Wednesday, October 19, 2016

Are we priced right for the market?

In the many years of my legal practice, and not going to count, I've been involved in pricing strategies for multifamily and commercial rent scenarios. The question usually starts with "are we priced right for the market?" 

What I ask is - "have we invested the right time and money in our people, property and marketing to achieve the top price our property should bring?"
Pricing and revenue management systems are incredibly powerful. There are a number of new software packages for commercial real estate management that has brought substantial management tools to the market. This gives operators the foresight and the discipline to address predicted fluctuations in demand through data-driven pricing strategies. But as the old saying goes, “To a hammer, the whole world looks like a nail.” Left solely as its own device, a pricing system will solve any performance challenge with the main strategy at its disposal.

This might not be wrong but it may not always optimize profit against demand. The other balance is The Three Ps:


First question is whether there could be a people issue. If they aren’t converting leads into visits or visits into leases, then price may help; but it’s really just subsidizing poor execution.

It’s important to understand both those conversion numbers rather than an overall lead-to-lease conversion ratio since the prescription for solving the problem depends on which (or whether both) of these issues is the diagnosis.

A poor lead-to-visit ratio may point to the need for improved sales skills. It may point to an issue with the quality of the leads being generated. It may be poor follow-up or telephone skills. It may also point to poor online photos, reviews and other pre-sale issues. It may also motivate an owner to consider adding different training, changing compensation calculations, add telemarketing, or changing management companies.

Meanwhile, poor visit-to-lease ratio indicates the people issue is much more focused around sales performance and/or the quality of physical appearance. Curb appeal, to take a residential term, may be turning off the prospect.  There might even be a staffing issue if we are making prospects wait too long for someone to meet with and tour them. This applies to commercial rentals and multi-family. Each have their own specific issues but same principles apply.


Process issues mostly deal with marketing, specifically “Are we generating enough leads?” 

Reducing price can help increase leads, but that is probably the most expensive method for correcting a lead generation issue.  The good news when there’s a demand management issue is that there are many tactics that can be employed. Some require spending money (e.g.. increasing ILS or PPC spend); some require time (e.g. outreach or increasing online posting); and some are driven creativity while requiring time and spend (e.g. running a leasing expo event, attending networking events, etc.). 

The options are vast but evaluate and track marketing efforts. Add new efforts as fast as possible and end efforts that are clearly not working. Don't go for straight lowest cost or lowest effort, think highest impact. 


Since reducing the rent roll has the largest negative effect on property valuation, this is the last change after eliminating people and process as the reasons for underperformance.

Many property owners hit the price lever as the first default to change…either actively or passively by just standing by while their pricing and revenue management software does it for them. But just because it’s easy doesn’t make it right.

One way to make it easier to address people and process issues is to have the data and technology platform in place that makes it easy to see lead, visit and lease counts.  Quick performance visibility into total counts and conversion ratios allows us to quickly diagnose where the real problem is and only implement price changes when we know that we don’t have people or process issues.  If the platform gives us simple drill-down to data by marketing channel and by leasing associate, it’s easier to avoid hitting the pricing lever just because pricing changes are simple.

The first step is to evaluate you data platform to make sure that People and Process is part of the formula to Price so price change doesn't become the only solution your people use to defend a decrease in lease sales.

Thursday, October 13, 2016

CRE Marketing Tools You May Not Think About

While commercial real estate attorneys don't usually get into marketing, you do all know that marketing is a passion of mine.The internet with smart phones is a truly fascinating, changing world of marketing opportunity. 

I've been interested in this new quick video phenomenon. There is a information for residential real estate agents but here's a brain storm how to tweak for commercial real estate. 

Instagram and Periscope

The interesting part of Instagram and Periscope is the wide demographic of people that use these platforms. Instagram videos last only 15 seconds and you can pre-record these for stretching out your marketing time. Periscope can be live streaming, short snippets and they are coming out with a Periscope Producer product.

It does seem on the surface to be for more geared to residential use but here are a couple of interesting ideas.

Highlight Your Listing’s Key Features

Professional five-minute video tours aren’t going to cut it. Instead use the video function to highlight the key features your love about the listing. Commercial real estate agents can use the video to showcase special moments in their spaces: the city skyline on a snowy day, busy time on the factory line, an update on project renovations. Use the video to capture foot traffic, traffic flow, new signage and other features that attract retail tenants. Shoot the video of a key feature you'd want to tell every prospective tenant about. While you’re at capturing videos, take several to build a resource for several upcoming posts.

Go Behind the Scenes

Users love to see what’s going on in places they don’t usually experience. Take a short clip of preparing a new tenant space, or an architect's vision for remodel. Conferences and trade shows are other great times to post photos or videos, showcasing you’re learning about the latest real estate trends. Developers can snapshot updates on progress or show renderings in progress.

Grab Client Testimonials

Interview happy clients in their new space. Ask them questions about why they chose a certain location. Talk about companion businesses they'd like to have in proximity. Post and remember to tag their Instagram accounts.

Marketing is not always about one set formula of success. Marketing is experimentation of getting your message to a new audience ahead of your competition. Trying new channels of very low cost to entry marketing is an interesting thought. 

The best advice seen over and over, keep it as short, relevant and entertaining as possible.