Hans Hansson | March 18, 2018
In most sales roles, your company assigns you a quota that you need to meet. However, in real estate, where agents can be independent contractors, sales quotas are actually rarely used. Instead, firms divide their expenses by the number of agents they have and add a profit to that number to achieve the performance goal that is required by each agent in order to keep the doors open.
It is much harder to create a monthly sales quota because deal flow is completely uncertain, and the amount of commissions earned cannot be gauged since each fee is different depending on the size of the transaction.
Most real estate firms do not have a sales quota. They will have tracking reports to gauge your monthly production against deals that are pending and if you do not produce at least desk cost you may be asked to leave. Therefore, as independent sales contractors, it’s up to you to create your own benchmarks and monitor results regularly.
Make a Plan: At the start of the year, most firms require you to complete an annual business plan.
Track Your Results: As a start to benchmarking results, you should be reviewing your plan each week and determine if the plan you created is being executed upon and if the results are putting you on the trajectory of success. If not, you should course correct accordingly.
Year-Over-Year: Next you need to keep a record of your prior years’ performance by month, then compare those results with what you are doing in the present. This will show you if your business is growing and by what rate.
Course-Correct: If your sales are down, then this is a real sign that you need to re-evaluate your business model and figure out how and where you can improve. This is where most sales agents fail the most. They continue to do business the way they always have and not evaluate their past performance.
Real estate is a business when truly you’re only as good as your last deal. Because we are in a business that is not consistent, it’s also harder to gauge. Yet, patterns are noticeable if you track at your results over a longer period of time.
One of the worst things you can become is a sales agent who is satisfied to do the occasional deal. We are in a business where you can find deals quickly. Everyone has a real estate need at some point, so we have a large pool to “fish” in.
However, if you don’t have a plan on how you conduct your business and monitor that plan, nor establish benchmarks to visualize your standing now and over a longer period of time– then you will become the agent that does the occasional deal. You can still make it, but your chances of growing your business year-to-year will be difficult to achieve.Photo Credit: Alan O'Rourke Flickr via Compfight cc
Hans Hansson | February 8, 2018
Common etiquette, at least what I have learned and practiced, has certainly evolved in ways that are very different today. “Please” and “thank you” have been replaced with “Can you” or just silence.
“Please” and “thank you” used to communicate civility. It was a request for help and a response for acknowledging help received.
The lack of these manners has also changed how we communicate in the workplace. As a commercial real estate broker, I am in a unique business where my competitors are my rivals one day, and my ally the next. Just like in any partnership, communication is critical to make sure both sides are moving forward to ultimately close a business transaction. Our job is to figure out the right strategy, communicate, and negotiate with one another until hopefully we come to an agreement.
However, common practice of the past is no longer the way business is handled. Fellow brokers today no longer update one another on deals, nor for that matter show any regard for their fellow brokers’ time and effort.
For example, a typical property tour used to comprise of a broker calling several days ahead to schedule a walk-through of a space. Today, we oftentimes hear from a broker with an hour or two of when they’d like to see the property. We do our best to accommodate, but frequently end up getting no-shows, extremely late showings, or cancellations to the showing. This ends up being a huge waste of time– and time is money.
The broker is not necessarily the problem here. Many times, a client today has little sensitivity or respect for a broker’s schedule and has expectations for the broker to work around their schedule.
After accommodating a last-minute scheduling to show off the space, we rarely receive a follow up from the broker to update us on interest from their clients. We will call, email, text– but rarely do we get a response. If a broker’s client is interested, we won’t hear from them until the offer is sent. Earlier in my career, business was handled between brokers and we would discuss what it would take on both ends of the deal to close. We may discuss terms of the buildout, term rate expectations, etc.
We have also experienced deals where brokers on both sides simply go radio silent. If you ask for an update, you can expect no response. Recently, I was involved in deal where a broker represented his client and took us through interest, an official offer, and even space-planning. Shortly after planning, they disappeared from the transaction only to reappear, and disappear again. Our obvious conclusion was that they were negotiating with another party.
I ask myself – “When did common courtesy get thrown out the door?” They say to receive respect, you must earn/show respect. If each of us practices gestures of etiquette, even the smallest actions, every day (particularly with strangers), one would hope to see a domino effect spread, making life–and business– much more pleasant for all of us.Photo Credit: http://tvorbaweb-stranok.sk Flickr via Compfight cc
Hans Hansson | January 7, 2018
The ongoing tradition of making a list of positive changes you want to implement in your life in a new year can actually be productive. A number of people will sign up for fitness classes, perhaps give up drinking, or cut back on unhealthy foods. Others may decide to make changes in their professional careers, make financial commitments to save more, or make a bucket list of places to travel.
New Years is a time to reflect and see the possibilities of the brand new year ahead. It’s a time to look forward, not backward. Unfortunately, most of us that make these potential life changing resolutions don’t stick with them long-term. Overtime, the motivation for change often weathers away.
The reality is: change is difficult. It’s difficult to actually start making changes and it’s even harder to maintain over a long period of time. As human beings, we like stability– regardless of if we are in a good stable place or bad stable place. Change takes us out of our comfort zone and brings us into the unknown, which can be very scary for most.
Although we may mean well to seek out positive change, we almost always feel obligated to simply because it’s a new year. But like any change, it doesn’t come easy and we rarely see it through.
What makes uncertainty such a challenge? Perhaps because it means nothing will ever be the same. A new job may not provide greener pastures as you had thought. Starting your own business could quickly go sideways and make your current circumstances a hundred times worse than they were.
Chip and Joanna Gaines, stars of the hit HDTV television show “Fixer Upper”, wrote a book called “The Magnolia Story” that explores how Chip is a constant believer in change, while his wife is a constant believer in stability. Chip believes that once you have reached stability and feel comfortable– change is necessary. Although his wife believes in the opposite, she supports Chip when a decision is made and jumps in to make the next change in their lives work. Chip feels that growth occurs only through uncertainty. Uncertainty requires you to be creative, open, and willing to deal with uncertainty head on. In turn, this creates growth.
My first grandchild was born in December. She is entering a world that will see changes like no other period in history. My granddaughter will probably never drive a car. Most of the products she’ll use will be manufactured through robotics. Commercial space travel and humans living on Mars may be the new norm. All of these items today bring a tremendous amount of uncertainty in our lives. The thought that we would not have control of our automobiles scares a lot of people. The thought that you would live on another planet and be able to travel to space is beyond uncertainty for most.
Every invention – from the light bulb to the computer, and the world tech giants like Amazon have created has ushered uncertainty into the marketplace and within our lives. Yet, we begin to accept these changes and adapt.
The world does not come to an end for most; rather we evolve. As the New Year begins, if you truly want to grow– jump into the pool of change. It might appear cold at first, but you will begin to swim. And who knows? It might put you in a better place than you are now.
Hans Hansson | January 7, 2018
Having been in the commercial real estate business since 1984, I have experienced three boom and bust cycles throughout my career. The beginning of the first cycle was marked by the 1989 earthquake in San Francisco, which preceded a deep national recession. That was followed by the Dot.com boom and bust of 1997 through 2001. And then the worst of them all– the stock market crash of 2008.
The current economic boom cycle started in 2010 and is now entering its eighth year. During this cycle, commercial rents have increased 60 percent on average, yet conventional business growth (excluding the tech sector) have seen business gains of less than five percent per year on average.
Historically, commercial tenants needed to pay a maximum of eight percent of their gross revenue on rent. Today, several businesses are pushing rent to 12 percent or higher. With other costs like payroll, benefits and additional regulations, businesses are being nickel and dimed. Many retailers, both local, national and international, have called it quits because profit margins have been lowered so dramatically.
That being said, the tech sector has clearly driven this current boom. However, venture capitalists have reduced startup funding, hoping to stabilize existing investments before engaging in new major rounds of funding. In commercial real estate, tech tenants are typically short-term tenants (under 3 years), that means any cutback on funding could eventually start creating vacancy issues.
Banks are starting to be more cautious too. Bank of America recently tightened their lending requirements for commercial lending in anticipation that the current cycle will end soon.
Yet with all the signs showing that we may be at the top of the cycle, growth continues to occur.
With the passage of the tax reform, we can predict that more businesses will benefit and therefore continue to see growth in the coming year.
This current cycle is so similar, yet so different from past cycles I’ve witnessed that I frankly can’t predict what will actually happen. But my gut is telling me that 2018 will be a good year.Photo Credit: photogism Flickr via Compfight cc
Hans Hansson | December 20, 2017
In a new book by Enrico Moretti, “The New Geography of Jobs,” Moretti provides a deep dive where job opportunities are and why that is the case. He explains how job hubs are created and why certain cities may never recover their past glory. Interestingly enough, some of today’s hottest markets came to fruition by complete accident. For instance, Bill Hewlett and Dave Packard created hardware components out of their garage in Palo Alto, California and created a domino effect for other tech founders. Around that time, Palo Alto’s economy was supported primarily by agriculture. HP forever changed Silicon Valley.
Paul Allen called his friend Bill Gates to New Mexico where they had worked on an early version of Microsoft. When their business grew to 50 people, Paul became homesick and decided to move the company headquarters back home to Seattle– which later became today’s tech hub of the great northwest.
Moretti noted in his book that most major business hubs would strategically choose a location near elite educational institutions in order to attract bright new talent to the area. However, some of the best schools in the country struggled with graduating students returning to their hometowns to start their careers. The University of Michigan is a prime example of an elite school that touts itself as one of the best universities in the country, yet the state has one the the lowest retention rates of its local graduates.
The same is seen in Philadelphia– a town loaded with exceptional universities, yet it continues to see graduates move back to New York or other surrounding hometowns rather than set down roots in Philadelphia.
My son attended Saint Joseph’s University in Philadelphia and graduated in 2009. My wife and I had visited numerous times over the five years he lived there. We found the historical aspects of the city beautiful, however the city itself seemed tired. Grand historic buildings were abandoned or underutilized, leaving parts of the city feeling like a ghost town. We’d see construction of new buildings take place, but overall the city appeared to be locked in a time warp.
In the last decade however, things began to change– all thanks to one local restaurateur by the name of Steven Starr. In 1995, Starr began opening unique restaurants in old abandoned buildings in downtown Philadelphia. This was highly risky, as downtown had the reputation of being very dangerous. But, one by one, each restaurant over time slowly took off and became wildly successful, changing the scene downtown.
Soon, local building owners would seek out Starr in hopes of forming a partnership to open new restaurants in their buildings. Today, Starr has opened 20 restaurants alone in downtown Philadelphia and brings in thousands of customers a day to the downtown area.
He not only gave new life to old, vintage buildings, but has ignited the transformation of a once rundown section of the city. Starr’s high-end restaurants attracted clientele of a particular demographic. Luxury retail shops soon caught on and moved their stores to downtown. Wanting their piece of the pie, more restaurateurs, coffee shops, and convenience stores started to open new locations downtown. In addition, the housing market started to take off. Like most major cities, millennial residents want to live in Center City, Philadelphia.
Remodels are seen underway of older office buildings, converting them into beautiful brand-new luxury residential properties.
Since the transformation of downtown, Philadelphia is attracting many young residents from New York seeking lower housing costs and a less crowded lifestyle. Co-working facilities are also cropping up as headquarters for new tech startups, mostly founded by local university graduates.
After all these years, Philadelphia got its spark back– all thanks to one successful restauranteur who took a huge risk and changed the city’s course for the better.
Cities around the world should take note– this is a textbook example of pure entrepreneurship, not city-planning or state-funded directives that sparked this change. Moretti’s book shares examples from around the world where attempts to change the direction of a city and it went nowhere, even though there were good intentions by city officials. Luck is most often the reason for major urban growth.
Hans Hansson | December 7, 2017
How do I do better in sales next year? The standard answer to this question has been “cold-call, cold-call, cold-call. Pick up the phone and talk to someone.” Today it’s not that simple. With voicemails taking the place of live calls and no gatekeeper to get around at the front desk, salespeople need to have a number of “pillars of business” in order to succeed.
So, here are my new rules to succeed in 2018:
Stop casting a wide net. Instead of calling more people every day, try connecting with one real decision maker every day. Rather than “dialing for dollars” and calling between 50 to 100 people a day, try researching your potential candidates. Find out what is going on in their business, if they are growing or shrinking, and who is the real decision maker there. Find out information through networking, public knowledge found online, or send a direct email to inquire more.
Create a compelling reason for the that decision maker to want to deal with you. What is going to create a reason for he or she to take time out of their day to return your call? What is your call-to-action?
Customize outreach. Make your emails personal and resist sending mass blasts. Tailor your message to the decision maker with something that is unique to their particular needs.
Be Inquisitive. Instead of telling your clients what you’re going to do for them, ask a lot of questions instead. Try to keep the conversation going as long as you can because the more you find out, the more helpful you can be. Also, the client will recognize your questions as taking care and showing interest in their needs.
Don’t give up. The old rule of thumb still exists that you need seven attempts to get one real lead. Vary your approach so that the client will see you trying to connect with them in different ways. This shows not only persistency, but also that you are strategic. This will win points in the mind of your potential client.
Become an expert. Avoid making mistakes by investigating thoroughly before making a connection with a potential client. The last thing you want to do is to misspeak– it may end up costing you your credibility in the long-run.
Connect with the lead directly. Networking is great, but can oftentimes be overrated. Yes, you may know someone who knows someone, who can connect you– but will they really vouch for you and your services? The only person who can do this for sure is you.
Schedule everything. Calendar your cold-calling activities, strategy planning, even your personal activities every day. If you put it in your calendar, you're more likely to actually do that activity – partly because you're less likely to have to make an active decision whether or not you should do it. Remember that cold-calling is not just part of your business; it’s your only business. Without a new business pipeline, you are through in sales no matter what you have closed in the past.
Find a good CRM platform and dedicate yourself to using it. Without a proper CRM system to manage your contacts, there is no way of running an effective campaign to secure new business.
Respect – Show it, give it, and earn it.
Follow these steps, and you’ll look back knowing you started 2018 in the best possible way.Photo Credit: griseldangelo1 Flickr via Compfight cc
Hans Hansson | November 29, 2017
One of the most active industrial markets in the country can be found in Chicago. Commercial Real Estate properties there can easily make $300,000 - $400,000 a year selling and leasing industrial space. Yet, commercial firms are having an ever increasingly tough time finding new agents.
No Longer a Go-To Career Choice
Real estate is not an attractive occupation to today’s generation. An industrial agent in Chicago needs to expect to have to own a car and drive on average 25,000 miles per year to cover their marketplace. Today’s generation does not want to own a car, let alone drive around all day for work. In addition, you need to put in several years of hard work with little pay to build your book of business to achieve these higher income levels. This generation wants an immediate payday.
The biggest challenge is that most younger professionals want to live in the cities that they work in and don’t typically find suburban life appealing after college. This frankly doesn’t only affect potential talent in commercial real estate, but also most traditional businesses. From manufacturing to the trades– traditional businesses are struggling to recruit while millennials seek roles at new startups in both nonprofit and non-traditional marketplaces.
Today, the average worker in trade work is 46 years old and are struggling to recruit, counting more and more on veterans rather than graduating high school or college students to fill these positions.
The big question is – what happens if you can’t find workers and compensation is not the driving recruitment tool? What happens when manufacturing or the trades pay well enough to attract and it does not work? An example is an electrician in the Bay Area can make $140,000 to $175,000 a year including pensions and full benefits far better than most jobs, yet they are struggling to find talent.
Part of the problem is that this generation has not experienced the need to fix their own things or service and assist others. The age of “now” may be showing its negative effects on society as a whole. Most of the trades attracted labor from the next generation. For example, a father who worked in the trades would likely have sons who ended up following their footsteps. Children used to work on cars themselves and learned the ins and outs of the mechanics. They would learn how to use tools at a young age, so choosing a career in the trades became a very natural choice. Today, children are working with computers– learning to code, build and design websites and software, therefore choosing a career in technology is now the new natural progression.
Business Continues to Change
Commercial Real estate agents typically were founded because their parents were in the business. Their parents were salespeople and the next generation understood what it took to be successful in sales and how to service clientele. Today, sales are done not in-person, but via text messages, emails, and social media. This has clearly caused an evolution that will eventually permanently change how we do business and how we create things.
Hans Hansson | November 15, 2017
As a result of owning my own commercial real estate firm since 1991, I have seen what works and doesn’t work in the successful development of a real estate salesperson. The single biggest thing that causes most agents to not “make it” is their inability to create a disciplined approach to time management.
Time management is the key to success for any salesperson. It’s also part of organizational skills that most salespeople do not have as an innate trait. Most personality profile tests will support this understanding. A strong salesperson’s test results will look for strong driven skills and the ability to multitask and press forward, even when it looks like there is no business to secure. Yet, almost all of those tests will show lack of organizational skills. This typically would be found in people who are more analytical in nature.
Calendaring Your Day
I have thought for years about the importance of calendaring all of an agent’s necessary activities each day. Personally, I will calendar current business, new business, “big hour”, personal business, research, and education.
The current business includes all of my deal activity pipeline and things I need to do to push those forward. The new business activity includes business development. The “big hour” is working on deals that have low probability to close, but with high rewards if they do. Personal business is acknowledging that everyone has certain personal actions that need to be accomplished each day.
Each activity requires you to create tasks to complete each day, which I keep in a separate tasks file. When I have to do work on current business, I simply go down my list of tasks associated with each activity. If I don’t complete a task, I move it to the next day to complete.
Continuing to Learn
Research and education are the hardest activities to calendar into your schedule. These are also the hardest actions to perform each day. Although education does not produce immediate results, nor lead to any direct benefits for the foreseeable future– you will increase your likelihood of long-term success.
As a commercial real estate broker, I recently attended the National Association of Realtors national convention. Most commercial brokers are not members of the NAR and most regard NAR as a service provider for residential realtors. However, NAR actually provides very strong tools, classes and networking opportunities that support commercial brokers both locally, nationally, and internationally.
I went to NAR to learn about new tools available to realtors. In the end, I learned new ways to leverage social media, new software tools available to improve how I do business while also lowering my costs, and I participated in classes that gave me inspiration to start implementing tactics with a new focus.
In terms of time management education, research is the most important daily activity you can do– and a daily calendar with scheduled time to educate yourself through listening to podcasts, reading books, mentoring, attending training classes or online webinars will help you grow as a salesperson instead of ultimately failing.
Hans Hansson | October 3, 2017
If you are a seasoned sales professional, you probably have reached what I call your “comfort zone.” You’ve established a way of doing your business right or wrong that works for you…or does it?
There is an old rule in sales– 80 percent of the fish are caught by 20 percent of the fisherman. The question is: are you in the 20 percent that catch or the 80 percent that go home empty-handed?
By Staying Comfortable, You’re Settling.
Being comfortable breeds mediocrity. A state of comfort will not motivate you to make changes. You may not be happy in your current financial situation, but you are comfortable enough to complain and do nothing about it. You know you need to make a change, but unless your situation gets dramatically worse– you won’t. And that’s settling for less than average.
Without Challenges, You Won’t Grow.
Your comfort zone does not work in the world of pain; it works in the world of pleasure. You feel comfortable even if you question whether you can be better because the comfort zone is the safe zone. If we aren’t challenging ourselves, we will stay complacent and plateau in our skillset as we watch our peers surpass us.
Don’t Wait for Outside Pressure
The best salesperson I have ever worked with was when I was in the foodservice industry. This salesman could sell like no other I had ever met then, or now. However, he clearly had personal issues that created a very odd way of selling. Matt would secure sale after sale and then go dark. When I mean dark, I mean that he would disappear off the grid. This was before cell phones, so his landline was all we had to communicate.
I would worry that something had happened to him so I would often stop by his house and ring his bell, only to find him in his pajamas in the middle of the day. His famous line was, “I put my bed sheets over my head again.” The only time he would remove that bed sheet was when he started to run out of money and was running behind on bills. At which point, it was like a fire under him to go out selling again. Pain caused need, which caused desire, and he became a selling machine. He was confident, organized, service-oriented, and he was the best salesperson for that brief moment in time when he found himself under serious pressure and pain.
Your Potential Outweighs the Risk
At Starboard, I make it a priority to train our agents and help them find ways to be organized, more focused, and improve their sales results. I’ve seen a lot of positive feedback, but only to see little or no change.
Harness your fear of the unknown and set out for change. Yes, things could go wrong– but you can always go back to what you know. Take a chance – because you haven’t reached your full potential.Photo Credit: aronbaker2 Flickr via Compfight cc
Hans Hansson | September 15, 2017
Warehouse demand is at an all-time high and industrial vacancies are at their lowest point in nearly two decades at 5.3 percent, according to JOC.com's data hub. Yet, building of warehouse space throughout the country is not keeping up with this demand. Why?
Simply put, the costs to secure the land, build, and then find a tenant does not make economic sense in most markets. Rents for warehouse spaces have remained relatively flat throughout the country until recently.
E-commerce fulfillment is a big reason why the demand for warehouses and distribution centers has increased of late, representing 40 percent of leasing of industrial properties today, according to a recent report from Jones Lang LaSalle.
In California, warehouse rents are doubling and in some cases tripling due to the legalization of marijuana. Warehouse spaces that used to sell at .50-.75 cents a square foot is now selling at $2.00 a square foot. In markets like Santa Rosa, California landlords are advertising two prices –$1.25 for non-marijuana use and $2.00 a foot for marijuana use. According to a CBRE article, 4.2 million sq. ft. of Denver, Colorado’s industrial market in Q4 2016 was occupied by marijuana growers.
Of course, at $2.00 a foot, it would make sense to build warehouses. The challenge we’re really seeing is that marijuana remains illegal on a federal basis. As a result, non-conventional funding sources from banks to hand out loans used to build warehouses are not allowed to support buildings that house marijuana.
In addition, if a landlord decides to add a marijuana tenant in their building, even if they had no loan on that particular building, their banks could legally take away any other loans on other properties owned by that landlord since they have illegal use in one of their properties.
In California, the marijuana demand has made it far more expensive for true warehouse users to not only find space, but to keep the space they have. In Santa Rosa, the Alhambra Water company will not have their lease renewed in favor of their current landlord wanting to add a marijuana cultivation operation in its place.
Unfortunately, the county is certainly not motivated to do anything but allow the expansion of marijuana. The fee structures established for marijuana cultivation is adding millions to the city. Until there is financing available to build marijuana cultivation warehouses, rents will continue to skyrocket.
What happens to the cost of basic services if businesses have to find warehouses further and further away from their marketplace in order to store their products? They will have to commute farther to bring their products to their marketplaces, making the warehouse location not only a hassle, but more expensive for the business.
Amazon is looking to build “super warehouses” across the country in order to meet their expected demand for their online products and now food with the recent acquisition of Whole Foods. As a result, there are different types of warehouse usages cropping up, such as indoor soccer fields, large gyms, and other sports facilities that are looking to reinvent their properties.
Local county and state planning is essential to provide quick decisions on warehouse development so that warehouse construction can happen and meet this demand. If not, the consumer in the end will be paying for it with much higher product costs and potentially face shortages in food and other basic product needs.