The following video was shot on a recent drive to Phoenix and is the first of what I hope will be a regular feature entitled CRE Road Kill. In this installment, I am addressing what I call the Tenant Trough, what it is the problems it creates for owners. In Part 2 I will talk about solutions…stay tuned.

Merriam-Webster defines “trough” as follows:

• a long and narrow or shallow channel or depression (as between waves);
• the minimum point of a complete cycle of a periodic function;
• the low point in a business cycle

Why?

Because many of the old models don’t work well in an increasingly collaborative world where people want to have a relationship and role in the creation of their investment outcomes, that’s why.

How is your property being marketed? How quickly can you turn the message and communicate change to thousands of people in a moment of time? These are huge questions for property owners.

In the marketing of your property are you running with the big dogs or licking with the pups? How can you break from the pack in 2010 and beyond enabling you to run with the big dogs?

Meet the Puppies Lickin’ and Playin’ on the Porch

When it comes to commercial real estate marketing, there are pups on the porch lickin’ and there are big dogs in the fields runnin’.

High failure rate marketing models such as cards, letters, complicated brochures, mindless spreadsheets that don’t cut-to-the-chase, ugly property signs and costly networking meetings are increasingly being replaced with lean and quick, impactful, attention-getting, direct and digital marketing models. Interactive, please.

In today’s commercial real estate marketing game slow is bad…speed is good; actually, speed is essential. In a competitive environment, slow is costly, while speed, agility and message delivery creates economic margins and a more responsive audience.

Big, old-line marketing is expensive, complicated and difficult to control, modify and monetize; the message is mostly, non-repetitive with a single impression that yields lower results. Message renewal is necessary for property owners, but old models make its delivery expensive and its recreation clunky and difficult.

A large factor in effective marketing is the ability or inability to edit our message on the fly…THIS IS HUGE IN TODAY’S FICKLE MARKET. Minutes and hours can make the difference in deal-making. Speed counts. Reaction time is money.

Break from the Pack…Lone Wolf Marketing

Ask yourself why Twitter, MySpace, YouTube, Craig’s List and Facebook have hundreds of millions of global viewers daily. Why do companies like Exxon, General Electric, Hollywood film makers, resorts, news networks and national retailers have Twitter accounts?

Why did candidate Barack Obama choose online, digital “speed marketing” as his primary message channel resulting in his raising more money than any candidate in history with the end game being his election as President? Uh, let me see…because it works? Why does it work?…uh, let me see…because, at the end of the day, people like it?

Lean, new straight-line marketing via hard-hitting and informational emails, digital brochures, property websites, video, blog content, RSS feeds and narrated PowerPoint presentations are, at the end of the day, a lower cost marketing approach per impression, editable and evolutionary and can deliver a higher and measurable result for property owners.

There are more reasons commercial property owners should take a careful, studied look at how they create, broadcast and control their message. Let’s start with “people” and how they currently gather information in general.

We’ve become tired of direct mail marketing…we don’t like to read all the crap that is thrown at us…we’d rather get the message first hand in a form we like and can access at any time, 24/7/365. In short, people want to control the marketing message they receive not have it shoveled upon them.

The old line “rapport” building is still valid…we are just going to have to build rapport faster and more effectively in order to succeed in the commercial real estate marketing game. We have to earn rapport faster than “power lunching” and meeting attendance.

Prospect rapport isn’t always fostered by eating with them, running around from place-to-place, engaging in never-ending phone tag or flying from airport to airport. I and owners earn prospect rapport by how well we communicate, the speed of our communication, its accuracy, style and ever changing content delivery.

Frequent, Fast, Evolving and Affordable

I’ve become the Chief Operating Officer for frequent, fast, affordable real estate communication models. Such models are easier than ever to create and their potential for audience and monetization are better than every. The upfront cost creates a digital magazine that can be edited constantly…example…look at this commercial real estate blog!

I am asking all of my substantial clients, i.e., those with multiple properties or large office complexes or retail centers to do the following, do it soon and to pay the freight now for a marketing infrastructure that will accelerate their communication and create a basis for an ever-changing property message:

• Create a Commercial Property Website (I can help)
• Communicate features, themes, and lifestyle benefits (I can help)
• Deploy video, podcasts and narrated presentations (I can help)
• Increase digital communication, links and downloads to gain audience (I can help)

We are entering a period of time when many properties are going to get drowned out in the ocean of similarity in the minds of a shrinking pool of prospects.

Owners who can attract users, separate them from the masses and hold their attention will be those who break from the pack. Owners who do not adopt new marketing methodologies will continue to see their properties languish, sadly.

Collaboration through real estate blogs and social media channels, coupled with powerful presentation marketing that attracts and hold eyeballs on your property is becoming the central marketing challenge for owners and, for that matter, commercial real estate brokers.

Remember this, the spreadsheet analysis means nothing if no one sees it. A great CAP rate doesn’t sell if the marketing fails to perform. In a market with increasing vacancies and volatility, sustained attention created with speed of message becomes paramount.

If you need a more effective marketing platform, consultation, an action plan, a property website or just some free advice…call or email me.

President Barack Obama

The Obama Administration has been funneling billions of dollars into lending institutions and dedicating billions more to the housing industry and its hoped-for recovery. This begs the question, is the President ignoring the problems now surfacing in the commercial property sector of the economy?

The short answer is yes. The longer and more complicated explanation may lie in understanding the fundamentals of the lending and insurance industries as they are the prime note holders and owners of much of the nation’s commercial real estate.

Although commercial property value declines are now underway in almost every property category, lending institutions may be free to use TARP and other funds to shore up the ailing commercial market.

A high percentage of commercial real estate owners (estimates are between 40% and 80%) will find refinancing difficult from 2009 through 2012 as 3 and 5 year note calls begin to kick-in and owners face a new set of qualifying requirements designed to reduce lender risks in commercial property lending.

There appears to be more creative liquidation and seller financing emerging in the market as owners face the reality of a shrinking market and the pressure to create cash flow.

Creative financing has been and will continue to be a major factor in structuring transactions during the commercial real estate recovery. We have been recommending that owners who can take on the roll of lender do so as this leverage enables competitive pricing and can produce healthy yields over the long haul.

It will be some time before we have any definitive indicators that the President’s overall approach to the economy has helped or harmed the commercial real estate sector.

This post written by and sponsored by Donald Teel, a Commercial Real Estate Specialist in Prescott, Arizona affiliated with Arizona Commercial. Donald can be reached by calling him toll free at 1-877-777-9100.

McCormick Place - Prescott, Arizona

Post Sponsored by Donald Teel

What is the current state of commercial property ownership, user potential, performance and values in the Prescott, Arizona area?

Where is the commercial real estate market headed in 2009 and beyond and what should property owners be doing to focus on property performance going forward?

At Arizona Commercial, we believe it is critically important for owners of commercial property within the tri-cites of Prescott, Prescott Valley and Chino Valley to consider executing a thorough “Property Performance Analysis” or PPA, based upon changes taking place in the general market but especially with respect to changes taking place in commercial mortgage lending.

The Myth of Immunity

The tri-cities commercial real estate market is not immune from the impact of the economy on property performance in larger metro markets such as Los Angeles and Phoenix.

The local commercial market is directly impacted by the strength of the general ecomomy, unemployment, housing and most importantly, lending.

The decline in residential property values, a slowdown in new construction, the reversal of commercial appreciation rates and unemployment are all contributing to changes in the performance of all segments of the commercial real estate market.

Listen to a podcast about this topic:

Property Performance Analysis

Arizona Commercial is currently engaged in conducting “Property Performance Analysis” (PPA) with commercial property owners as a FREE service designed to guage an owner’s financial objectives, the current financial performance of a property and the short and long term financing needs associated with the property.

Because we anticipate new challenges to commercial property performance as a direct result of the general conditions of the economy we think it imperative that owners assess their property performance situation sooner rather than later, and that they develop a sound financial plan going forward.”

Jim Pullaro – Broker, Arizona Commercial

Arizona Commercial’s PPA includes an assessment of and owners’s financial objectives measured against the quality of tenant mix, correct property use, lease performance, operating cost analysis, mortgage situation and estimations of user demand through 2010, with specific recommendations in each category.

Arizona Commercial’s PPA is like a property physical, in a sense. It measure the critical components related to the health of a commercial property and sets forth prognosis and treatment before problems begin.

Listen to a podcast about this topic:

Refinancing and Replacing

Commercial property owners and investors are keenly aware of the need for quality “R and R” or, refinancing and replacing. These are the two keys to perpetuating long term performance.

Lenders are currently tightening requirement for new commercial loans and refinancing. Qualification requirements are more stringent and under-performing properties or, select segments (property types) within the commercial real estate market are finding it more difficult to secure financing.

A PPA can signal issues fan owner may face before they become critical and assist with pre-planning for mortgage refinancing, property replacement or, both.

Commercial real estate investments require monitoring, adjustments and sometime immediate changes in order to keep them performing. A PPA can flag areas where an owner can and should make adjustments in order to keep performance healthy.

Until recently, many properties were performing as a result of a strong demand and easy financing. Therefore, many owners ignored or postponed the need for regular property analysis. In today’s economy there is no guarantee that a property will appreciate or perform without careful “hands-on” attention and management of the components of performance.

Listen to a podcast about this topic:

Email Donald Teel for a confidential Property Performance Analysis or, if you prefer, call him at 928.777.8100 and if you are out of state call toll free to 877.777.9100.