their business through innovative marketing and sales techniques.

Be open, honest and sincere in your presentation; remember ‘first impressions will be lasting impressions’.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

25

ADMINISTRATION

INTROD U C I N G YOU R S EL F THE INTRODUCTORY LETTER Many sales people have found that an introductory letter is appropriate. This is to be used when you have identified a prospective client and are looking to make initial contact. The letter however should always be followed up within a few days with a phone call. That way, the letter, and its intention, is still in the mind of the person receiving it. The letter and phone call approach works well and can be an ice breaker to scheduling the initial meeting.

In many organisations be mindful that some senior managers have their letters and calls screened by personal assistants. If that is the case then you need to understand the protocol of the organisation and work professionally with the appropriate people. A polite phone call to the personal assistant explaining your organisation and what you can offer will ensure that you will secure a meeting with the appropriate person.

On page 27 you will find an example of an introductory letter written by Michael Race, a Commercial Property Sales and Leasing Manager.

During a discussion at a Property Council meeting Michael received a referral. He decides he should contact Mary Smith to see if First National Commercial could secure the property management of an ABC Investments property. Naturally Michael followed up with a phone call to Mary and secured a meeting.

Michael’s prospecting approach worked as he secured the meeting and the subsequent management of three properties.

Templates of letters similar to Michael’s are available in the Commercial Resource Centre.

26

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

EXAMP LE INTRODUCTORY LETTER Contact 9111 T (03) 9418 22 91 F (03) 9418 .com.au urcompany yo o@ inf E ial.com.au nalcommerc W firstnatio

Address Your Street Town PO Box VIC 3196

10 1st August 20 Mary Smith ager General Man ents Pty Ltd ABC Investm ad 24 Hughes Ro l, el rw be Cam

Dear Mary, IAL COMMERC rney Rubble to you by Ba I was referred s. your propertie leasing one of ercial may ational Comm

PROPERTY

LEASING

of Flint Con

be the answer

ing

ay be consider

d that you m

indicate structions who

ing for.

you are look

alia and across Austr fices located of s ha al ci er ional Comm tate, First Nat ents. ercial real es m erty requirem m op co pr in al t ci lis er m m co A specia ur future t you with yo plan for their is able to assis forward and then now is ok s, lo ld tie er ou sh op additional pr all businesses g in at er th id s ns ve co lie be or you are l Commercial e is expiring, First Nationa ts. If your leas en . m al ci ire er qu m re property ational Com nsider First N a small ly represent the time to co hilst these on w rience within d, pe an ex s d ie an lit pth of skills ills and capabi de sk e r th ou to in ng ni ht tli good insig brochures ou it provides a Enclosed are ts underway, ec oj pr e th of number at any time. d leasing team the group. an s le sa r ou to contact ease feel free , however, pl tly or sh u yo t ac We will cont

First N

ly,

Yours sincere

Michael Race LEASING L SALES and COMMERCIA

endent Real

ep l Group of Ind First Nationa 2 192 ACN 005 94

ts Limited

Estate Agen

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

27

ADMINISTRATION

CANVA S S I N G

Assuming that you have sent your introductory letter and secured the initial meeting it is now wise to gather as much information about a prospect as possible.

Irrespective of whether you have secured the listing you need to record the information on a canvassing record sheet. The ‘Canvassing Record Sheet’ and a ‘Canvass Register’, as shown below and on the following page, provide the templates for information required about the prospect.

The information contained in these records should be used to track your progress in successfully prospecting for listings and also to prompt you to make follow up calls.

28

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

ADMINISTRATION

CANVA S S I N G

This register provides the sales person with a record of the follow-up enquiries made to a prospect following the introductory letter and initial meeting.

TER

ING REGIS

CANVASS

quiries made

e follow-up en a record of th ith w on rs pe ting. sales and initial mee provides the This register ing the introductory letter w prospect follo DATE

COMPANY

PHONE

CONTACT

C O M M E R C I A L O P E R AT I O N S M A N U A L

RESPONSE

volume 1

to a

P

FOLLOW-U DATE

29

30

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKET I N G Introduction

33

Current Situation

33

Agreeing on price

36

Methods of sale

38

Private Treaty

Sale by Tender

Informal Tender / Expressions of Interest

Auction Sale

Marketing Communication Strategy

43

Advertising Strategy

45

Advertising Objective

Advertising Budget

Property Signboards

Internet Advertising

Window Displays

Local and National Newspapers

A4 Property Brochures

Sales Promotions

55

Public Relations

56

Property Marketing Plan

57

Measurement

61

Post-Auction Marketing

62

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

31

MARKETING

any

Your Comp

3

165 sqm*

Auction

On Site Auction 6.30pm ber 09 Mon 28 Septem ed 1-145pm Inspect Sat/W Rowe Contact Alex 678 345 0412 27 98465 ID Web

NG RD 27 BOOLARO ns • Excellent retur

E 0418 936 AGEnt nAM 8 WEB iD 89154

• 10 year lease t parking • 3 car off stree E 0418 936 AGEnt nAM 8 WEB iD 89154

555

enant • Long term t e • 10 year leas et parking • 3 car off stre come et in • High n

555

165 sqm*

FoR SALE

3

165 sqm*

NG RD 27 BOOLARO ns • Excellent retur

tenant • Long term • 10 year lease t parking • 3 car off stree

• 10 year lease t parking • 3 car off stree

On Site Auction 6.30pm ber 09 Mon 28 Septem ed 1-145pm Inspect Sat/W Rowe Contact Alex 0412 345 678 27 98465 Web ID

FoR LEASE

3

165 sqm*

FoR LEASE

E 0418 936 AGEnt nAM 8 WEB iD 89154

ONG RD 27 BOOLAR turns • Excellent re e • 10 year leas et parking • 3 car off stre • 6 years old enant rm t ng te • Lo e leas • 10 year et parking • 3 car off stre come • High net in

$630,000

ONG RD 27 BOOLAR turns • Excellent re e • 10 year leas et parking • 3 car off stre • 6 years old enant • Long term t e leas year • 10 et parking • 3 car off stre come • High net in

$630,000

ONG RD 27 BOOLAR turns • Excellent re e • 10 year leas et parking • 3 car off stre old ears • 6 y

$630,000

NG RD 27 BOOLARO ns • Excellent retur

tenant • Long term • 10 year lease t parking • 3 car off stree

E 0418 AGEnt nAM 8 WEB iD 89154

3 $630,000

FOR SA

tenant • Long term • 10 year lease t parking • 3 car off stree

• 10 year lease t parking • 3 car off stree

555

3

165 sqm*

FoR SALE

3

165 sqm*

Auction

LE

936 555

89 HOD

DLE ST

FoR LEASE

FoR LEASE

FoR LEASE

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555 E 0418 AGEnt nAM 8 WEB iD 89154

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555

E 0418 AGEnt nAM 8 WEB iD 89154

E 0418 AGEnt nAM 8 WEB iD 89154

FoR LEASE

FoR LEASE

FoR LEASE

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555 E 0418 AGEnt nAM 8 WEB iD 89154

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str t tenan term • Long se • 10 year lea 936 555

ur town ur street, yo

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant term Long • se • 10 year lea

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str tenant • Long term se • 10 year lea 936 555

E 0418 936 AGEnt nAM 8 WEB iD 89154

E 0418 AGEnt nAM 8 WEB iD 89154

FoR LEASE

ity

555

any

p Your Com

E 0418 AGEnt nAM 8 WEB iD 89154

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str t tenan • Long term se • 10 year lea 936 555 E 0418 AGEnt nAM 8 WEB iD 89154

9123 4567

ny.com.au

yourcompa

r details.

Yo

Phone: 91 23 Email: em 4567 Fax: 9123 4568 ail@your Web: w ww.yourc company.com.au ompany DISCLAIM .com.au ER : Ur? Edi

t, Fitzroy 29 Smith omSmercial.com.au/16745 : firstnationalc

Property ID

lls

Ca Opportunity

eturns • Excellent r e as le • 10 year et parking re st ff • 3 car o • 6 years old tenant • Long term ck • Large blo

67 m.au 9123nal4co5 mmercial.co firstnatio

our Suburb

Your Street, Y

32

165 sqm*

t venit vit

mos que

officilit res t, aut inis

vel ipis qui

busc itiam,

serro eat

. Minte plis

modignis

et venduc

i beatem

autassi ma

ioratur as.

3

Inspect at 1pm Thurs 1 July : Internet ID /5158963

Joe Rowe 0418 573 078 *Approx

quo moles

AYUoC ur T CIoO mN pany

5 772 2 yo urcom Your st

6o 63

pany.c

reet, yo

m.au

ur town

C O M M E R C I A L O P E R AT I O N S M A N U A L

2

Inspect : Date and time here Auction : Date Contact : John Smith 0400 123 456 Amy Jones 0400 789 Price : 234 630,000+

This cream brick conv entional sty to shoppin le home is g and tra in an exce nsport, an llent locati bedrooms d a leisure on only me , gas heate ly stroll to tres d lounge, up E 0418 thebeach Set on ea AGEnt nAM dated kitch . Offering 8 sily managed WEB iD 89154 en, dining three grounds ap As re sim and separat prox 520m il iur? Repu e laundry.

2 with No dae volor iaspernam rtherly re epro que , ut et et ar aspect. ma deliqua quaes dig m quam ea sit moloru natem eo rchit pta non co s quo mint re st, vo samet od aritiis porio luptatum itat alitatq nonsequa r se sit ips FoR LEASE m, uatemped unt omnie Ipsapident ut ut auda NG RD t paria ve io comnis 27 BOOLARO ndam e nustis do turns ex etureic • Excellent re luptibus. vitate et ut se tat em • 10 year lea quiandit qu aperfer um eet parking • 3 car off str ia t qu tenan inv ibe dionsecte eria sperum ra que cu • Long term se plab ilis qu s et, omnim • 10 year lea faccuptat 555 E 0418 936 atius cipici quia qui te eum repe AGEnt nAM dion cum 8 nobita runte volor WEB iD 89154 a cusa cus ep erovit dolorporib Property hillam lab ID: /9586 us dolorec orun ducid 97 es See webs uciur am ite for fur et quaest. the

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str t tenan term • Long se • 10 year lea 936 555

FoR LEASE

NG RD 27 BOOLARO turns • Excellent re se • 10 year lea eet parking • 3 car off str t tenan term • Long se • 10 year lea 936 555

E 0418 AGEnt nAM 8 WEB iD 89154

AUCTION E 0418 AGEnt nAM 8 WEB iD 89154

FoR LEASE

BURB

Opportun

FoR LEASE

FoR LEASE

167m 2*

REET, SU

Excellent

volume 1

MARKETING

INTROD U C T IO N Every business needs to have a marketing plan - a written document that details the actions necessary to achieve a specific marketing objective. The marketing plan may be for a business, a product, a service or, in this case, a commercial property.

The focus of this section will be to provide the information necessary for your office to complete and implement a marketing plan for a commercial property.

There are a number of essential elements to include in these plans: • A summary or snapshot of the current state of the market.

• What you and your vendor expect to achieve.

• Resources and budget to execute the plan.

• The strategy for marketing and selling the property.

• A method of measuring the results.

CURRENT SITUATION Through your research during prospecting for listings, you would have gathered quite a deal of information about the commercial property market in your area. When assessing the current market situation you need to consider the internal and external factors impacting on your business.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

33

MARKETING

CU RREN T S I TU AT I ON Internal Environment An analysis of the internal environment includes identifying those aspects of the business which you are able to control or influence to some degree.

In commercial property ‘internal’ factors to consider include: The Commercial Team • Their skills and qualifications • Their knowledge of commercial property • The size of the commercial team is it adequate?

• The network of influence of your team • Their ability to share ideas • Is there a team approach to listings?

• Support staff • Does the team work as a ‘team?’

• Staff presentation • Is your client database up to date?

Office Operations • Is the office well managed?

• Is the office well presented?

• Is the office in the right location?

• Market Share - what percentage does your office have?

• Signwriting – is it in accordance with Corporate Identity?

Advertising • Where do you advertise?

• Is the advertising effective?

• Is your internet advertising up to date?

• Is your advertising vendor paid?

• How does it compare with others?

• Are your signboards new, fresh and compliant?

Training • Does your team attend regular commercial training?

• Is the Commercial Conference on your calendar?

• What courses could improve staff skills?

34

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

CU RREN T S I TU AT I ON External Environment The external factors are those that you, as the Principal, cannot directly change or influence. Despite this you need to be aware of the external environment and make changes or modifications in your business operations in order to capitalise on opportunities that present themselves.

External factors that you should be aware of include; Technology • Does your office keep up with new technologies?

• Does your office utilise ‘Platform’ • Is your website linked to firstnationalcommercial.com.au?

• Are emails answered promptly?

• Do you list on commercial internet portals?

Demographics • What is the scope of your trading area?

• Who are your major clients (owner occupiers, investors, LPT’s)?

• Are age and income of clients an issue for your office?

LocAL

AGENc

MARKE

TING P

Competitors • Who are they?

• How and where do they advertise?

• What is their market share?

• What are their marketing plans?

• What unique skills do they have?

• Do they have a point of difference?

• Where do they advertise?

L

A

N

C re at in g a co m m ar ke tin pr eh en si ve g pl an fo r yo ur of fic e.

The internal and external factors should be reviewed on an annual basis with the Principal deciding on what needs to be addressed. By keeping a checklist of the items requiring attention the office will be able to respond quickly to the changing marketplace and keep one step ahead of competitors.

For additional information on Marketing Plans please refer to the Local Agency Marketing Booklet 2.

C O M M E R C I A L O P E R AT I O N S M A N U A L

y

M A r k e t i N g B o o k l e t 2

volume 1

35

MARKETING

AGR EEI N G O N P R I CE In commercial real estate, like all selling activities, you aim to get the best possible price that you can for the property.

In order to get the best price you must have an understanding of the value of the property and the price that the property owner wishes to sell or lease at.

There are two key factors in gaining the top market price when you sell or lease: • An intimate knowledge of commercial property values in the area.

• The ability to tap into a wide source of potential buyers.

Through the research that you have undertaken of the market, and the prospecting that you have done, you will be armed with this information.

Your next step is to then meet with the vendor and submit a considered estimate on the value of the property. Do not inflate figures to obtain business by giving an irresponsibly high opinion of market value and then working ‘downwards’ in price.

If it is a large property worth several million dollars you may consider employing a certified valuer to undertake a valuation. Naturally you would negotiate this with the vendor to ensure that they meet the costs associated with the valuation.

Once this is done, you should meet with the vendor to agree on a price that the vendor is happy with. Be fair, open and honest in the appraisal of the property.

Once an agreed price is reached, you can commence the marketing program for the property.

Through your advertising, publicity and overall marketing plan, people will see the attractiveness of the property and will place a certain value on it. If you have done everything possible then it is finally up to the marketplace to decide on the price.

36

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

37

MARKETING

ME TH OD S O F S A LE Before designing and implementing a property marketing campaign you need to determine, clearly, the method of sale that you intend to employ. An auction sale will be different to a sale by tender or seeking of offers so this needs due consideration in terms of budget and timing.

There are four methods of sale generally available: • Private Treaty • Informal Tender / Expressions of Interest • Sale by Tender • Auction Sale

Private Treaty This method of sale entails the preparation of a comprehensive and detailed report on the property, setting out all its physical features and, more importantly, setting out details of income and expenditure. In the event that the vendor wishes to have the property sold without publicity, the appointed selling agent would normally submit the report, and details directly to all those organisations they believe are capable of acquiring the property.

Alternatively, the vendor may instruct the selling agents to not only submit the details to potential purchasers, but also to advertise and generally publicise the availability of the property. The rationale is that some new purchasers such as investors may have entered the market and may not be on the office database.

With Private Treaty sales, in nearly all instances, the vendor will quote a selling price and it is a matter of negotiation, with interested parties, to determine the best price that can be achieved in the market. When this is done, contracts are executed by the parties, with settlement to follow usually one or two months later. In commercial property transactions, the settlement periods may be very long and this requires careful negotiation by the agent.

Larger Australian and overseas groups prefer sale by Private Treaty, particularly if they believe that the price they are willing to offer is close to the sale price advertised. If this is the case then they contact the vendor’s agent and commence the negotiation process.

Advantages and Disadvantages of Sale by Private Treaty Advantages

Disadvantages

Stipulates Terms and Conditions Timing and full disclosure Parties can negotiate Allows for conditional offers Recognised and familiar Confidentiality

Sets a ‘ceiling’ price Difficulty in setting a ‘list price’ Can only negotiate down No urgency/time for decision Usually less exposure More difficult to advertise Some offers are too conditional Quick result may be difficult to achieve May be selling below market values

38

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ME TH OD S O F S A LE Sale by Tender The ‘Sale by Tender’ method has been used in more recent times in the Australian marketplace and arose from a market in which values were rising rapidly. In such circumstances, it is difficult for the agent and the vendor to accurately assess the maximum price that the market is prepared to pay for prime property. Hence, the vendor may allow the property to be offered in an atmosphere of competition in that one purchaser may see more value than the others, to the point where they may offer more for the property than the vendor had anticipated. In such a Tender situation, each interested party is issued with full particulars of the property and also a Contract of Sale.

On the given date for the close of Tenders, the purchaser must complete the Contract of Sale and lodge with the vendor’s agent, together with a cheque for the deposit. The vendor also undertakes, in the Tender documents, to respond to the potential purchasers by a certain given date - possibly within two to four weeks.

During this period the vendor selects the Tender which is acceptable, advises the agent who on forwards the counterpart contract to the prospective purchaser, thus binding both parties to the sale. In every case, the vendor reserves the right not to accept any Tender, if they so wish.

In the event that the property is not sold by Tender, the vendor may elect to proceed privately, ie without advertising or publicity or, conversely, may continue to advertise the availability of the property.

Because the contract wording is drawn in favour of the vendor there is usually little opportunity to consider alternative proposals until after the formal closing of the Tender.

Advantages and Disadvantages of Sale by Tender Advantages

Disadvantages

Set time frame Favours the vendor Attractive to many buyers Absolute confidentiality Conditional offer possible

Some buyers won’t be considered Level of competition not obvious Collusion is possible Can attract low bids No set form that process must take May be no public display of sale price Quick result may be difficult to achieve

Commitment to buy by purchaser Allows for further negotiation Offers may be rejected Selling price not exposed Highest bids need not be accepted Usually good marketing budget

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

39

MARKETING

ME TH OD S O F S A LE Informal Tender / Expressions of Interest This method of sale entails the preparation of a comprehensive report on the property, and advertising and marketing the property, in accordance with a budget agreed with the vendor.

Potential purchasers are invited to submit offers or expressions of interest in the property by a certain date. This means that no normal contract is required to be completed, although it would be common for the terms and conditions acceptable to the vendor to be made available to interested parties. On the date given for the close of offers, letters are lodged, by interested parties, setting out the price they are prepared to pay, together with any broad terms and conditions they require. In no case will these letters be binding on either party, and the most desirable offer generally proceeds through final negotiation, much in the manner of a Private Treaty sale, until the exchange of contracts.

This method of sale has one distinct advantage over the formal Tender process, which is that in order for an organisation to complete a formal Tender, all formalities must be completed by the Tender date. That is, approval by the Board of Directors, the obtaining of finance, and all legal and consultants enquiries will have been completed prior to Tender date.

In the case of an ‘Informal Tender’, these formalities can be overcome later and, indeed, most letters of offer specify that the offer is subject to final Board approval and other considerations. The advantage of this is that some organisations, who have a more ponderous purchasing process, can take part since they are not finally bound until after the closing of offers.

Where a vendor wishes to consider joint ventures, or is flexible on timing, this method has a distinct advantage - each Tender proposal may be different and can be considered by the vendor on individual merits which may result in a greater number of proposals being submitted.

Advantages and Disadvantages of Sale by Informal Tender / Expressions of Interest Advantages

Disadvantages

Many offers may be received Vendor has wider choice Purchasers may prefer long process May be lower advertising cost Absolute confidentiality

Not all offers may be considered Level of competition not obvious Collusion is possible Can attract low bids No set form that it must take

Conditional offer possible Commitment to buy by purchaser Allows for further negotiation Vendor has right to reject an offer Highest bids need not be accepted Selling price not exposed

May be no public display of sale price Higher administrative cost

40

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ME TH OD S O F S A LE Auction Sale This method of sale is common in Australia and involves a process whereby a property is advertised as being available for sale through the ‘Auction’ method.

The vendor’s solicitor will draw up a contract prior to the auction and the auction date, time and place are clearly advertised.

Interested parties are handed comprehensive reports, together with the precise contract, upon which they are expected to bid and therefore purchase. At the appointed moment, the potential purchasers gather at the auction venue, the auctioneer reads the contract and calls for bids.

The vendor sets a ‘reserve price’ below which the auctioneer will not sell the property. The highest bidder, above the reserve price set by the vendor, is the purchaser, and he or she may not retract their bid.

In the event that the reserve price set by the vendor is not achieved, it is usual for the highest bidder to be offered the opportunity to negotiate with the vendor in order to reach an agreed price. This is frequently done and as soon as an agreement is reached, the parties execute a binding contract.

Large Australian and overseas institutions are generally wary of auction sales. They do not like the informality of bids being made by executives across an auction room in competition with others in public. Generally speaking, they prefer not to buy in competition.

The majority of commercial and industrial property auctions are conducted in ‘Auction Rooms’. This office is set up with a lectern, telephones and audio visual equipment, thus providing all parties with the necessary tools to negotiate the sale.

Advantages and Disadvantages of Sale by Auction Advantages

Disadvantages

Cash Sale Unconditional Market sets the price Vendor’s reserve may be unrealistic Exclusive agency

Agent gets blame for failure No conditional offers Some buyers won’t participate Buyers may not be aware of market price

Competitive bidding Higher price may be achieved

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

41

MARKETING

ME TH OD S O F S A LE Selecting the Best Method of Sale Armed with information and research gathered from the marketplace, you will be in a good position to discuss the most appropriate selling method with your vendor.

Discussions with your vendor should include elements of your research which then substantiates and supports your recommendation to proceed down a certain path. Be very mindful of your vendor’s wishes and ensure that you allow them to feel that they are in control of the decision making process.

Key considerations in selecting the most appropriate method of sale include: • The estimated sale price • Timing of the sale • Examining each property on its merit • Ensuring that the vendor is aware of costs • Obtain the vendor’s method of sale preference • Have advertising and marketing costs well documented At this stage, you will have undertaken your market research, examined the methods of sale and had initial discussions with your vendor. It is now time to develop and implement a ‘Marketing Communication Strategy’ for the property. This is covered in the next section.

FOR SALE

167m2*

89 HODDLE STR

EET, SUBURB

Excellent Opportun

ity

• Excellent return s

• 10 year lease • 3 car off street park

• 6 years old • Long term tena nt

ing

• Large block

*Approx

Property ID: /9586

97

DISCLAIMER: Ur?

See website for furth

Edi quo molest venit

email@yourcompa

er details.

vit mos que officilit

ny.com.au

42

2

Inspect : Date and time here Auction : Date Contact : John Smit h 0400 123 456 Amy Jones 0400 789 234 Price : 630,000+

rest, aut inis vel ipis

quibusc itiam, serro

firstnationalcomme

C O M M E R C I A L O P E R AT I O N S M A N U A L

eat. Minte plis modig

rcial.com.au

nis et venduci beatem

autassi maioratur

9132 0000

volume 1

as.

MARKETING

MARKETING COMMUNICATIO N STRATEGY All businesses today, irrespective of their industry, need to have a solid marketing communication program. In commercial property, you need to consider which form of communication will achieve the desired result for you and your vendor.

Marketing communication includes advertising, sales promotions, the promotional strategy, personal selling, public relations and even direct marketing.

The best results will generally be achieved through a combination of activities, however, first and foremost, you need to identify your target market. Once this is established, you can design an appropriate advertising and marketing program.

Target Market Whether marketing a business or marketing a property, you need to determine who your target audience is.

The questions that need to be asked include: • Who do we want to respond to our advertising?

• Who are the people most likely to purchase the property?

• How do we reach our target buyers?

• How should the property be best positioned to attract our target market?

This is a sample of target clients for the promotion of your business, or a property.

When promoting your commercial real estate business

When promoting commercial property such as a warehouse

Developers Superannuation funds Property trusts Other commercial real estate agents Urban planners Existing landlords

Companies with large distribution requirements : eg: Coles, Bunnings, Mitre 10, Tradelink, Freedom Furniture etc.

Distribution and logistics companies eg; Linfox, Toll, Star Track Express Superannuation funds Investors Syndicates Developers Urban planners

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

43

MARKETING

MARKETING COMMUNICATIO N STRATEGY Once the target audience is determined, you need to identify the communication channel that will deliver the message in the most effective way.

Communication Objectives With a clearly defined target audience, the marketer must decide on the type of response expected that will meet the marketing communication objective.

For example, if you have been retained to market an industrial warehouse measuring some 10,000 square metres, you will determine your target market as any company requiring warehouse space to break down, repack and distribute their products.

Some target clients might include: • Furniture companies • Hardware groups • Air conditioning and refrigeration groups • Automotive parts distributors • Importers With this list of target clients you can now determine your communication objective. This might be to contact all prospective buyers through a clearly focused advertising strategy.

Your communications must clearly hit the mark if you want these groups to sit up and take a look at you. The next section will outline the various elements of an advertising strategy which will enable you to achieve your communication objectives.

With a clear communications objective you know that you are on the right track to sales success.

44

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ADVER T I S I N G S T R ATEG Y Advertising is said to be any paid form of non-personal presentation or promotion of ideas, goods or services by an organisation. This may include, but not be limited to, the following: • Audio visual material • Billboards • Brochures • Internet • Office displays • Posters • Print and broadcast ads • Printed directories • Property booklets • Signboards • Symbols and logo • Window displays Successful advertising campaigns are typically the result of careful planning - however, many businesses fail to plan, resulting in a poor outcome for the vendor and the agent. When you receive the authority to sell or lease a property, creating the overall property marketing plan, including a good advertising campaign, will ultimately lead to positive results.

In developing an advertising strategy there are five simple steps to follow: • Mission - what is the advertising objective?

• Money – how much can be spent?

• Message – the message and how it will position your business?

• Media – what media should be used?

• Measurement - how should the results be evaluated?

Advertising Objective Advertising is required to contribute to the achievement of your marketing objectives and strategy. It should flow from these objectives. Therefore, what is your mission and role of advertising in the context of your marketing objectives? In short, what is it expected to do - why advertise at all?

The objective or mission of your campaign must be goal oriented and achieve your advertising objectives.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

45

MARKETING

ADVER T I S I N G S T R ATEG Y Advertising objectives include: 1. Build a long term image for your business or property 2. Reinforce/maintain/improve attitudes towards the property 3. Change consumer perceptions of the property 4. Promote new uses for the property 5. Ensure strong promotion through the internet 6. Support other marketing activities 7. Motivate people to become interested in the property 8. Motivate the sales people The advertising objective must be derived from discussion and evaluation of your client’s needs.

Positioning Positioning may be described as the act of designing the company’s offering and image so that they occupy a meaningful and distinctive competitive position in the target customer’s minds. The sales results from your advertising program will largely depend upon how you position your real estate business and the properties that you have in the market.

The dictionary states that position is ‘the place held by a person or thing’. When you position your property, you place it a certain way in the consumer’s mind. Once you’ve got it there, it’s very hard to dislodge. So it’s very important to decide clearly what the positioning strategy should be.

To help you decide where you position your business, and the properties that you market, the following should be considered: • Your competitive advantage • Your value proposition • The benefits of using your office • Competitive properties • Consumer demographics, behaviour, lifestyles, needs, attitudes, beliefs • The environment Research such as the topics covered in assessing the current marketplace will be invaluable when developing a positioning statement.

46

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ADVER T I S I N G S T R ATEG Y Advertising Budget The advertising budget is largely determined by how much the vendor is willing to spend on marketing their property. In your presentation to vendors and landlords be prepared to clearly articulate the proposed budget that will achieve the goals set out in the advertising objectives. In commercial property, always consider the value of the property and the desired effect of your proposed advertising campaign. If you have a $5million property in a CBD location then it may be relevant to spend a considerable amount of money to reach and attract the right buyers to the property. A property of lower value may have a lower advertising budget.

The Competitive Environment You will have already researched your competitive environment at this stage, however, you need to have the information on hand in order to develop the advertising strategy.

From a property perspective, it is always good to be aware of the properties that you are competing against in the marketplace. Armed with this information, you and your vendor can determine the best strategy to achieve the best result.

The next section will provide the options and methods available in executing the advertising and marketing of a commercial property.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

47

MARKETING

ADVER T I S I N G S T R ATEG Y Property Signboards First National Commercial has developed a full range of signs which may be used in the advertising of commercial property. This section provides the information necessary to make your signboards work for you, and help to achieve a successful sales result.

Following the First National Commercial Corporate Identity Manual (Your Guide to Successful Branding) is the first step in getting things right when installing commercial property signboards.

In commercial real estate, advertising through the use of signboards should be geared to cover two objectives: • Directly sell the property • Raise the brand awareness of your real estate business – firstnationalcommercial.com.au Signs are vital to the operations of the Commercial Sales, Leasing and Property Management business. Most enquiries for leasing are obtained through signboards. Never underestimate the power of your sign.

During early negotiations with a client, stress should be placed upon the promotional value of having a sign placed upon the property. Wherever an opportunity occurs you should try and arrange for an appropriate sign to be erected either ‘For Sale - For Lease - Auction - Tender’ etc.

‘Sold’ and ‘Leased’ stickers should be held in stock for immediate use.

Property signboards are vital for: • Vendor / Lessor to sell or lease property • The maintenance of the company’s identity and position in the marketplace • Salesperson to secure enquiries to assist sales and leasing When a signboard is placed on a property for the purpose of selling or leasing, the sign also advertises your office. A person driving past the sign has approximately three seconds (one glance) to view a property signboard, so the sign must have an immediate impact - A One Glance Appeal.

The number of signs erected indicates the company’s strength in the market. These signs attract enquiries for prospective buyers or lessees and prospective vendors and lessors. The public recognises and identifies our signs and together with the company’s long standing position in the marketplace, gain confidence in dealing with us.

Surveys on sources of leasing enquiries confirm that many enquiries are derived from signs on properties. In many cases, the enquiry is not for the property advertised, but signals the enquirer’s need for us to solve their accommodation problems.

48

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ADVER T I S I N G S T R ATEG Y You must always obtain your client’s approval before erecting a sign and confirm with your client any commitment to costs. When client’s approval is obtained, the site should be inspected to establish the best location.

Before installing a signboard you must ensure that: • Colours and logo design are corporately compliant • Address and phone numbers are correct • Your name is on the board • The website address is correct • Property ID is listed eg: www.firstnationalcommercial.com.au/23456 • Auction dates are clearly shown • Be clear and concise with words A property signboard must be placed where maximum exposure may be gained. The location of the property will indicate the size and type of signboard. An idea of how long the sign will remain on the premises will also determine the size and type to be used. Erection of signs must be carried out without damaging premises and with a view to preventing the signs being obscured by traffic or being vandalised.

People thinking of placing their properties on the market are influenced by our agency signage and our conversion rate of properties from ‘For Sale/For Lease’ to ‘Sold/Leased’ or ‘Under Contract’. Signboards must be updated during this conversion. A sold sign or leased by sign is very positive advertising for the company and the salesperson.

Both buyers and listings stem from signboards. Our distinctive marketing identity is our ‘Signboard to Success’.

Conjunctional Signs Conjunctional sales occur frequently in the commercial property market, and whilst this is not the preferred method, if well managed it can lead to your office gaining valuable exposure in the marketplace. When you appear on a jointly advertised property signboard there are a number of guidelines to follow. Wherever possible, establish your agency as the co-ordinating agent, thereby your office will be responsible for production, order, location and installation of the sign. This gives you overall control of the sale and sign process.

Should you not be the co-ordinating agent, the person responsible for signs or their representative, should always be present at meetings with the other real estate agent.

You should ensure that your agency always obtains equal space for the First National Commercial name and logo as compared with the space used by the conjunction agent. You should ensure that the correct colours are used and try to secure that side of the board which has the greatest prominence in the location that the board is to be erected.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

49

MARKETING

ADVER T I S I N G S T R ATEG Y A representative of your agency should see the final draft for all signs and again when the sign is finally erected it should be inspected with the appropriate photograph taken and placed on the Sign Register.

In summary, follow these guidelines for the management of conjunctional signs: • If one or more joint agents appear one on top of the other, try to position your name on the top.

• If joint agents names appear side by side, endeavour to position your name on the most prominent side.

• Insert location of your other offices, particularly if joint agent has mentioned more than one office.

• Ensure all logos are presented at the same size on the signboard.

• Where possible offer your services as you then have some degree of control.

• The use of corflute signs is to be encouraged. These signs are cheap and have a particular use as an external sign on industrial properties and as an internal sign on shop windows.

Types of Commercial Property Signs Due to the physical nature of commercial property, commercial signboards may differ significantly from site to site. For example, in the office CBD market, commercial signs may be placed on the marble or concrete walls of buildings. These can be small, measuring only two metres in height or up to six metres in height, if there is a wall with an adjoining vacant site.

On large warehouse sites, the commercial signboard can be very large, measuring up to four metres long and two metres high. These present challenges to the commercial agent including cost and the positioning of the sign.

This is a selection of the most common types of commercial property signs: • Corflute – most common and widely used • Vinyl – mounted on timber frame • Vinyl skin – used on windows and buildings • Sheet steel – used on large signs in industrial areas Given the size and complexity of signs, agents also need to be aware of any local council regulations and government by laws in their area, as real estate signs are usually regulated by local government by-laws.

Restrictions generally apply to the size, number and location of signs.

Every agency should have on file the precise restrictions that apply in their area. This will prevent the confiscation of signs. Remember also that by-laws are based on safety, and other considerations, rather than just regulation for the sake of regulation.

50

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ADVER T I S I N G S T R ATEG Y Safety is a particular concern. One of the contributing factors cited in an accident was the fact that the car driver involved did not have a clear view of the road because of a real estate sign at a road junction. Some councils print booklets on the restrictions.

Local councils have different regulations, however the following are common restrictions: • One sign per agent per property • Signs to include only ’FOR SALE’ or ‘TO LEASE’ phrase plus the name and telephone number of the agent • Signs to be no larger than one square metre (although size maximums varied greatly from area to area) • Larger signs to be submitted to council for approval and a permit granted before they are erected • Signs not to be displayed outside the boundary of the listed property (e.g. such as on footpaths, trees or traffic islands) • Signs are prohibited from being displayed on power poles

Sign Register Each First National Commercial office should maintain a Sign Register. The Sign Register may be recorded in a book or even on a computer, through the use of an ‘Excel’ spreadsheet. The information in a ‘Sign Register’ include: • The location of all boards that are erected • The erected cost of the signboard • Whether any or all of the sign cost is recoverable from the client • The date upon which the signboard is returned to store • Allow space for insertion of photo/s of the erected signboard Commercial managers and salespeople must be aware of, and conform to, ethical and legal standards for their signs. By observing the guidelines and rules outlined in this section, it will ensure that your sign stays put to do the job it’s intended for - to bring in business.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

51

MARKETING

ADVER T I S I N G S T R ATEG Y Internet Advertising First National Commercial has its own website and all First National accredited commercial offices are required to list their properties on the national website.

The development of internet marketing over the last few years has moved strongly into commercial property.

Vendors and property managers are using the internet on a daily basis to search for properties and the search engines are now tailored to commercial property. This means that for you and your vendor to effectively market properties you need to ensure that you are active in this marketplace.

First National Real Estate has produced a separate Local Agency Marketing booklet on eMarketing, and the principles contained in this booklet are very similar for commercial property.

Some major differences with commercial property include: • The value of the properties • Search by square metres is a primary consideration • Car parking is essential for many commercial businesses • Warehouse space is essential firstnationalcommercial.com.au has all of these parameters - it is essential that all agents submit these details when completing the property information.

52

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ADVER T I S I N G S T R ATEG Y Window Displays First National Commercial has developed a standard template for window displays. These are to be used to promote properties in your window or, if in a general office, locate them on brochures stands or in a prominent position in the office.

Local and National Newspapers National and State based newspapers are to be used frequently to advertise commercial properties. Ensure that you negotiate vendor paid advertising and have the properties featured in the following newspapers on the days shown:

Newspaper

State / Region

Preferred Publication Days

The Financial Review

National

Thursday

The Courier Mail

Queensland

Friday

The Sydney Morning Herald

New South Wales

Friday, Saturday

The Age

Victoria

Wednesday, Saturday

The Advertiser

South Australia

Tuesday, Wednesday, Saturday

The West Australian

Western Australia

Wednesday

To assist First National Commercial offices, Fusion2.0 may be utilised to book and lay out your newspaper advertising.

This is a sample of some of the previous advertising undertaken by First National Commercial offices.

Auction 27 BOOLARON

G RD

• Excellent return

s

• 10 year lease

• 3 car off street p

arking

• 6 years old

• Long term tenan

t

• 10 year lease • 3 car off street p

165 sqm*

3

Auction 6.30p m On Site Mon 28 Septem ber 09 Inspect Sat/W ed 1-145pm Contact Alex Rowe 0412 345 6 78 Office Bridge St, Benalla Phone: 9123 4567 Fax: 9123 4568 Web: www.fnbenalla.co m.au

arking

Auction

165 sqm*

27 BOOLARON

G RD

• Excellent return

• 10 year lease

s arking

• Long term tenan t • 10 year lease • 3 car off street p

Your Street, You

Mon 28 Septem

ber 09 Inspect Sat/W ed 1-145pm Contact Alex Rowe 0412 345 6 78 Office Bridge St, Benalla Phone: 9123 4567 Fax: 9123 4568 Web: www.fnbenalla.co m.au

• 3 car off street p

• 6 years old

3

Auction 6.30p m On Site

arking

r Town

firstnationalco

Auction 27 BOOLARON s

• 10 year lease • 3 car off street p arking • 6 years old • Long term tenan

t

• 10 year lease • 3 car off street p

mmercial.com

.au

G RD

• Excellent return

165 sqm*

3

Auction 6.30p m On Site

Mon 28 Septem

ber 09 Inspect Sat/W ed 1-145pm Contact Alex Rowe 0412 345 6 78 Bridge St, Benalla 9123 4567 Fax: 9123 4568 Web: www.fnbenalla.co m.au Office Phone:

arking

9418 9111

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

53

MARKETING

ADVER T I S I N G S T R ATEG Y A4 Property Brochures In the commercial property market it is common for First National Commercial offices to use A4 size property brochures and ‘Information Memorandums’. These are covered in detail in Sales (Volume 3), and whilst legislation varies from State to State on the property information required, this is a brief summary of what you should include.

Commercial property brochures should, as a minimum, contain the following information: • First National Commercial artwork and logos

• Photographs

• Contact information

• Features of the property

• Plans of the property

• Benefits of the property

• Zoning of the area

• Supporting area information

• Area and boundaries Information Memorandums are a very common form of promoting a commercial property to prospective purchasers. This is a document which contains all of the elements of a simple A4 brochure, however in far greater detail. The Information Memorandum is designed to provide interested parties as much information about a property, from which they will make their decision to purchase. Bear in mind that people looking at commercial property are looking at the property from a commercial and or financial perspective.

This is what an Information Memorandum looks like.

May 20, 2010

May 20, 2010

52 Your Stree

May 20, 2010

52 Your Stree

Location

mmary

Address

t

Zoning

UCV Building Area Floor Areas

Australian Cinem as Medical Precin ct inc Pathology, Docto QLD Health, Chemist, rs Balance of Specia lities inc Post Office & Newsagency Total

Carparks

174 including

Sale Details

Nerang 14 km west of Surfers Parad ise and 65km south of Brisbane

.com.au

yourcompany

.com.au

Your Comp

any

54

The property is situated withi n the “Town Precinct unde Centre” (Nor r the Nerang th West) Local Plan - Gold Scheme 2003 Coast PlannTena ing nts by Total Annual Inco Gold Coast City me % Council (approx) $4,000,000 (as at 30/6/2008) assessed for rates & land tax purpo NLA 4,394m 2 ses plus upside subje ct to council approval extra $1,500m 2 Component

Local Authority

Net Income

yourcompany

any

Area (approx)

1,690m 2 654m 2 2,050m 2 4,394m 2

undercover parki

ng

$963,957 per annum (approxim Schedule attach ately) on a fully ed herein leased basis. Refer to the Tenancy The property is offered for Sale by Expre June, 2010 at ssion of Intere the offices of st Closing on First National Monday 21st Commercial Your Company Agent Nam e 0417 011 222 Agent Nam e 0417 011 225 yourname@yourc ompany.com.au Office: 07 668 9854

.com.au

Your Comp

Tenants by NLA (sqm)

Earle Plaza Shop ping Centre 53 Price Stree t

Site Area

sfaewfQuo quatu r, ius est ulpa vellu natesti dus. Laborum re, at eatur reris ptatus. Cepu dae etus magn id consequid mos imodi con porio mo odipiet qui dero consed quasimus alitis nobit, quas molu endae. Nequiam, mole ptatem dolore facea si restiaepu voluptae reium s est, sitis magnatem sim qui nonsequi con dis aut re pore conse niendissum quas etur, expe per ovitio dunt , sum haribusam ro que estis derecto reium Litas audipis cons in pra dolo quos , quae provit eque eossitis eum veritat empo dolut in cone aute re pa sitata ra id maxim t ipsapieni digen ceatur? ea is alic tore perspero quun da que peliqui sciderem to blat aut es faces audae volup lia qui con nusd fugia volupta ae nonsequ aecu nonsequas natur tat lla niet faceaquate sitas nonem sum magni cumendu m sapedist, volor faces voluptaspe est rendae nobit di cuptate.Ipiciis eos etur ateca tur auta

Property Title

Lot 1-3 on Regis tered Plan N116 County Ward , Parish : Nera ng 1.21ha (12,100 square metres) Refer to the Title Search annex ed to this repor

Easements & Encumbrance s

yourcompany

t, Suburb

Property Title

Executive Su Real Property Description

52 Your Stre et, Suburb Property Tit le

52 Your Stree

t, Suburb

Property Title

Property Title

Gold Coast

May 20, 2010

52 Your Stree

t, Suburb

t, Suburb

yourcompany

.com.au

Your Comp

any

C O M M E R C I A L O P E R AT I O N S M A N U A L

Your Comp

any

volume 1

MARKETING

SALE S P ROMO T IO N S Sales promotions are generally a selection of short term incentives to encourage the trial or purchase of a product or service. It may include offering frequent flyer points, holidays or advertising space as part of a package.

Sales promotions may be conducted for a specified period after which the campaign ceases and another may follow. Commercial real estate agents generally do not have sales promotions as a form of incentive to purchase a property however, do have promotional items which are used to build brand awareness.

Some commercial real estate agents, in agreement with the lessor, offer rent free periods as an incentive to prospective tenants. This is not a sales promotion as such, but rather an incentive to lease.

Nevertheless, this incentive may well have an allowance made for it in the businesses operating budget, thus making it, in a sense, a promotional item.

Some of the methods used to promote a commercial real estate business and the respective properties include: • Events such as cocktail parties • Entertainment at events (eg: football, tennis, golf days) • Exhibitions • Site visits • Listing incentives • Auction process • Premiums and gifts • Newspaper editorials Many commercial real estate agents choose to use promotional products. These are used primarily to develop the brand and are designed to put the First National Commercial name in front of prospective buyers or property owners.

Some promotional items you may consider include: • Clothing such as shirts, ties and caps • Bottle openers and cork screws • Key rings • Calculators • Drink coasters • Glassware Some of the most successful property campaigns have featured the use of promotional items.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

55

MARKETING

P UBL I C RELAT I ON S Promoting the company’s image in a positive manner through the use of media or press releases is a good way of creating awareness, and lifting the profile of your brand.

Public relations involves a variety of programs designed to promote and/or protect a company’s image, or its individual products.

In commercial property, the use of the media as the vehicle to facilitate your public relations campaign will be critical to ensuring that your business is noticed by the public and your target audience.

Commercial

Address Your Street Town PO Box VIC 3196

Contact T (03) 9418 9111 F (03) 9418 9122 E info@you rcompany.c om W firstnation alcommercia .au l.com.au

Leases: It Pa ys for Small Business to do the Hom For a small bu ework siness, signing the lease on an commitment an office or retail d an exciting st outlet is both ep forward. a big business Public relations activities and materials But according to First Natio nal Real Estate points busines Queensland, th include the following: s owners and ere are a num managers shou ber of import ld consider be ant fore signing on “It’s importan the dotted lin • Press releases t not to get lo e. cked into a pr or that incurs operty that yo higher on-going u find isn’t suita costs than you Real Estate Q • Annual reports ble for your ne realised,” Dav ueensland dire eds id Hamilton, Fi ctor, said. rst National • Property prospectus “There are a nu mber of challen ges for small bu commercial pr operties and a siness, including • Industry publications and very tight labou high demand fo space require r market. Dec ments and wha r iding your offic t yo employees an u’ re journals pr ep ar e location, ed d bottom line to pa y w ill all over the life of have an impact number of iss the lease, so it’ on your ues.” s worth thinki • Corporate magazines ng through a Location. Ac cording to Firs t National Real the new space Estate the prim is centrally loca e consideratio ted with easy In undertaking a public relations helps an empl n is whether access to publ oyer attract an ic transport,. d retain good reliable transp “A good locatio employees an ort is not avail program, you need to be mindful n d encourages able, the prov consideration business traffic. ision of parkin and, in some ar If g for employee eas, an added also consider of what is said, and how it is said. s is a co key long term grow st,” Mr Hamilt on said. “Busin th patterns in in a busy or up esses should a particular ar -and-coming ar Always get a second opinion on ea. You want ea that has co avoid an area a location that mprehensive in that is being by is frastructure an -passed becaus what is written and, if in doubt, d you want to e growth is oc curring elsewhe Visibility. If vis re.” ibility is import perhaps have a solicitor review any ant for your bu activity goes on siness, you ne in the area. Ar ed to look at e there plenty be visible to pe how much written material that is sent out. of passers-by? ople driving pa Will the office st? At the sam heavy that the or company e time, make business is all su re bu that traffic flo The last thing that you want is a t impossible to deterrent to cu w is not so access. “Too m stomers, so th e trick is to fin uch traffic can Plan for grow d a happy med be a big th. Anticipate press release that is misconstrued iu yo m ur ,” desk space or Mr Hamilton company’s grow said. storage area th th .

It ca n be at you expect worth paying current growth and taken the wrong way which, for an extra you will need rate rather th in six months an having to ne extra space. based on your gotiate an exit in turn, will have a detrimental from the lease or search for Issued by: Firs affect on your business. t National Com mercial For further in formation, co ntact: Nationa l Commercial Manager First National ACN 005 942

56

Group of Ind ependent Re al Estate Ag 192 ents Limited

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

PR O P ER T Y M A R KE T I N G PL A N Overview Now that you have secured the listing and the vendor or lessor has engaged your office to market their commercial property, you will need to develop a marketing plan for the property. This section will assist you in developing such a plan.

When developing a property marketing plan there are some primary considerations: • Objective • Property information • Budget and profitability • Timing • Target market Each of these elements are outlined below in further detail.

Objective – Taking into account the budget, profitability expectations of the property owner, and the target market, you must now fully understand the property owners objective and expectations.

Understanding their expectations will be determined during the initial discussion phase and this will assist in developing an overall objective for the marketing plan.

Property Information A commercial agent will need to be fully briefed on the features and details of the property.

Key considerations include: • Zoning of the land • Intended use of the property • Key features • Knowledge of the area • Council planning issues • Currently leased?

• Lease expiry date For a fully detailed property description you may prefer to use a Property Listing Form.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

57

MARKETING

PR O P ER T Y M A R KE T I N G PL A N Budget and Profitability What is the size of the budget that you have agreed to with the property owner? Included in the budget needs to be the agents and/or auctioneers fees. When discussing the budget with the vendor you need to be aware that they may have a certain level of profit that they wish to achieve as a result of the sale of the property.

A commercial real estate office also needs to be mindful of the profitability of the office. Do not enter into agreements to market a property if it is not profitable for the office to do so. Know your operating costs and what level of commission you need to work with, in order to achieve a satisfactory return.

Timing With full knowledge of the property you can then determine the timing of the property marketing program. Key considerations in the timing of the marketing program include issues such as intended use of the property, current tenancy or lease term, and if seasonality is an issue. These are critical factors and will influence your decision and it could well be that the promotion may end up lasting three, six or twelve months.

58

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

PR O P ER T Y M A R KE T I N G PL A N Target Market The target market has been covered earlier, however, in this instance you need to clearly define the list of people or organisations that are likely to purchase or show genuine interest in the property. This is distinct from identifying the target market when promoting your overall real estate business.

Identify your target market – using your knowledge of the marketplace and potential prospects, use the following questions to identify your target market for the listed property.

1. Identify the best uses for the property that will result in the highest price in the owner’s timeframe. ___________________________________________________________________________________________ ___________________________________________________________________________________________ 2. What need could the property fulfil? ___________________________________________________________________________________________ __________________________________________________________________________________________ 3. Describe and define the reach of the prospective markets for the property eg: Local, State, National, Worldwide. ___________________________________________________________________________________________ ___________________________________________________________________________________________ 4. What use or user is missing or limited in the market? ___________________________________________________________________________________________ ___________________________________________________________________________________________ 5. What are the benefits that this property offers? ___________________________________________________________________________________________ ___________________________________________________________________________________________ 6. Based upon the information gathered, identify and list potential prospects. ___________________________________________________________________________________________ ___________________________________________________________________________________________

The Marketing Campaign Once you know the objective, timing and the method of sale, the actual property marketing plan can be organised.

Key elements of the property marketing program are: • The timing of activities

• Brochures

• Publications where property will be advertised

• DL or A4 size marketing cards

• Internet placement

• Window displays

• Signboards

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

59

MARKETING

PR O P ER T Y M A R KE T I N G PL A N This is an example of a marketing program for a commercial property using an auction method:

MARKETING PROGRAM SALE BY AUCTION Auction date: 10am Friday 29th September, 2010 Property Description: Wareho use Address: 24 Henderson Road, Knoxfie ld, Victoria Size: 10,000 Square Metres Access: Good road access for all veh icles Listing Agent: Bill Jones Contact No: 0499 999 999 Advert Dates

Publication

Advert Size

Advert Cost

WEEK one

Mon 4th June Tue 5th June Thu 7th June Sat 9th June

Mon 11th June

Mon 18th June

Mon 25th June

Fri

29th June

Internet Brochures ready Financial Review The Melbourne Age

A4 Size 1/12 Page 5cm x 1 column

Continue Internet The Melbourne Age The Melbourne Age

5cm x 1 column 5cm x 1 column

WEEK two

Mon 11th Cont Juneinue Internet Wed 13th June Sat 16th June

WEEK two

WEEK three

Mon 18th June Continue Internet Thu 21st June Sat 22nd June

Thu 28th June 29th June

Fri

1/12 Page 5cm x 1 column

Continue Internet The Melbourne Age

5cm x 1 column

Advertising Sub Total

Financial Review Auction Day

Additional Marketing Items

3300.00 400.00

WEEK four 400.00 3300.00

1/12 Page

Photo signboard 2400 x1200 mm (nightlight optional add $110) Professional photography (4 shots) Website firstnationalcommercial .com.au , plus realcommercial.c om 200 Colour brochures DL marketing cards for local delivery x 1,000 Floorplan (to appear on rever se of brochures) Production and typesetting of all artwork Auctioneer’s fee Ancillary items sub total Total advertising

400.00 400.00

WEEK three

Continue Internet Financial Review The Melbourne Age

WEEK four

Mon 25th Cont June inue Internet Wed 27th June

800.00 3300.00 400.00

Auction Day $12,700.00

Additional Marketing Items 450.00 450.00 150.00 350.00 400.00 200.00 400.00 450.00 2850.00 $15,550.00

Prior consultation with your client is recommended to ensure that they are comfortable with all elements of the marketing program. Add or delete items as necessary in order to maximise the exposure of the property.

You need to ensure that you have the approval and sign-off by the property owner before you proceed with any marketing program.

During the campaign keep in close contact with the property owner and inform them of interested parties.

60

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

ME ASU REMEN T During the advertising and marketing program, it is essential that you gather as much information as possible to enable you to identify the leads generated, and from where the enquiries came.

For example, when advertising on the internet, you are now able to record the number of hits and searches on a particular website. This is extremely useful and can assist with future vendor presentations.

Try to monitor the number of leads generated from signboards. One way of doing this is to ask your office receptionist to ask people where they saw or heard about the property that they are enquiring about. The receptionist can keep a tally of the source of enquiries.

As you establish a rapport with potential buyers ask them where they saw details of the property. Most will gladly tell you.

If you follow these steps and ensure that a good monitoring system is in place, you can be confident that you will know if your advertising and marketing strategy has worked and if it will work for future campaigns.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

61

MARKETING

P O ST - AUC T IO N M A R KE T I N G If conducting an auction campaign it is wise to have a back-up plan in case the property is passed in. This section provides some useful information if the property that you have been marketing does not sell on auction day.

The following steps will follow immediately after a property is passed in: 1. Contact everyone who inspected the property. Advise them of the reserve and the current asking price.

2. Commence negotiations with the highest bidder and even any underbidders.

3. The ‘Auction’ brochure is reprinted as a ‘For Sale’ brochure with a price.

4. The ‘Auction’ signboard is altered to a ‘For Sale’ sign. It is most important that the signboard remain as long as possible, as it is now the prime method of keeping interested parties on a tight line.

5. Undertake further advertising.

6. If results have still not been obtained, a market review with particular emphasis on a price alteration, is undertaken.

7. Other agents are invited to conjunct and to submit buyers. You are still the lead agent and as such ‘responsible’ for the sale. All inspections are arranged and offers submitted through you. The advantages to the vendor of having a sole agent who can continue to negotiate from a position of ‘strength’ are maintained.

8. An acceptable offer is made and contracts are signed. The reserve price and highest bid are useful levers with which to get an interested buyer up in price.

9. A ‘Sold’ sign is always placed on the ‘For Sale’ board, once a negotiated sale price is agreed upon.

62

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

MARKETING

P O ST - AUC T IO N M A R KE T I N G Note - The advantages to a vendor of having a sole or exclusive agent who can continue to act from a position of strength after the auction are: • The vendor receives objective advice.

• The agent is in a strong negotiating position with buyers.

• The agent is responsible for the sale and can act in a planned, controlled and professional manner on the vendor’s behalf.

Once sold, always ask if you can manage the property for the owner.

Your Compa ny

FOR SALE .

29 Smith St,

Property ID: firs

tnationalcomm

Fitzroy

165 sqm*

ercial.com.au/16

745

Opportunity C

alls

3

• Excellent ret urns • 10 year lease • 3 car off stree t parking • 6 years old • Long term ten ant • Large block

9123 4567

firstnationalcom

Your Street, Yo

ur Suburb

Inspect hurs 1 July at 1 T Internet ID: /5158963

mercial.com.au

pm

Joe Rowe 0418 573 078

*Approx

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

63

64

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

D EFIN I T IO N S A N D TE R M S

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

65

DEFINITIONS AND TERMS

TE RMS U SE D IN COMMERCIA L AND INDUSTRIAL RE AL ESTATE AD HOC - Set up for a special purpose.

AD INFINITUM - Without end.

ADDED VALUE OF IMPROVEMENTS - The monetary amount that buildings add to the market value of land as based on the building replacement costs less accrued depreciation.

AGENT - The person or firm appointed in writing by you to act on your behalf with third parties, and thereby receive a commission.

AGENTS IN CONJUNCTION - In real estate transactions, an agency conjunctional relationship may be created by either party: AIR RIGHTS - Rights concerning the building upon, or occupancy of the vertical space above the specified site.

ALLOTMENT - A small site for home building, sometimes called a block.

AMORTISATION - The process of recovering, over a stated period of time, the capital investment through scheduled, systematic repayments at regular intervals. Periodic contributions to a sinking fund to discharge a debt or make a replacement at a future date.

ANCHOR TENANT - The main, usually the largest tenant who attracts other tenants and customers to a shopping centre.

APARTMENT - Originally the American word for a flat, but in Australia it might also be a suite or a single room which is not necessarily self contained.

APPRAISAL - The term commonly used in America to indicate what in Australia is termed a valuation. In Australia the term means an opinion or summation of the saleability of a property without resorting to a full scale valuation.

APPRECIATION - An increase in property values triggered by inflation, improvements or increased demand.

ARCADE - A covered walkway, usually with shops along both sides.

66

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

ARREARS - Debts, usually rents which have not been paid on time.

ASSESSMENT - The rates or taxes apportioned to a particular property.

ASSETS - The sum of a person’s real and personal property, including equities.

ASSIGNEE - One to whom a transfer of interest is made.

ASSIGNMENT OF LEASE - The transfer of the interest of a tenant to another whereby the other person becomes the tenant in the place of the assignor.

ASSIGNOR - One who makes an assignment.

AUCTION SALE - An auction is a public sale where buyers bid against each other to purchase a property. If the highest bid is acceptable to the vendor (the seller) the sale occurs on the fall of the hammer. The property is ‘passed-in’ if the highest bid fails to meet the vendor’s reserve price.

AVERAGE - The term is ‘subject to average’ and it is used by insurers when responding to a claim on property which has been covered for less than its full value.

BASE RENT - Meaning the minimum acceptable rental provided in a percentage lease.

BID - An offer to buy at a given or stated price an item or property which is being sold by auction.

BODY CORPORATES - The legal administrative group of owners of offices, home units, flats, town houses etc. for common property.

BONA FIDE - In good faith, honestly, without fraud, collusion, or participation in wrong doing.

BREACH OF CONTRACT - The breaking of the obligation which a contract imposes.

BRIDGING FINANCE - A temporary loan to bridge the time gap between paying for one property and receiving payment for a previous property.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

67

DEFINITIONS AND TERMS

BUILDING LINE - The uniform distance, usually from a road, behind which buildings must be erected.

BUILDING REGULATIONS - Laws laying down standards in materials and construction methods which must be observed to maintain health, safety and certain design minimums in any building or alterations.

BUYING COMMISSION - The money you pay an agent for helping you acquire a specific type of building.

CAPITAL GAIN - The profitable difference between your buying price and selling price, possibly subject to capital gains tax.

CAPITAL IMPROVED FLOW - The amount of money a property might reasonably be expected to realise if sold at the time of a municipal valuation.

CAPITALISATION - The process of estimating the yearly revenue in terms of the amount of capital it would be necessary to invest in order to receive that revenue, calculated at a given rate of interest. Method of arriving at the value of a property by reference to net returns and an expected percentage yield.

CAPITALISATION RATE - The interest rate at which an annual income is capitalised.

CASH FLOW - The surplus income, usually charted monthly, flowing into a property investment or business after servicing and operating costs have been reduced.

CAVEAT EMPTOR - Let the buyer beware. In real estate, in the absence of specific representation by the vendor or his agent as to the conditions of a property or the uses to which it may be put, the buyer takes the risk and must make his own inquiries.

CENTRAL BUSINESS DISTRICT (CBD) - The designated downtown business area of a major city.

CERTIFICATE OF TITLE - The paper that records property ownership. One copy is lodged at the Titles Office and the other with the proprietor. When the property is sold, the Titles Office annotates both copies.

CIRCA - About; around; an approximation.

CLIENT - A person who engages an agent or valuer, and who is obliged to pay that agent or valuer a commission or fees.

68

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

COMMERCIAL PROPERTY - Premises used for business purposes (such as, office buildings, shops, warehouses and hotels).

COMPARABLES - An abbreviation for sales of comparable properties, i.e. used for comparative purposes in the valuation process.

COMPARATIVE MARKET ANALYSIS (CMA) - A comparison of similar properties sold recently in the same region.

COMPENSATION - The money paid to a property owner when all or part of the property is compulsorily acquired by a statutory authority. It takes into account such things as market value, the effect on the balance of the property and loss of income.

COMPOUND INTEREST - The combination of interest paid on the principal and on interest accrued.

CONDITIONS OF SALE - The conditions under which the purchaser takes property sold to him. In the case of auction sales, a copy of the conditions may be advertised prior to the day of sale, posted in a conspicuous place in the sale room on the day of sale, printed with the particulars or catalogue of the property to be sold or copies may be distributed amongst the intending bidders. Where real property is the subject of sale the conditions contain (inter alia) provisions as to title to be accepted by the purchaser and how it is to be proved and amount of deposit.

When a sale is concluded, the purchaser signs a memorandum endorsed on the conditions, the whole becoming the contract of sale. Conditions of sale are frequently attached to goods specifying (inter alia) what warranties attach or do not attach and, generally, the purchaser will be deemed to have notice of such conditions and the sale will be affected by them accordingly. In South Australia it must be displayed at specific times.

CONDOMINIUM - An American term starting to come into Australian usage covering ownership of a flat or unit and the owners interests in parts of the property used by other owners.

CONSIDERATION - The Price.

CONSOLIDATION OF TITLE - When several parcels of land are put together, a new certificate of title is issued to replace all the earlier certificates.

CONSTRUCTION COSTS - The sum of labour and materials costs, plus contractors overheads and profits in the erection or improvement of a property.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

69

DEFINITIONS AND TERMS

CONSUMER PRICE INDEX (CPI) - The Consumer Price Index (CPI) measures quarterly changes in the price of a ‘basket’ of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households). This ‘basket’ covers a wide range of goods and services, arranged in the following eleven groups: • alcohol and tobacco

• health

• clothing and footwear

• household contents and services

• communication

• housing

• education

• recreation

• financial and insurance services

• transportation

• food CORRIDOR DEVELOPMENT - Planning schemes calling for ‘Finger development’ of urban dwellings with rural land in between.

COUNTERPART - An identical copy of an original document.

COVENANT - An agreement or promise by deed, by which one party pledges to the other that something has been done or will be done, or stipulates for the truth of certain facts. He who promises is called the covenanter; and he to whom the promise is made is the covenantor. Covenants are either positive or negative, and relate as a rule to the relationship between vendor and purchaser, or landlord and tenant. A positive covenant is one by which the party binds himself to do some act or carry out some work; and a negative covenant is one by which the party is restricted in his rights in relation to the other party, or promises not to do a certain thing. Covenants are also express or implied: express, where they are set out in terms; implied, where the mere relationship of the parties automatically creates the covenant. For covenants on title, refer to ‘Restrictive Covenants’.

COVER NOTE - Immediate insurance cover, often issued by an insurance broker on the insurance company’s behalf, for a property which has just been bought.

DATE OF SETTLEMENT - The day, under the terms of the contract, when a vendor is obliged to hand over a property to the purchaser.

DEFERRED INCOME - Future income as from a lease which included periodic rent increases.

70

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

DEPRECIATION - A loss from the upper limit of value. An effect caused by deterioration, obsolescence or both. Deterioration is evidenced by wear and tear, decay, dry rot, cracks, encrustations, or structural defects.

Obsolescence is divisible into two parts, functional and economic. Functional obsolescence may be due to: poor plan, functional inadequacy or over-adequacy due to size, style, age, or otherwise. It is evidenced by conditions within the property. Economic obsolescence is caused by changes external to the property such as neighbourhood infiltrations of inharmonious people or property uses, legislation and the like.

DEPRECIATION REPLACEMENT COST - Depreciated replacement cost is the theory that the value of an improvement may be ascertained at any time by taking the cost of replacement, of an equivalent improvement, at the relevant data, and by writing down such cost by the amount of depreciation which has accrued in the existing structure. Note: this method can only be used under certain conditions, e.g. the improvements are such they ensure that the property is put to the highest and best use etc.

DEVELOPER - A person who buys property and by improving it (through, for instance, subdivision or construction) lifts its value.

DIRECT COSTS - Site costs (purchase price plus legal expenses plus commission) plus improvement costs (plans and permits plus professional fees plus construction).

DISCLOSURE STATEMENTS – A document which provides information on a property, policy or legal agreement.

May also be known as a Product Disclosure Statement or Property Disclosure Statement when referring to real estate.

DISCOUNTED CASHFLOW METHOD - A means of isolating differences in the timing of cashflows by discounting these cashflows to their present values. The two discounted cashflow methods are the internal-rate-of-return method and the net-present-value method.

DISTRICT BUSINESS CENTRE - The heart of a substantial shopping centre in a suburb.

DOG BLOCK - The colloquial term given to the first lot facing a street with several rear boundaries of adjoining lots (facing another street) on its side boundary.

DORMANT PARTNER - A silent partner. A person who does not actually participate but maintains a monetary interest in a business and receives some of its profits, if any.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

71

DEFINITIONS AND TERMS

EASEMENT - The contractual right of one person to use a portion of another person’s land, usually as a drive for access or as a run off for water.

ECONOMIC LIFE - The potential number of years a property could be profitable.

EFFECTIVE RATE - The real rate of return or repayment, as opposed to the nominal rate.

ENGLOBO VALUE - Price that a subdivider or developer would expect to pay for land in large parcels which is suitable and ripe for subdivision into allotments and takes into account his expenses of purchase, development and a margin for profit and risk.

ENVIRONMENTAL IMPACT STUDY - An expert’s assessment of the long term environmental effects of a particular land-use scheme.

EQUITY - The percentage of a property an owner holds after outstanding loans have been deducted from the market value.

ESSENTIAL SERVICES - Statutorily monitored services within a property - including air-conditioning, fire services, elevators and electrical equipment - which all attract significant fines for you, as the owner, for non compliance.

EX GRATIA PAYMENT - A payment as an act of grace, although there is no legal obligation to make it.

EXPERT - An expert is one who, by reason of education, experience or study, is presumed to have knowledge of (or skill in) a particular field. An estate agent is regarded as an expert in property matters.

FACADE - The front face of a building.

FEE SIMPLE - The fullest and highest possible estate one can possess in real estate. Ownership of unlimited duration. Upon the owner’s death real estate will pass to his heirs.

FORECLOSURE - The legal action to posses a property which a mortgagee takes when a mortgagor defaults on payments.

72

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

FREEHOLD - The highest form of estate in land and the nearest the law allows a real property owner to approach complete ownership. A freehold estate is one which is of unlimited duration that is to say it cannot be said of an estate of freehold at the time of its creation when it will come to an end. Thus, an estate for life is a freehold estate as when it is created, while it is clear that it must come to an end with the death of a life tenant as the person to enjoy for life is called, no one can say for certain when it will end.

GENERAL LAW TITLE - Such a title pre-dates the Torrens title system under which ownership is government recorded by certificates of title; it is based on a comprehensive history of ownership.

GST - GST is a tax charged on ‘taxable supplies’ made on or after 1 July 2000. The A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) sets out the criteria for determining what are ‘taxable supplies’. There are a number of other pieces of legislation addressing particular aspects of the GST system.

The party making the taxable supply (the supplier) has an obligation to remit GST on taxable supplies to the Australian Taxation Office (the ATO). The amount of GST payable by the supplier is 10% of the value of the taxable supply (or 1/11 of the ‘price’ for that taxable supply as determined in accordance with the GST Act). Suppliers need to factor in their GST liability in setting the charges for taxable supplies (along with factoring in other costs suppliers incur in making a supply). Account must also be taken of the taxes that are being phased out or abolished with the introduction of the GST as part of the changes to Australia’s tax system.

HEAD ROOM - The distance from floor to ceiling.

HEAVY INDUSTRY - A zoning term covering noisy, smelly or otherwise unattractive industries.

HECTARE - The metric measurement of land area equal to 10000 square metres, or 2.47 acres.

HEIGHT DENSITY - Another zoning regulation limiting the height of buildings in a particular area.

HIGH RISE - A building over three or four storeys, usually requiring an elevator. It is an indefinite term. Office high rises generally comprise over thirty stories.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

73

DEFINITIONS AND TERMS

HIGHEST AND BEST USE - The most profitable likely use to which a property can be put. The opinion of such use may be based on the highest and most profitable continuous use to which the property is adapted and needed, or likely to be in demand in the reasonably near future having taken into consideration zoning regulation. However, elements affecting value which depend upon events or a combination of occurrences which, while within the realm of possibility are not fairly shown to be reasonably probable, should be excluded from consideration. Also, if the intended use is dependent on an uncertain act of another person, the intention cannot be considered. That use of land which may reasonably be expected to produce the greatest net return to land over a given period of time. That legal use which will yield to land the highest present value. Sometimes called optimum use. The use of, or program of utilisation of, a site which will produce the maximum net land returns in the future, although such return need not be in dollar amounts e.g. Social welfare buildings, schools etc. The optimum use for a site.

HOME UNITS - Individually owned homes in a development of two or more homes, usually owner-occupied rather than rented.

HYPOTHETICAL DEVELOPMENT - Hypothetical development envisages the completion of a proposed development of a vacant site or redevelopment of an improved site in order to ascertain the probable net returns from the property.

IN TOTO - Entirely; wholly.

INCOME - Money or other benefit, generally assumed to be received periodically.

INDUSTRIAL PARK - A controlled, park-like development, designed to accommodate specific types of industry, and providing the required appurtenances such as public utilities, streets, railroad sidings, water and sewerage facilities, etc.

INFORMATION MEMORANDUM – A comprehensive property document prepared by a commercial real estate agent, and provided to prospective purchasers. It includes information, to enable an assessment of the property.

INSURANCE - An arrangement by which a company gives customers financial protection against loss or harm, for example theft or illness, in return for payment, (premium).

INTER ALIA - Amongst other things.

INTEREST-ONLY LOAN - The borrower is obliged to pay interest over the term of the loan but not to amortise the principal, repaying it in a lump sum at the end.

74

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

INTERIM DEVELOPMENT ORDER - Enables a planning authority to control development of an area before the final scheme is gazetted.

INVESTMENT RETURN - The rate per month or year of return on an investment, produced by rental and/or resale.

IPSO FACTO - By that very fact.

IRREVOCABLE - That which cannot be undone.

JOINT TENANTS AND TENANTS IN COMMON - Property, whether real or personal, may be owned under the joint tenancy or tenancy in common. Joint tenancy is ownership in equal undivided shares, stated to have the technical requisites of unity of possession, interest, title and time. The most important feature of joint tenancy is known as survivorship; on the death of one joint tenant, his share passes to the survivors so that they remain joint tenants of the whole. Joint tenants are regarded collectively as a single person in respect of their dealings with others. In the case of tenancy in common, although each has an undivided share, such share is distinct and separate. The interests needs not be equal; thus ‘A’ may have one undivided third share, and ‘B’ two undivided third shares of the same property. The most important feature is that the share of a tenant-in-common may be separately disposed of by him during his lifetime, or by will. On his death it passes, not to the other tenants-incommon, but by his will, or by the laws of intestacy.

LAND USAGE - The purpose for which land is utilised or determined by zoning regulations (for example, residential or industrial).

LANDLORD - The owner of a property for leasing.

LEASE - A grant of the possession of real property to last for a fixed or ascertainable period at will or in perpetuity, and usually with the reservation of a rent. The person who grants the lease is called the lessor, the person to whom it is granted being the lessee. A lease must be for a less estate or term than the lessor has in the property, for if it comprises his whole interest it is a conveyance or assignment and not a lease. Where a person who is himself a lessee grants a lease of the same property to another person for a shorter term, it is called an underlease or sub-lease.

LEASE WITH OPTION TO PURCHASE - A lease embodying the right of the lessee to buy the property at an agreed price within an agreed time.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

75

DEFINITIONS AND TERMS

LEASEHOLD ESTATE - A non-freehold estate, the tenant’s or lessee’s interest. An estate in property created by a lease.

LEASEHOLD IMPROVEMENTS - The improvement and/or additions to leased property which have been made by the lessee.

LEASEHOLD VALUE - The value of a lease from the points of view of both the lessee and the lessor. As economic conditions change, a lease may be worth more or less with the passing of time. Leasehold value is that increase in the market value of a lease over what is being paid.

LESSOR - The party who grants a lease.

LEVERAGE - Putting a low amount of capital into a property and borrowing the balance to achieve the best return on your capital.

LIQUIDATOR - A person appointed to carry out the winding up of a company. The duties of a liquidator are to get in and realise the property of the company, to pay its debts, and to distribute the surplus (if any) among the members.

MAINTENANCE - The expenditure required to keep a property in an efficient operating condition.

MANAGING AGENT - A real estate agent authorised to manage a property.

MARKET PRICE - The actual price paid for a property; ‘market value’ your property.

MARKET VALUE - As defined by the courts, the highest price estimated in terms of money which a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used and assumes a willing buyer and willing seller.

MEZZANINE - An intermediary floor, usually between the ground and first floors.

MEZZANINE FINANCE - A high yielding investment in property development, filling the gap between bank lending and the developer’s own equity, and sometimes with a second mortgage over the property.

MODUS OPERANDI - The way in which anything is done, mode or manner of operation.

76

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

MORTGAGE - A document pledging a property as security for the repayment of the money borrowed on the property.

MORTGAGE FUND - A managed fund that invests in mortgages.

MORTGAGEE - The lender on the mortgage MORTGAGEE IN POSSESSION - The mortgagee gets a court order to take possession of the property, usually after a mortgagor defaults.

MORTGAGOR - The borrower.

MUTATIS MUTANIMS - With the necessary changes of things that have to be changed.

NET LEASE - Where a lease is responsible for all building outgoings on top of the agreed rent.

NOTICE TO QUIT - Enables under strict conditions, a landlord or tenant to terminate a tenancy without the agreement of the other.

NULL AND VOID - Of no legal effect, a nullity, e.g. an agreement for an illegal consideration, it can neither be enforced and in general, money paid under it cannot be recovered by the payer.

OPTIONS - During the terms of a lease there may be an ‘option’ to further lease terms. For example six months prior to a lease expiring there may be an option to extend the lease for a further 12 months at an agreed lease rate.

OUTGOINGS - All expenses on a property.

OWN YOUR OWN FLATS - The expanding practice of people buying, rather than renting, flats and units. Usually the owner gets a separate title and undertakes to pay a proper proportion of running costs for the whole building.

PARKING RATIO - The ratio of parking places to office area or number of flats - a very important consideration.

PASSED IN - If a property is not sold at auction because the owner’s reserve price has not been reached, it is passed in, the highest bidder having first option to purchase at the reserve price. It is then possible to negotiate for the purchase, either on the same day or afterwards. Properties so passed in are mostly sold shortly afterwards at a price close to the passed-in figure.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

77

DEFINITIONS AND TERMS

PEPPERCORN RENT – Historically a rent of one peppercorn a year; in fact a method by which a landlord can let a property for virtually nothing, but retain all ownership rights.

PERCENTAGE RENT - Rental income received in accordance with the terms of a percentage clause in a lease, normally with a guaranteed lease rental.

PHYSICAL DEPRECIATION - The decline in property value due to the physical action of time and the elements, as well as through usage. Deterioration through the physical depreciation is normally as a result of inadequate maintenance of normal weathering and decay.

PLOT RATIO - The ratio of building area to site area.

PREMIUM - The payment made to an insurance company to obtain insurance.

PRO FORMA - As a matter of form.

PRO RATA - In proportion.

PROPERTY MANAGEMENT - A real estate agent manages properties for landlords, ensuring the property complies with legislation and regulations at all times, and is also responsible for selecting tenants, collecting rents, arranging maintenance and so on.

PROPERTY SECURITIES FUND - A managed fund which owns units in a variety of listed property trusts, and sometimes also in other property assets.

PROPERTY SYNDICATE - A group that is formed under a legal structure to invest in a property asset for a specific term. Large public syndicates are run by property management companies.

PROPERTY TRUST - A managed investment in property. Most trusts are listed on the Australian Stock Exchange.

PROPERTY WEALTH - The difference between the market value of properties and the amount of money owed on them.

PUBLIC LIABILITY - The insurance taken by companies and private individuals to protect themselves against claims made by members of the public who might be injured in some way on the property.

78

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

PURCHASE AND LEASE BACK - A real estate transaction wherein an investor purchased a property and allows the seller to remain in possession as a tenant.

QUANTITY SURVEYOR - A professional who calculates the materials required for a construction, and also helps to compile a depreciation schedule.

QUID PRO QUO - Something for something. Consideration.

RACK RENT - The rent at which a property is worth to be let by the year in the open market, i.e. what a tenant, taking one year with another, might fairly and reasonably be expected to pay, the tenant paying rates and taxes, and the landlord doing repairs.

RATEABLE VALUE - The estimated value of a property on which rates are assessed.

REAL PROPERTY - The ownership of physical real estate land buildings.

RECEIVER - A court-appointed person who takes possession and manages the property of a bankrupt or of property being otherwise litigated. The receiver’s function is to maintain the premises and its assets for the benefit and protection of those having equity in it, until a court decision as to its disposition is reached.

REDEVELOPMENT - The development or improvement of cleared or undeveloped land in an urban renewal area. In technical usage, this term includes demolition of existing buildings, erection of buildings and other development and improvement of the land, by private or public redevelopers to whom the land has been made available, but it does not include site or project improvements installed by a local public agency in preparing land for disposition by sale or lease.

REGIONAL SHOPPING CENTRE - Drive in developments which comprise department stores, supermarkets and specialty shops, and which are replacing the ribbons of shops along both sides of busy streets.

RESERVE PRICE - The minimum price at which the owner of a property is prepared to sell his property at auction.

RESTRICTIVE COVENANT - A covenant on a title restricting the full use of the land. It may be removed by order of the court or in some cases by consent of the person or persons named in the covenant as having this power. A common example is a covenant not to erect more than one dwelling on the allotment at which the covenant relates.

Another typical covenant is that buildings to be erected on the subject land must have brick external walls.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

79

DEFINITIONS AND TERMS

REVERSION - Where land is granted by the owner for a less period or interest than he himself has, his undisposed interest is termed the reversion, because the land will revert to the owner, or the determination of the particular estate.

REVERSIONARY INTEREST - Any right in property the enjoyment of which is deferred e.g. a reversion or remainder, or analogous interests in personal property.

REZONING - A planning term in which the local authority can alter a planning scheme to allow, say, commercial rather than residential building.

RISE AND FALL CLAUSE - A clause in a contract (normally in building contracts) providing for an adjustment of the contract price upwards or downwards according to movement of prices, wages or other factors specified in the clause.

SALE AND LEASE BACK - An investor buys a property and leases it back to the seller - a practice which is on the increase.

SATELLITE TOWN - A separate town situated near a large city that is closely tied economically, politically and socially to the metropolitan area it borders.

SCHEMATIC - (i) Relating to a scheme, plan or diagram. (ii) An architect’s three-dimensional, detailed drawing.

SECURITY DEPOSIT - Deposit to assure performance usually of a lease.

SELLERS MARKET - When any community including real estate is in short supply, the seller is in a more commanding position. Within reason, an owner can generally name his price and terms.

SITE VALUE - Means the sum which the land, if it were held for an estate in fee simple unencumbered by any lease, mortgage or other charge thereon, might in ordinary circumstances be expected to realise at the time of the valuation if offered for sale on such reasonable terms and conditions as a bona fide seller might be expected to require and assuming that the improvement (if any) had not been made. (Definition from Local Government Act, Victoria). The value of the land component in a developed property.

SPEC. BUILDER - A speculative builder is simply a builder who builds houses first then sells them as a package deal at a profit.

80

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

DEFINITIONS AND TERMS

SPECIFIC PERFORMANCE - A contract is specifically performed when each of the parties to it does the very thing or things which he contracted to do, and when accordingly, each party gets what he by the contract bargained for. The right to specific performance of a contract is enforced through the Equity Court, which may decree that a contract shall be specifically performed and carried into effect.

SPECULATOR - One who speculates; that is, one who buys any commodity, including real estate, in the expectancy of selling in a higher market.

STATUS QUO - The state in which things are, or were.

STRATA TITLE - The title for a segment of a property in the expectation of selling it later for a higher price.

STRATUM - Stratum title means a part of land consisting of a space or layer below, on, or above the surface of land, or partly below and partly above the surface of the land, defined or definable by reference to improvements or otherwise, whether some of the dimensions of the space or layer are unlimited or whether all the dimensions are limited, but refers only to a stratum rateable or taxable under any Act. Strata is the plural of stratum.

SUBDIVISION - The division of a piece of property into building lots; inevitably this requires several official approvals.

SUB-LEASE - A lease granted by a lessee of the whole or part of the leasehold property. The length of the sublease must be less than the unexpired part of the tenants own lease of the property.

SUMMATION - Means an addition of the values of the constituent parts of a property to arrive at a total value.

SURVEY - The accurate measurement and description of a piece of land, usually showing structures and contours.

SYNDICATE - A group of investors (individuals or corporations) who get together to invest in a financial project requiring more than capital than each one has individually.

TENANCY AGREEMENT - A document setting out the rights and obligations of lessor and lessee, the rental and period of tenancy. It is not registered upon the lessor’s certificate of title. Usually it is used where a lease is not entered into.

TENANCY AT WILL - The tenancy can be closed at will by either landlord or tenant.

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

81

DEFINITIONS AND TERMS

TENDER or SALE BY TENDER - In a Tender situation, each interested party is issued with full particulars of the property and also a contract of sale. On the given date for the close of Tenders, the potential purchasers must complete the contract of sale and lodge with the vendor’s agent together with the specified cheque for deposit.

The vendor also undertakes, in the Tender documents, to respond to the potential purchasers by a certain given date, possibly within 2 to 4 weeks. During this period the vendor selects the Tender which is acceptable and, on forwarding the counterpart contract to the selected party, binds both parties to the sale. In every case, the vendor would reserve the right not to accept any Tender, if they so wish.

TITLE DEEDS - The documents proving ownership or property.

TORRENS TITLE - A title registration system used very much in South Australia. Named after Sir Robert Torrens, a British administrator of Australia, this system allows the condition of the title to be discovered without resorting to a title search.

UNIMPROVED CAPITAL VALUE - The value of a piece of unencumbered land without improvements.

UNREGISTERED MORTGAGE - Not registered on the title of the property.

URBAN RENEWAL - Redevelopment, usually in the more dilapidated sections of cities.

VENDOR TERMS CONTRACT - When a property is paid for over time - usually a deposit first, and then regular payments of the balance, plus interest, over several years.

VIVA VOCE - By word of mouth.

VOID - Having no legal effect.

WITHOUT PREJUDICE - These words, used during a negotiation, mean that any suggestion or plan put forward cannot be used as evidence later if the negotiations fall down.

YEARS PURCHASE - The number of years required for the net income from an interest in property to amount (without interest) to a sum equal to the purchase price. The years purchase in any particular instance is determined by dividing 100 by the rate percent. NOTE: Years purchase multiplied by net rent equals purchase price.

YIELD - The money you derive by way of income or profit from a property deal.

ZONING - The method by which councils or planning authorities control property use (for example, residential or industrial).

82

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

N OTES

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

83

N OTES

84

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1

C O M M E R C I A L O P E R AT I O N S M A N U A L

volume 1