Beyond the Price Tag: Driving Demand in the Commercial Real Estate Market

Let’s face it, Pricing strategy is important for every business. It’s probably the most overlooked lever in business….except for in Real Estate where it’s many times the first lever of discussion when property owners talk to real estate agents.

Why is this? Part of the answer ties in with the equation between selling price and appraisal value. If the selling price is substantially over appraisal value, bank financing becomes a challenge unless you’re bringing a larger pile of cash to the table which can present a challenge for many buyers.

We’re not discounting the importance of pricing strategy – it’s certainly an effective lever, but if you’re a property owner you know the criticality of selling or leasing your property at your target price. And, this holds true not just for Madison, WI, but for all markets.

In this article, we’ll outline what you can do prior to negotiating on price to maintain or even drive demand for your property.

Here are 5 Steps for Driving More Demand for Your Commercial Real Estate:

1) Think of your commercial property as a business — because it is!

Look at any B2B (Business-to-Business) company in the world — they have Sales and Marketing systems to drive more demand to their products and services.

If the Cokes and Pepsis of the world can do it, commercial real estate should be no different, especially given the fact that real estate is less a commodity than something like soda.

That means putting on your marketing cap to maximize your selling price. Think through these items:

• Who is your target audience? What type of buyer or tenant would benefit most from your property?
  

• What is their motivation? Go beyond surface level thinking and push yourself to match your property’s attributes to the benefits they are seeking. This requires honest reflection, but is an excellent exercise in gaining clarity over the buyer persona you’re targeting.
  

• How is your property different from the competition? So many times buyers and tenants look at surface-level metrics like price-per-square-foot, square footage, demographics and geographic location. Change the narrative and thought process by highlighting what may be obvious to you, but not to a buyer or tenant.

  • How is my property’s location unique in terms of its relation to other complementary businesses? Could there be a mutually beneficial strategic partnership opportunity or co-marketing play?
    

  • How is the purchasing or leasing experience unique? If you’re a smaller property investor or owner, there are major benefits for small business owners to not be working with a large commercial conglomerate. There’s typically more flexibility and faster response times from management.
    

2) Augment traditional commercial real estate sales and marketing plays. A sign in front of your property and a listing on the MLS or other online brokering site is fine, but it’s a relatively passive strategy.

To drive more demand at a faster rate, find an agent that has these capabilities:

• Leveraging Data and Analytics to find potential buyers and tenants. Savvy marketers understand how to identify groups of potential prospects.
  

• Utilize “full-stack” marketing systems to deploy messaging across email, social media, and paid advertising channels. A full-stack marketing system resembles the same type of marketing system that our friends over at Coke, Google, or Microsoft would use, but without the big budget.

3) Ensure that there is a follow-up system in place. Because most commercial (and residential) real estate licenses are “sales” licenses, many of the important follow-up systems found in Marketing are left out of the picture.

These follow-up systems target what we call the top-of-the-funnel in Marketing – the point where the highest number of leads originates.  

These often are prospects who are very early in their search. However, there are more top-of-funnel-prospects in the market than there are bottom-of-funnel leads (bottom of-funnel = nearly ready to buy).

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True story: There was a prominent local business for sale in the city I live in (Madison, WI). I found the listing on a popular business brokering website and submitted my information. After waiting for more than a week, I finally called the broker and left a message inquiring about the business.

She ultimately did call back, but after sharing with her that I was in the initial stages of research, I could tell that her level of interest was marginal. Since that conversation, I haven’t received a phone call or email.

This goes back to the point that real estate agents are generally experts in Sales, not Marketing. But, it’s important that there are systems in place to nurture prospects who are early in their process.

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4) Understand your buyer's goals. Once you’ve finally been given the opportunity to engage in person-to-person communication, there’s a chance to dive deep and understand what is driving the potential buyer on a much deeper level. Just like Marketing needed to align the property attributes with the Target Audience’s desired property benefits, the same holds true during the Sales process.

Remember, Sales isn’t the process of convincing the prospect this is the deal for them; rather, it’s the process of understanding the customer’s needs and aligning both parties to a mutually beneficial outcome.

5) Follow the metrics.

Whether you're engaging in Marketing or Sales, both areas are chock-full of meaningful metrics. Key areas to examine include:

• # of website visits for your property's listing.
  

• Bounce rate - the point at which prospects are dropping off your online listing pages.
  

• # of inbound phone calls and emails.
  

• # of outbound Sales emails and phone calls completed by the agent.

Each of these areas will inform you (or your agent) where pivots and attention are needed to improve Marketing and Sales processes.

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To your success, Jason Huett Collaborative Commercial, LLC. CEO/CMO