Strategic Networking in Commercial Real Estate
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Today, I’d like to delve into a subject that can benefit any business - retail, office, or industrial or any service provider. I’ll bet that circles the wagons of lots of my readers. Why? Because we all must use creative ways to secure new business and drive revenue. For an attorney that means finding a new client with a legal issue. A plastic injection molding company? A customer in the market for plastic toilet seats must be found. Medical practitioners continue to source new patients. And those of us who sell and lease commercial real estate are on the prowl for an owner with a vacant building in search of a buyer or tenant or a buyer or tenant looking for a business residence. Easy, right?
Whether it’s a new client, customer or patient - all have certain characteristics. We refer to this as an “ideal client”, a target audience, or a prospect. Our commercial real estate practice generally involves a family owned and operated manufacturing or logistics company experiencing a transition. Transitions lead to commercial real estate transactions. A simple example is the acquisition of a competitor. When businesses swallow a competing firm with their own set of customers, real estate, machinery and employees - a Brady Bunch of operations results. Many times the “married entity” has too many buildings. Therefore, one or more must be jettisoned. That’s where our team comes in - to find a tenant, sub-tenant, or buyer for the overrun.
So, with that explanation as a back drop - how do we find companies in transition? Certainly, employed are the conventional methods of direct mail, ads, social media, calls, etc. But, we’re limited in the number of contacts we can make. That is where strategic networking comes in. Allow me to explain. You see, the enterprise I described - a company in transition - relies upon several professional service providers - also known as trusted advisors. CPAs, business bankers, commercial insurance agents, transactional attorneys, lawyers who plan for estates, investment bankers and wealth advisors are all consulted on a regular basis. A CPA will generally be in touch with an operation several times a year to audit financial statements, prepare taxes, and potentially provide payroll services. Anytime working capital is needed to buy machinery, equipment, hire employees or buy a building - a business banker gets a nod. Commercial insurance? Those policies are renewed annually. Compare that to the number of times a commercial real estate broker is in touch. When we’re transacting - our involvement is daily. Once the deal is done, the need for our services wanes. Consequently, knowing the service providers above, can become a steady source of referrals as they will typically know if the entrepreneur is expanding, contracting, making money, considering selling the business, getting a divorce, or approaching a lease expiration on their business premises.
But beware. Strategic networking is not simply phoning trusted advisors and asking for referrals. These relationships must be fostered over years with the idea of adding value to their clients and by referring business to them. Adopt an attitude of giving without the expectation of getting and you’ll be fine.
So, there you go. More space than you knew existed.
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at email@example.com or 714.564.7104. His website is allencbuchanan.blogspot.com.