Commercial clients typically don’t cold-call you. You have to find them and earn their business over time. But how do you do that? Where do you even start?
Texas REALTOR® magazine asked past winners of the William C. Jennings Award, the state REALTOR® association’s honor for the outstanding commercial transaction of the year. Here’s what they recommended.
Where do you find commercial clients?
Cesar Cepeda, 2021 winner: I send out a lot of direct mail. Through databases, I can find recipients such as property owners who need to refinance and owner-occupied properties who may not know about sale-lease back. I drive by properties looking for distress signals: poor maintenance and higher vacancies. Those could be signs of an inability to manage the property. Investors love those assets.
I send frequent educational emails along with commercial lenders, insurance brokers, bankers, and service companies. Not many want to receive calls or solicitations, but they can appreciate educational tips such as information on property taxes, insurance coverage, or interest rates.
Doing this allows me to contact more prospects and educate them at the same time.
I find that prospecting to commercial owners is no different than in residential real estate, except the content and format may be more serious or investor-targeted rather than fun, seasonal, or family oriented. Creating YouTube videos may not build a list of prospects immediately but will generate credibility.
Many investors are looking for cash flow. I can educate the owner that instead of selling now, we can lease a vacant property. Once that’s done, selling may not be a big challenge. It just takes time, effort, and the client’s education.
Will Northern, 2019 winner: Volunteer your time at real estate-related nonprofits and governmental bodies, such as public improvement district boards, zoning commissions, and planning commissions. Also convert prospects that reach out about existing listings.
Lee Wheeler, 2018 winner: Great commercial clients are cultivated over time. You build a relationship with them so they do not just work with you, they become a trusted resource and referral partner. To do this you have to look at who you want and then go out and cultivate them. Let them get to know you before you ever ask for their business.
Coy Garrett, 2016 winner: Watch and be in touch with surrounding properties. A business may be expanding, downsizing, or looking for an additional location. Pursue vacant properties and vacant land. It’s really no different than farming in a residential neighborhood, but much broader in scope.
Jef Conn, 2015 winner: My specialties within commercial real estate are the office and warehouse sectors. After 15.5 years in the business, many clients are referrals, but I have a lot of new clients that are made through personal relationships and prospecting.
Ken Wimberly, 2012 winner: I am fortunate today to have almost 100% of my commercial clients come from repeats and referrals. I spent a great deal of time early in my career developing relationships with people who were building significant businesses. Many of those people have become repeat clients and dear friends; some have even become business partners.
What is your advice for cultivating commercial clients?
Cepeda: Constant communication. There are several ways to do it: mail, email, phone, or social media. LinkedIn has been great for me. I also regularly email or send YouTube videos to them via WhatsApp.
Northern: Reach out to prospects in a timely manner.
Wheeler: You must focus on the relationship. What do you know about your clients, their business, their industry? You must know more than they know for you to truly gain their lifelong business. Read the same periodicals they read about their industry. Know their company history. Go out of your way to know them on a personal level. Become indispensable to them.
Garrett: Know your properties, be responsive, and be accurate in what you say and deliver.
Conn: Run the marathon, not the sprint. Relationships take time and are built slowly. Don’t neglect taking the time to get to know your clients or potential future clients. Get to know your market and the players within. When you build those relationships and consistently show up, you’ll be known as the commercial expert.
Wimberly: Find ways at every opportunity to add value to the people you interact with. Many times, your prospects or clients are much more knowledgeable in an asset class than you are, particularly early in your career. However, you very likely have knowledge or expertise in other topics that could be very beneficial. You might also have contacts in your network that could be of benefit. In one case, I became an accountability partner to one of my clients for a fitness program he was starting. We eventually became great friends and then business partners.
What are the challenges associated with finding new clients, and how can agents and brokers overcome them?
Cepeda: It is challenging to engage with prospects, but it is more challenging to ask them to differentiate between agents. Many prospects get bombarded with solicitations to the point where they don’t know who can help them with their commercial asset. My response is to be persistent and to educate the clients about the qualifications needed to practice commercial real estate.
Northern: Time management. Make prospecting a priority, especially in a slowing economy.
Wheeler: The biggest hurdle nowadays is the internet and instant information they can get online. The sad part is that 90% of that information is wrong and misleading. You need to overcome this by being a resource for them to get information. Seek out what they are seeking and when you find it, connect them with those who can help. Above all, forget about yourself and focus on the needs of others. By focusing on the needs of others you will easily fulfill your own needs. What you will find is that money is not your true motivator. Helping others is what drives those who build lifelong clients into lifelong friends. Become a problem solver for anyone needing it.
Garrett: Be active and highly visible in your community. Become the go-to expert. Have effective, consistent, and different types of advertising. Advertise education and expertise. Every business, whether large or small, is a potential client. Every phone call is just as important as the last call. My motto is, “The harder I work, the luckier I become.”
Conn: Today’s clients are sophisticated and likely have done their research on you. They have access to listings where before they could only find them through agents. It’s up to each agent and commercial real estate firm to market their services and agents in a way that shows them as the experts in the industry. Consistency is key. Agents who continue to show up day after day are the ones who will win the business.
Wimberly: One of the great challenges people face today is the lack of personal interaction. Too many people sit behind a screen and talk to their “friends” via social media. I believe it is crucial to get out of the office, meet folks in person, and really get to know people. Attend networking functions, happy hours, economic updates, breakfast meetings, and live training classes. You never know where you might meet the best client of your career.
Ask an Educator
Ginger Unger is a real estate educator and Certified Commercial Investment Member (CCIM) who has spent more than 30 years in commercial real estate and residential investments. She teaches the required courses for the Texas REALTORS® Texas Accredited Commercial Specialist designation. Here’s what she had to say about finding and cultivating commercial clients.
Where can you find new clients?
You can utilize these services to obtain databases of investors, tenants, and landlords to communicate with them:
- CoStar Public Record
- Data Axle
- MarketViewer to help obtain current market information
- MSCI Real Capital Analytics
- REALTORS® Property Resource for prospecting using commercial property ownership records. Use filters like public records. Focus on five to 10-year ownership periods; these owners may consider a sale or 1031 exchange.
- Tenant Base
Where can you network to find commercial prospects?
- Building Owners and Managers Association (BOMA) local chapters
- CCIM Institute and Society of Industrial and Office REALTORS® (SIOR) local chapters
- Chambers of Commerce
- Commercial Real Estate Development Association (NAIOP) local chapters
- Industrial trade organizations such as manufacturing, office, insurance, medical, retail, or multi-family
- ICSC annual conference in Las Vegas
- Local commercial overlay boards
- Local planning and zoning commissions. Attend rezoning meetings to learn who are the key players in your marketplace
- Volunteer for charities and nonprofits
How do you cultivate prospects?
Once you have identified prospects from these and other sources, you can start sending out introduction letters, sales letters, postcards, and lease and sales analyses of the area where the investor’s commercial property is located. Become the expert in your prospects’ areas of interest. Offer free broker price opinions and information that pertains to the investor, tenant, or landlord’s business.
Newsletters can include educational articles on topics such as: the current state of the commercial market and current interest rates; tax incentives; whether cap rates are compressing; how to analyze cap rates on an investment property; 1031 exchange requirements; optimizing purchasing in an opportunity zone; and utilizing sale-lease back transactions to gain capital to expand businesses.
Try to set up a lunch or coffee meeting at least once a day with a new prospect or a previous client to continue to generate leads. At some point, you should be on a referral basis with commercial clients.
What should you avoid?
Trying to be an expert in all sectors of commercial real estate. Most investors will be able to tell if you have the expertise you state you have on your resume.
What else should commercial agents consider?
It takes time to cultivate relationships in the commercial real estate industry, and networking is key. Commercial agents heavily rely on their relationships and connections to put deals together. You will be seeking off-market properties for your clients. This is a large part of why investors hire commercial brokers; they are seeking your connections to build their portfolios. Remember that most investors have access to LoopNet and CoStar.
The cost to enter the commercial real estate industry is substantially more than the residential real estate industry. New agents try to cut corners, like not subscribing to the commercial listing platforms required for marketing and compiling comps for commercial properties. Most investors have subscriptions to all commercial listing platforms, and they will know very quickly if they use an agent who does not have properties on those platforms. This one item can be detrimental to a new commercial agent.
The agent must have the appropriate listing platforms and tools to handle commercial transactions, just like having MLS access is a critical requirement for the residential industry. Completing training and having a mentor is also key to succeeding in this industry. The risk is too high to try and wing a commercial transaction.
Any agent can learn and be trained in the commercial real estate industry. It just takes time to develop your brand, reputation, and education base. I firmly believe in programs such as the CCIM and SIOR programs for new and seasoned commercial real estate agents to build their knowledge base. No two commercial transactions will be the same; having a solid education in commercial real estate will make the difference your success.