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Thursday, 8 October 2009

25 Tips on Selling/Letting Commercial Properties More Quickly

I have been dealing with the legal aspects of the sale and letting of commercial properties for 24 years now and in that time have noticed what can really help a property fly off the shelf and race to completion. In the current climate, buyers / tenants are nervous, cautious, constantly re-evaluating their cash flow situation and even when they have agreed terms on a purchase or lease, deals frequently collapse because the Tenant / Buyer gets cold feet.

Therefore, it is vital that Sellers / Landlords sell / let more quickly and more effectively because the number of buyers/potential tenants is vastly reduced.

Here are some tips for speeding up the whole process and for increasing sales:

1. Get a comprehensive seller's / letting pack together including searches (Local Authority Search, Environmental Search, Drainage Search, Chancel Check), up to date title entries and filed plan, replies to CPSE standard commercial enquiries, copy planning permissions, building regulation approvals. Get all this information scanned and put up on a web site or put on to a CD so that when you have a buyer/tenant they can start looking at the pack and get their solicitors instructed without weeks of delay waiting for searches. This is the same concept which has been used in the residential market with HIPS packs but the difference is you seller's / Letting pack will be completely definitive. This will mean you can apply extreme pressure on the Buyer/Tenant to exchange within say 14 days because there is nothing further to request or which could cause delay. This also flushes out time-wasters much more quickly.

2. Commission an Energy Performance Certificate and include this in the Seller's / Letting pack. These are compulsory for all but the smallest properties. They take about a week to organise but it can cause delay if left till later in the transaction.

3. Ensure you have an asbestos survey report for the property. It is a legal requirement to have one and again it can cause delay if this is left till later in the transaction. Get it sorted immediately before the property is put on the market. Put it in the seller's pack.

4. Ensure you have a fire risk assessment on the building/common parts where the unit being sold or let is part of a building/estate. Get this put on the Seller's pack CD/website.

5. Ensure you a building regulations completion certificate for all works and alterations carried out to the property. This causes massive delays and is often one of the last things holding up exchange. Get it sorted now and pre-empt the Buyer's solicitor's enquiries.

6. Ensure you have comprehensive planning documenation for the building/site including copies of all planning permssions, evidence of compliance of all planning conditions. This is another thing which causes unbelievable delay. It does cost money but it is well worth it.

7. Ensure you have a Land Registry compliant plan of the property being sold/let. This means that it must be to a recognisable scale, have a north point and have sufficient identifying features on it so that the Land Registry can plot it on to the Filed Plan. Many developer clients have software which can easily produce compliant plans or there are some very good companies who can produce fantastic compliant plans at very reasonable prices. Get it sorted before the transaction gets going.

8. On a new build, get the collateral warranties sorted out well in advance from the professionals involved in the build eg. architects, structural engineers, electrical contractors, steel frame contractors. Get them to sign the warranties prior to the sale/letting. Get a copy of their indemnity insurance policy and their confirmation on how many times the warranties can be assigned.

9. Ensure that the Lease is Lease Code Compliant to speed up negotiations. The Code for Leasing Business Premises in England and Wales 2007 is the result of collaboration between commercial property professionals and industry bodies representing both owners (Landlords) and occupiers (Tenants).

The Code aims to promote fairness in commercial leases, and recognises a need to increase awareness of property issues, especially among small businesses, ensuring that occupiers of business premises have the information necessary to negotiate the best deal available to them.

10. Make sure the Heads of Terms are comprehensive by involving the solicitor in the preparation of the draft. This can massively speed up the process of negotiation because although not contractually binding, it is very hard to go back on what is set out in the Heads of Terms from a tactical point of view.

11. Use Google Sketchup (free software) to produce an electronic mock-up of the building to save stupid questions from the lawyers and endless site visits. The link is here

12. Produce a directory of services useful to a business occupying your building. Start ups need recommendations for accountants, solicitors, bankers, website designers, printers, signage companies. Have a list already to add value as a Landlord / Seller.

13. Create a database of your existing tenants and build relationships with them by having a monthly email newsletter. This could mean that tenants will stay loyal to you as a Landlord or purchaser will buy from you again. The relationship between landlord and tenant is a partnership not unlike marriage. Court and woo your potential tenants as you would were you a suitor. This is just an office building but a Bloggs Building. Create a legend.

14. Email / blog your followers / fans / customers / agents with useful information about capital allowances, ways of reducing energy bills. Become a resource before you sell/let.

15. Consider being a green landlord. Alter construct your building to improve its energy efficiency. Install solar panels, greywater systems, heat sinks, air to heat exchange heating systems, lime and hemp walls. There may be government grants available. There are capital allowances for energy efficient plant and machinery.

16. Give talks highlighting your product at Chamber of Commerce, networking breakfasts etc.

17. Use creativity in designing your sales literature, business cards.

18. Use a puppy dog close to secure sales/lettings. For example, take the unit on a serviced licence to occupy basis before you take a longer term lease.

19. Offer flexible renting terms eg annual breaks for Tenant only, up and down rent reviews, service charge caps/ceilings, turnover rents, monthly rental payments. It's a tough market. Differentiate by being flexible.

20. Use video testimonials of satisfied buyers/tenants. Emphasise long-term relationships with your buyers/tenants.

21. Offer start up finance backed with suitable collateral security to fund the tenant's fit out costs and then rentalise the improvements.

22. Offer discounted prices on office furniture with a hook-up with a local supplier.

23. Aim to win awards for your buildings whether for being green or for being a considerate landlord. Make tenants/buyers want to be part of the buzz around your company.

24. Define a Unique Selling Proposition for your product, something for which you can be famous for. The most luxurious, the most energy efficient, the greenest, the most hi-tech. Media outlets love superlatives. So does Google.

25. Get comprehensive service charge information collated prior to marketing showing the last 3 years audited service charge accounts, receipts for expenditure, financial projections.

There's a few ideas to be getting on with. It's all about standing out from the market. There is so much vacant commercial property stock just sitting there in industrial parks, high streets, business parks which shouldn't be unlet/unsold. Take your product out to the market. Just like in Gordon Ramsay's Kitchen Nightmares, when Gordon goes out into the streets with samples of the food. Take the message to the people. The old ways of print and TV advertising are dying. Have a paradigm shift. Re-think your sales and marketing strategy. Think bold. God speed!