Month: August 2020

So, you’ve developed a commercial property and you’re ready to capitalize on all your hard work?

Before investors or tenants hand over their hard earned cash, you’ve still got to do a little marketing if you want to convince them you’ve got the right property for their business.

In order to do that, you’ll need to gather your marketing assets, which include property listings, an immersive website, and even professional looking real estate flyers.

Though you may think in this digital world that real estate flyers are unnecessary, think again. Though you may not want to stand on the corner and hand out pieces of paper to potential investors or tenants, one thing you will want to do is create digital real estate flyers that are easily shared across the web and given out to people in person.

That’s why today we’re going to convince you that real estate flyers are a necessary marketing component for any property owner looking to sell or lease. Plus, we’re going to give you some surefire ways to ensure your commercial real estate flyers attract the right people and convert.

Why You Should Use Commercial Real Estate Flyers in 2020

Advanced web technology has irreversibly changed how we market everything, including commercial real estate. Yet, there is still a spot for more traditional marketing materials, such as flyers, brochures, and offer memorandums. In fact, this type of marketing still exists, just with varied forms so business owners can reach wider audiences than ever before.

In the commercial real estate world, properties exchange hands for millions and sometimes billions of dollars, and yet, interactions are still mostly conducted face to face. We’d even go so far as to say there’s a long time before we learn to entrust life-changing transactions consisting of lots of money to the computer.

Handing somebody a physical flyer promoting your property gives you another touch point to use and influence the buyer’s decision. In fact, a flyer with the property’s core information and benefits can complement a verbal presentation and give your potential investor something to remind them later about the property long after they’ve walked away.

Think about it.

Our fingers remember the distinct feeling of cheap glossy flyers we’re handed from fast food restaurants. Handing somebody a piece of premium paper that feels solid and expensive to the touch is going to leave an impression – just like a firm hand shake does.

This type of marketing, though often pushed aside and replaced with digital means of advertising, gives you an edge over the competition.

Now that you know you’re going to need a commercial real estate flyer for your piece of real estate, let’s take a look at how you can create highly attractive and converting flyers for your properties.

1. Create Integrated Experiences

Any decent marketer will tell you that marketing today is all about offering an integrated experience, no matter what means you take to market your brand. Your marketing efforts must interact seamlessly with what you’re offering and take potential investors on a journey that leads to a transaction. If not, you’ll never generate a sale or have a signed lease agreement in hand.

Because of this, it’s best to think of your real estate marketing materials as extensions of you, and insist that they come in all forms – print, online, and in-person interactions.

This process starts with handing someone a beautifully designed and informative flyer. From there, the conversation moves online, where a detailed website neatly presents all the compelling reasons to pick up the phone and request a meeting.

This then takes us to our next point.

2. Consistently Represent Your Brand

Every flyer, brochure, business card, email, or social media post is a representation of your business.

There are a million and one downloadable templates for any type of commercial real estate property you have. There are also many design apps that allow you to customize and modify premade layouts for just about everything you need.

It’s important to consider how the design of your real estate flyers and other marketing materials correlate with your brand and the message you’re trying to get across. This is true even for property owners that have one piece of real estate they want to sell or lease.

If you’re going to leave a lasting impression on potential investors, you need your marketing materials to be consistent with one another and stay true to the values your brand is known for.

Of course, a commercial real estate flyer is all about the property that’s available. However, even if you can’t land the transaction right now, nailing down the visual presentation will entice potential investors to come back around and take another look. And eventually, you’ll land a sale.

3. Follow the Design Rules for Commercial Real Estate Flyers

In order to push ahead of the competition, you need to follow a handful of design principles when creating your commercial real estate flyers. And the best part is, whether you plan to make these marketing materials available for in-person interactions, or as an immersive experience on your website, the same best practices will come into play.

Layout

If you’re picking a ready-made template, choose a layout that has all the core elements of a commercial real estate flyer:

• Building name and address
• Square footage and price
• Photograph
• Map
• Text area / Featured benefits / Highlights section
• Contact information, company name, and logo

From there on, different types of real estate will be marketed differently.

For example, an office space flyer will inform tenants about nearby transportation options, as well as nearby amenities such as parking spaces, cafes, restaurants, bars, gyms, and anything else people like to do after a hard day’s work.

On the other hand, an industrial complex flyer will emphasise property features such as 3-phase power, climate controlled warehouses, railway infrastructure, and proximity to the highway network.

Lastly, a property owner with a piece of retail space will want to promote to prospective business owners the amount of foot traffic going through the premises, the population of the nearby areas, and the amount of money typical customers spend when they frequent the area.

In the end, just make sure the layout of your commercial real estate flyer speaks to the property you’re advertising.

Images

Nothing turns off potential buyers or tenants like a bad quality photo that takes up half of your real estate flyer.

One of the best marketing investments you can make is having your property professionally photographed.

Premium quality photographs can mean the difference between someone finalizing a purchase and going elsewhere with their business. You want to make sure to highlight your property’s best angles and entice people to come check it out in person.

Typography and Colors

Ideally, you want to match the fonts and colors of your flyers, brochures, and website.

In doing so, vsitors will have an easier time recognizing your consistent branding and style and recalling previous information they read or emotions they felt about your brand.

If you can’t match the style exactly, focus on making the flyer easy to scan and effortless to read. Use colors to outline or contrast other design elements, keeping the reader’s eye pinned to the flyer.

Content

All the fancy presentation of a real estate flyer is pointless if you fail to create solid content for it. Sure, a commercial real estate flyer is mostly a visual piece of marketing material. However, this means the written text you do include on the flyer is even that more important.

The key to winning a potential buyer or tenant over is being able to tell them in 5 lines or less why they should buy or lease from you.

Remember, it’s all about selling or leasing out the property you have available. It’s not there to advertise your business, so don’t emphasize your brand too much. Instead, use demographic data, market statistics, and projections to present a compelling business case about the property and make people feel that if they don’t jump in and buy or lease now, they’ll regret this missed opportunity later.

Of course, don’t forget to put your name, contact information, logo, and website on the flyer, so those interested can look you up later.

If you want to take it a step further, you can always add a QR code that leads people from your flyer directly to your website, where all the compelling benefits you listed will be matched with even more detailed information about the property and your business.

Again, if you match the design of your flyer and website, you can offer a seamless transition between both mediums, thus giving the reader reassurance they’re looking at the same property and company.

4. Strive to Hire a Qualified Marketer

Of course, any advice provided in this article cannot compensate for the years of experience and practical knowledge of a professional marketer.

The person designing your marketing material should not only have vast understanding of the property and your industry, but also the ability to convey the values of your project to the target buyers or tenants you want to attract.

Not able to hire a professional marketer quite yet? Don’t worry. At CREOP, we understand the importance of marketing properties to interested buyers and tenants. At the same time, we know that property owners don’t necessarily have the time, money, or skills needed to create “professional” real estate flyers.

That’s why we strive to provide a user-friendly online platform that helps any property owner, regardless of marketing or design skills, to create stand out real estate flyers, offer memorandums, and other advertisement materials.

5. Study Your Competition

If the right person is already responsible for marketing your properties, they’ll understand the need to research the competition and study their designs in detail.

After all, your potential investors will likely meet some of these other developers (who are your competition) and will be handed their real estate flyers in addition to yours.

Of course, the goal is to copy (or worse, plagiarize) your competition’s marketing materials. Rather, the goal is to study what they’re doing that’s working, tweak what isn’t working, and make your materials even better than theirs.

Doing this will leave lasting impressions on all interested buyers or tenants, no matter how many other property owners they consult.

Wrapping Up

Your commercial real estate flyer does not live in isolation; and it never should.

Just like every other marketing tool, a real estate flyer will represent your business, attract the right target audience, and drive sales. If you take the time to create informative, original, and highly attractive real estate flyers representing the properties you have available, you’re sure to get more business in no time.

This is especially true if you use a cloud-based software like CREOP. Providing property owners the tools to design and manage a property marketing campaign in no time, CREOP is as effective as hiring a professional marketing – without the hefty price.

So, get in touch with us today and see how we can help you create real estate flyers, offer memorandums, proposals, and full-fledged marketing packages to advertise your available property for the highest sales prices or rent rates possible.

When it comes to negotiating a commercial retail lease, there are plenty of lease provisions you should be aware of before signing on the dotted line. After all, it’s your responsibility as a tenant to understand what your landlord expects from you. And sometimes, that’s more money than you might expect to pay each month.

Though this doesn’t always happen, there are times when a percentage rent clause becomes part of a commercial lease agreement. As a way to ensure they receive great value from the business you run, landlords often charge a percentage rent in addition to the base rent you agreed to pay to lease the property.

If you’ve never heard of percentage rent in commercial lease, keep reading. Today we’re going to explain to you what percentage rent is, how breakpoints work, and ways to negotiate with your landlord so you get the best deal possible.

Let’s get started!

What is Percentage Rent?

Percentage rent is extra rent you pay your landlord that is ties to the sales you generate from your business. By charging a percentage rent, landlords are able to share in your growing success.

Though this seems unfair to tenants trying to run a business, it’s important to note that owning a commercial building comes with plenty of expenses that go beyond the square footage that’s being leased to you. For example, things like maintenance, marketing, and continuous improvement of not only the building but common areas surrounding it are things your landlord typically handles. For a landlord leasing a shopping mall, this ends up being quite costly.

By charging tenants a percentage rent, landlords are able to tap into the success business owners are reaping as a result of their hard work. And honestly, a tenant is always going to do more business in a busy commercial building as opposed to a deserted unit in a remote part of town.

So, in an effort to generate more revenue for themselves, and provide you the best commercial space possible, it’s possible your landlord might include a percentage rent clause in your lease agreement.

Commercial Lease Rent: A Breakdown

Rent as part of a commercial lease can be broken down into two parts: base rent and percentage rent.

Base Rent

The base rent  of a commercial lease is a flat amount the tenant owes each month, regardless of whether their business is generating a profit or operating on a loss.

The base rent is usually calculated based on the floor area of the property. However, the base rent can also be a flat rate based on your business’ gross sales.

Base rent is helpful for business’ like fast food chains or coffee shops, both of which have fairly consistent and predictable revenue. In fact, their base rent would be loosely associated with their projected annual revenue.

On the other hand, businesses who have peak seasons (e.g. Thanksgiving or Christmas) may not be able to afford a consistently high base rent every month of the year. As a solution, a low base rent is charged, allowing the business to sustain a healthy cash flow during its slow months. However, you can bet business’ with a low base rent and seasonal sales will also have a percentage rent clause in their commercial lease agreement.

Percentage Rent

If a lease has a percentage rent clause, the percentage part of the rent is charged only after a business exceeds a specific amount of revenue that exceeds its gross sales. This is called the breakpoint.

The average percentage rent in the retail industry is 7%. That said, this value is not set

in stone and can be negotiated. In fact, different industries also find applications for percentage rent, where the value can differ significantly.

Breakpoints

When your business’ gross sales surpass a specified amount agreed to by both you and your landlord, your rent hits what’s called a breakpoint. From there, any sales you generate are subject to the percentage rent amount in your lease agreement.

Breakpoints ensure that businesses are not overburdened with high rent rates at low periods

of the year. At the same time, they allow landlords to profit when a business is doing well and turning a high profit.

A Practical Example of Percentage Rent

If this all seems like a lot to you, don’t worry, you’re not the only one. Let’s take a look at a real-life example to make things clearer:

You operate a consumer electronics store and you’re offered a retail space in a new strip mall. The contract includes a base rent of $5,000 per month and a percentage component of 7% of the gross sales, which is applied for every dollar above $150,000 – measured in gross income.

• In July, when shopping is typically down, the store generates $80,000 in revenue. This means only the base revenue of $5,000 is charged.
• In November, there’s Black Friday, and as a whole, shopping activity in your store peaks. The electronics store generates $250,000 in gross sales. The breakpoint is $150,000, so on top of the base rent (which is 5,000), the store also owes 7% of the $100,000 excess, equal to $7,000. Therefore, the total rent you owe for November is $12,000.

As you can see, when you have a percentage rent, the monthly rent you owe largely depends on your sales and can vary greatly from month to month. That’s why it’s important to understand your commercial lease in order to negotiate the best deal for your business.

What Is Included and Excluded When Calculating Percentage Rent?

Percentage rent is calculated from the gross sales of your business each rental period. This includes both cash and credit card sales at the time of merchandise delivery or performance of services. With credit sales, the risk of collecting (or specifically, not collecting) the revenue falls onto the tenant. In other words, if you process a transaction, but fail to invoice and collect for that transaction until next month, you might still owe your landlord a percentage rent.

Any discounts, refunds, credits, allowances, or price adjustments extended to individual customers are not accounted for when calculating percentage rent. If a sales tax is attached to the price of the product or service, it is also usually excluded.

How to Calculate the Natural Breakpoint of Your Percentage Rent?

A natural breakpoint in a percentage rent commercial lease is the amount of gross revenue at which the base rent becomes equal to the percentage rent.

For our consumer electronics store example, we have a base rent of $5,000 and a percentage of 7%. The natural breakpoint is $71,428.57, because 7% of $71,428.57 is $5,000.

You can calculate the natural breakpoint by dividing your base rent by your percentage rent. If we express the percentage as a fraction, the calculation is really easy.

$5,000 /(7/100) = $5,000 * 100 / 7 = $71,428.57

In a lot of commercial leases, the percentage rent breakpoint is simply the natural breakpoint. This ensures the landlord always receives a fixed percent of gross revenue or more in rent.

When the tenant suffers a lack of sales for the month, the base rent is still charged and it represents a larger percentage of the tenants’ gross income. In other words, the business faces a greater relative charge when they have the least amount of business.

For our example, if the electronics store only yields $45,000 in revenue, the base rent of $5,000 represents 11.11% of their gross income.

If the agreed breakpoint in the lease is higher than the natural breakpoint, the business benefits from a reduced rent compared to their gross income.

For our example, if the electronics store yields $75,000 in revenue, but the breakpoint is set at $80,000, then the base rent of $5,000 is only 6.67%.

Rent Periods and Sales Auditing

Since percentage rent is directly calculated from the gross income of the business, the landlord will expect the tenant to provide sales reports either monthly, quarterly, or annually.

If reported monthly or quarterly, usually a final annual report is required to nullify any previous errors and adjust the percentage rent accordingly.

The tenant’s sales records must be made available for audits by the landlord. Usually the landlord will request an annual audit by a certified external accounting company.

Tips for Negotiating Percentage Rent

Oftentimes your prospective landlord will provide a ready-made lease contract configured with their preferred base rent, percentage rent, and breakpoint. However, that does not mean these figures are set in stone.

You can and should negotiate.

Tenants should strive for the lowest possible base rent and percentage rent, while also seeking the highest possible breakpoint. There’s no magical leverage to help you achieve that, but you can balance the terms to better suit your business.

New or Slow Businesses

Businesses that have just opened their doors, or project a slow revenue growth can benefit from a higher base rent and a higher breakpoint.

For example, consider a base rate of $5,500, percentage of 7%, and breakpoint at $90,000 (naturally at $78,571.42). Right up to that breakpoint, the business can benefit from a rent equal to just over 6.11% of their gross sales.

Highly Seasonal Businesses

Alternatively, highly seasonal businesses with volatile monthly revenue can gain an advantage from a low base rent and a higher percentage rate.

For example, a base rate of $4,500 could secure businesses some extra cash flow when sales are slow. If we increase the percentage rent to 8.5% and set the breakpoint at $60,000 (naturally at $52,941.18), the business would still save a significant amount of money, even during the strong months.

If November and December yield gross sales of $100,000, the tenant would need to pay $3,200 in additional percentage rent, or a total of $7,700 per month. That’s an increase of 71%, but there is enough revenue to absorb the extra cost and return profit for the business.

Wrapping Up

In the end, percentage rent in commercial leases is not a difficult concept to grasp. Though it is more complex than a flat rent arrangement, it shouldn’t be too difficult for any business owner to figure out. That said, the devil is in the details and understanding your commercial lease agreement before you agree and sign is crucial to the overall success of your business. After all, your landlord isn’t the only one looking to generate a profit.

Are you ready to advertise your commercial space as available to tenants and want to make sure they understand all the details, including the percentage rent clause that you intend to add to the agreement? Then take advantage of the beginner friendly online platform CREOP. Designed to make marketing commercial properties a breeze, complete with everything a potential tenant would need to know before agreeing to lease from you, this advanced software makes your job easier, so you can concentrate on more important things, like getting lease agreements signed.

Get in touch today and see how we can help you lease your commercial space with ease.