Flashcards in Chapter 7 Deck (17)
How does knowledge of fundamental economic data and demographics assist in the market analysis phase of the leasing process?
It enables the asset manager to protect the types of prospective tenants, their industries, and the size and typical terms such firms pursue (rent, length, concessions, etc.)
Describe the difference between the three property classes and describe why it is important to know the difference during the market analysis process.
Class A-less the 30 years old, attract best tenants, well maintained, highest rents and lowest vacancies, large efficient floor areas
Class B-less than 60 years old, show little deterioration, high occupancy and fully functional, includes older building that have been modernized
Class C-more than 60 years old, not first class tenants, experience functional obsolescence, low rent tenants
What critical information should asset managers request through a formal or informal RFP process for identifying a leasing company for their properties?
names and bios for leasing team members
names of other assignments the firm and its agents supports and potential conflicts of interest
brokerage firm evaluation of your property and market analysis
examples of marketing tools/strategies used in other assignments
marketing programs developed to ensure follow up on cold calls, showings, etc.
proposed feed schedule
Describe the three key members of an effective leasing team and the value each offers to the leasing process.
*adds value as a proven producer of leases
*taking a leadership role in leasing team and acting in capacity of creative/skilled lease closer
*serves leasing team in ability to solicit, negotiate, and close business deals and acting in support of senior member.
*contacts tenants, cold calls prospects and canvassing the market.
*Handling routine tasks
What issues should be considered in hiring practices for leasing teams?
*proposed fee structure
*quality and effectiveness of leasing presentation is strong indicator of teams skills along with their ability to understand and meet the needs of prospective needs or prospective tenants
*potential conflicts of interest
*selection should focus on meeting owners objectives and needs of property
Leasing agent prospect reports are used by asset managers to monitor what type of marketing activities?
*status on potential occupancies
*terms of leases being negotiated
*tenant occupancy locations in the building
*actions for follow up
What information is the leasing team responsible for providing to property managers during the budget preparation process?
information on new and renewing tenants including:
*vacancies and whether or not these spaces will lease in budget year
*rent/tenant improvement costs for each space
*costs associated with leasing spaces
*expiring leases and whether or not they will be renewed
marketing strategy for vacant spaces
*can be done using data from previous year's expenses
Identify some strategies an asset manager can employ to facility positive relationships with tenant brokers.
*paying commissions quickly and fairly
*deciding on compensation levels as negotiations begin and not when lease begins
*treating brokers with respect/holding broker events
What are the costs that are incurred by a property as a result of losing tenants (that is, costs resulting from leases that are not renewed)?
*vacancy time costs-lost rent
*tenant finishing costs-costs for configuring space for new tenants
*brokerage fees-paid to leasing team
*legal fees for negotiation of new lease
What strategies can property managers use to assist in getting tenants to renew their leases?
*Cultivating personal relationships
*managing building and services well
*addressing tenant concerns quickly along with follow-up
*ensuring renovations don't disrupt tenants
Why is leasing such an important aspects of the performance of an investment?
Because without leasing no value is created in the asset.
Ina strong market what types of rents can a Class A property generate relative to the other two classes?
High rent/low vacancy
Describe a fundamental step taken by asset managers in completing a market analysis for a given property.
Placing asset into Class A, B, or C category
Document listing desired services and evaluation criteria and method
Describe why reporting is a critical aspect of asset management as it relates to the leasing team..
Proper reporting ensures the leasing team executes an effective marketing program to ensure property is exposed to enough prospective tenants.
Define tenant representative.
a real estate professional, often a broker, who represents a tenants interests in the search for suitable space and negotiations of lease terms favorable to the tenant.