Following on the theme of my last blog, I wanted to expound on the idea that time is the most important thing a tenant broker has control over.  I mentioned that only chasing clients with either set lease expirations or who are running out of space is a great way to ensure you don’t spin your wheels working on the same deal for months on end.  Taking that a step further, I would say that working on small deals might make you feel busy and productive, but has the potential to be the biggest waste of your time.

For me, this was a hard lesson to learn. Year one in the business was what you would expect.  Year two was a big step forward.  But year three was only slightly better than year two.  I knew something was wrong, and when I looked at my clients from that year, I realized that most of the deals were too small, too annoying, and a big waste of time.  If I had said no to 7-8 of my deals that year, I would have almost made the same money, but would have had so much more time to chase better deals.  I vowed year four would be different and it ended up being the large leap forward I wanted, largely because I realized I had small deal disease and was willing to make a change.

Before I go any further, I want to clarify that when I say small deals, I actually mean small “fee” deals.  Most of the time, that means small in size as well, but I have many friends who work at large firms who brag about working on large transactions, but because the deal is being split up so many ways, they could make more working on a simple 5000 sf deal.  Also, you lose out on the chance to own the relationship, which greatly increases your value to the brokerage firm you work for.

I have two criteria that help me determine if it is a “small” deal or not at this stage in my career. First, the company must have 20 employees. Second, I need to make at least $10,000 net on the transaction after splitting with the house.  Last year I did 23 transactions and almost all of the deals met or exceeded this criteria.  This was a sharp contrast to the year before when I did almost the same number of transactions but only half of my deals met the criteria.  My goal is to up those numbers each year to keep moving forward.

Now that we are clear on the definition of a small deal, what are the signs that you are working on too small of deals?  I like to call is small deal disease or small dealitis.

1. You are making less than $10,000 net on each deal.  Do the math.  Less deals at higher commissions equals same money and more free time…or you could work harder and make much more money.

2. Every year, you have to find 25 new deals (i.e. your clients aren’t growing). At SWA we seek to have 70% of our annual business be from repeat business. This does not happen overnight but is a great goal and one I am working towards.

3. You have never turned down a deal….. If you aren’t regularly saying no to things that come across your desk then your standards are way too low.

4. You get almost all of your clients through cold calling. I know all the old school guys will tell you how cold calling is the only way to do it, but c’mon, really? The CEO/CFO of growing companies aren’t in their offices a lot, are hard to get in touch with, and most already have a broker friend.  The deals found through cold calling are the low hanging fruit and usually act like that…

5. You think smaller deals are easier to find. This is definitely false.  Bigger deals are easier to find, but they have more competition.  Most of the time, people are just scared to chase the bigger fish.  However, bigger deals are typically easier to work, happen faster, are more enjoyable, and lead to other big deals.

Here is the good news for you if you have small deal disease.  Once you get out of that bad habit, you will never go back.  It is like all fears, they are never as bad as you think, and the snowball effect of working larger deals will not only make you more money, but will greatly increase your quality of life as well.

We all remember that client that drug you around on 4 different tours, then decided to lease half the space they originally wanted, and the commission just got cut in half but your time spent just doubled.  Or, there is the client with the always annoying “month-to-month” lease that says they can move anytime and want to look around, but really mean that they are going to work you to death until you quit or find them the most amazing sublease deal ever.

Bottom line, working with larger clients or finding ways to reduce the amount of time you spend on each deal is the only way you can increase your production as a broker.  As a clarification, I don’t mean that your service or value to your client needs to go down.  I just mean that if you consistently become more efficient with the way you spend time on deals and put the client in position to make decisions quickly, then both you and the client will be happier.   Your skills and value align perfectly with the client’s needs and it is a great thing.

So here are the Three Key Ingredients to closing more deals quickly:

1. The tenant must have a reason to do a transaction – i.e. growth or lease expiration.

This may seem like a simple thing, but how many times have you started work for a client without discovering what is really driving the deal?  They may say they want new space or would love to be in a better building, but most of the time, when push comes to shove, if there is not a trigger outside of them pushing the deal forward, the deal is going to stall.  In fact, most of the time it is bad for the client to go through a new lease deal if they don’t have to.  It puts us brokers in a compromising position if we are trying to force our clients to do a deal that may not be the best long-term decision.

One way I have ensured that I answer this question is that I do my best to only target growing companies.  Listing databases with lease expirations shown are not the most accurate and every other broker is calling on the same list…..so why not just focus on discovering what companies are growing?  You would be surprised how easy it is to find out the answer to that question with all the free information on the internet these days….Also, I would rather do 20 deals with growing companies than 30 deals with stagnate companies.  Makes my hopper much more full for the upcoming years.

2. Use technology to expedite the deal process and give your client clarity.

There is a saying in brokerage that “time kills all deals”, and I couldn’t agree more.  So how can technology help deals keep their momentum?  I think of technology as the lens through which your client views the entire transaction.  If it is comprised fully of multiple emails with multiple word documents, excel files, and pdf’s attached each day, then you can understand why they view it as frustrating and frankly hard to decipher.  The reality is that they only have an hour or so each day that they can actually focus on this real estate deal, and if they are constantly confused or have a hard time understanding what seems simple to us brokers, then it is very possible that they may just delay the decision several extra weeks due to lack of clarity.

Currently, I utilize two major software platforms that help me cut down on my time creating information to give to my client, and make it incredibly easy for my client’s to decipher that information and make decisions with it.

The first software platform is Ten Eight (old site is www.teneightapp.com, new site is www.teneight.net).  Ten Eight’s deal dashboard is the first ever designed specifically for tenant brokers and their clients to work through a deal process.

First I do online search through the many options that currently exist (Costar, Loopnet, ROFO, etc.), and then I have my assistant contact each of the brokers directly to confirm the availability of the spaces. Once she does that, she uploads all the buildings into the system with the floor plans and flyers sent from the buildings and creates an account for my client.  My client can then log into the system and view all of the available options on a secure site or their mobile device that is VISUAL with a map, pictures, and important information clearly laid out like size of the suite, rate, and monthly rental.    My client can easily pick their top 3-5 buildings this way and we set our tour much quicker than otherwise.

We then use the Ten Eight iPad app in lieu of a tour book on tour.  This allows my client to take notes, pictures, rate the building, and interact the properties while on tour.   All this info syncs automatically with the deal dashboard.Throughout the rest of the deal, we continue to upload all the important files to the deal dashboard and the client always knows where to go to find it.  These include proposals, counters, financial analysis, and lease documents. Me, my assistant, or my client call all comment and edit the content on the site.  This alone saves me from having to drive back to the office most days post tour.

The second software platform I use is LeaseMatrix.  LeaseMatrix is not only the easiest financial analysis to create from a time perspective, but it is also the most clear for my client to understand.  It is limited in some of the complicated deals, but for 90% of my transactions, it is more than adequate.  My assistant can create a full analysis from a proposal in less than 10 minutes.  I love it because I can be on the go and log in on my iPad from wherever and immediately check it for accuracy and also view all of my deals and analysis forms all in one place.  I then have my assistant just upload the analysis to the Ten Eight Deal Dashboard, and my client can view it right away.  If you are still sending your client the old ProCalc analysis sheets or a boring excel file, then you are missing the boat…..

3. Tell your client what you think they should do and convince them of it.

This by far is the hardest one of the three.  It is easy to just pick better clients or utilize technology (although so many brokers resist the change), but it is much harder to become a closer and be able to get deals done.

Even at a very young age, I am amazed at how much our clients want me to tell them what I think and give them a reason to make a decision.  Tenants don’t do this every day of the week and they hired me for a reason, so if I just shove all this information in front of them and say “here you go”, then I am not doing my job to the fullest.  I need to have processed the information myself, surveyed the landscape in front of us, and the be able to confidently tell my client what they should do based on sound commercial real estate logic.  All the tools and technology should only aid this process and help my client see that what I am telling them makes sense and is backed up with data.

However, most clients don’t look too intently at the numbers or stats, they respond much quicker to the confident proclamation from their broker that they hired and trust about which building/space to pursue and when the deal is at the bottom.

The best way I can generally describe this is that you have to create a narrative for your client (and the building owner) to view the entire transaction and process. If you set up a narrative that is unattainable or over-promise, then you will be in trouble.  In contrast, if you set up a narrative that is attainable and is logical to both parties, then most times you set yourself up perfectly to come to both your client and the building owner at the end of the transaction with the deal they both need to do in front of them.  Knowing what the building is going to do when you approach your client gives you all the confidence in the world and should help you close. If you come with uncertainty, your client will smell it and delay their decision.

The first step to getting your client to make a decision is to make one yourself……

For those of you running around with Alpharetta deals right now, this is going to be good news for you.  The two buildings at Parkway 400 are back on the leasing market. To clarify, those buildings are right across the street from what will be the new Avalon development.

 I’d been following the situation closely for the past two years with those buildings due to a client of mine who is in the two story project.  Right when we completed the deal back in 2010, we knew the buildings were having some trouble because it took them about 2 months longer than expected to build out the space and it took them 3 months longer than agreed to for them to pay commissions. Shortly thereafter, the buildings went through a number of financial issues and in layman’s terms, went into a big freeze over the next 2 years.  No deals could be done at the project. you can read more about the foreclosure process here.

Meanwhile, across the street, the Avalon project was picking up steam again and actually pre-leased almost all of their office space in the new mixed-use facility that will be one of a kind in Alpharetta.  In addition, there began to be a “trickle up” effect happening from all the leasing absorption in the Central Perimeter.  For example, over 40% of our transactions in 2012 happened in the Central Perimeter, and in contrast, we have approximately 50K sf of deals (on multiple transactions) working in that submarket right now through 4 months of 2013.

So what is the situation at Parkway 400 now?  Well, the buildings have been unable do deals for so long, but have been collecting rent all along the way, and now that the ownership is recapitalized, the building is more than capable of doing transactions.  If anyone is interested in Parkway 400 you can check out their old website at www.parkway400.com , but stay tuned because the new leasing team at PM Realty (Chip Roach and Stephen Clifton), are working on  a revamped site that tells the new story.

King and Queen Towers

Second, as a result of the large deals and absorption in 2012, the market is finally starting to get tight again in the well positioned Class A assets.  The sublease market started to dry up first, then the “move-in-ready” spaces that needed little construction work, and finally tenants are having to make decisions on the basic fundamentals of the marketplace.  This is causing a serious premium on any of those exception spaces that still remain.  For example, in working on a recent deal in a Class A building on a floor that is very desirable for 5-10K sized tenants, we have had to hustle to get it done because three other groups were looking at the same floor.  That scenario hasn’t happened in a LONG time.

Lastly, rental rates are FINALLY being pushed upward by a few buildings, i.e. Concourse, Perimeter Summit, Ravinia, Lakeside Commons, etc..  For example, last May, I did a deal in one of the King and Queen buildings for $22.50/RSF starting rate.  That same deal if done today, would start at $25+/RSF.  While that may seem like a bad thing to some people, it actually does wonders for the marketplace.  Here’s why.  The gap between the top buildings and the rest of the market gets to be much more defined, which simplifies the decision process for tenants and allows the competitive market for a particular tenant to be much simpler.  For example, when doing a search recently for a tenant that needed to stay within a strict budget, I was able to eliminate half of the buildings in the market right from the start.  Knowing that the top of the market was unattainable for them, actually helped them make a more confident decision for space.  They went to get the best space available in the options they could afford.

The top of the market buildings now can focus on delivering quality amenities and experience to their tenants who now more accurately fit the profile of the building.  The reality is that the top tier tenants in the Perimeter submarket could actually still afford much more expensive buildings.  They would be fine paying $30+/RSF for a tower in Buckhead, but they want to be in the Perimeter for geographic reasons.  As the market gets more defined because of the fundamentals above, this will continue to allow those Class A+ buildings to push rates and deliver the quality their tenants desire.

Let’s hope this trend continues and 2013 becomes a great year for all in the industry.

SPEED UP the process to get the northbound exit ramp to I-85 from GA 400 finished. Shoot they built the Panama Canal in less time than it is going to take the city of Atlanta to fix this long overdue problem.  Just build the dang bridge and get it over with. Seriously. Ever since I moved to Atlanta, I could never understand why this wasn’t a top priority in the city. Also, we have a long history of finding any way we can to pay for pointless things, but dragging our feet on the important things that Government is supposed to do. It has to stop. Our expectations with timing for government projects needs to change, and Kasim Reed needs to make this happen, ASAP.

Fix the POTHOLES in our CITY! If we would just take the money we are planning to spend on the stupid new Falcons stadium, and fixed the road issues and potholes, we would be such a better city. Why we continue to spend countless dollars on things other than the roads and bridges that make up our city, I will never understand. I have driven over the same exact pothole on Piedmont Road in front of my office for literally 3 years. Again, if government can’t even do the one job that both Republicans and Democrats think they should, then how are they ever going to reform anything else? Let’s scale back our government and make it actually do some things correctly. Our public servants, aka the senate and congress, should not be among the most maligned members of society, and it would be a good start for them if the just executed on the simple tasks laid out before them like fixing our roads and bridges that we all agree they should do.

And with that, I’m out.  I hope you enjoyed reading my wishes for 2013 in Atlanta.  Let’s all do our part in 2013 to get involved and continue to make Atlanta the Capital of the South.

7. Bring Run ‘N Shoot back (AKA…the best 24hr pick up bball gym ever)!

Atlanta has some of the worst places to play pick-up basketball of any major city!  Under the current structure, we have to pay $ to play in some league that has late game times and awful refs who just want to call lots of fouls to slow down the pace of play and keep their lazy butts from running the court and let the stupid running clock rule just speed up the game.  There is no gym that consistently offers pick up games, and the LA Fittnesses of the world are awful and just have folks who want to whine and moan about calls and hog the court.  We need another 24hr venue that is affordable and lets all types of people play pick up basketball any time, any day, and have multiple courts that allow all skill levels a place to play, just like the student rec centers in college.  Again, I just don’t understand why it is so hard to make this happen in a city with millions of people….

For example, when the typical southern conservative hears about light rail travel in the city, they immediately jump to conclusions that the government wants to push us into smaller and smaller living spaces and take away our cars and make us ride public transportation so they can control us.  BOGUS. Some people just like urban living, i.e. the thousands of people leaving the suburbs for the city.  My generation likes the idea of walkable living, public green spaces, living in town, and being around a diverse group of people and culture. Opposite example, when a liberal hears budget cuts or entitlement reform, they immediately think that conservatives want to close their schools, fire teachers, and throw poor people off a cliff. BOGUS.  Liberals always fall for the ploy that government is the only engine capable of doing anything, when in fact, the government is much more corrupt and unfair than the private sector..  Having a balanced budget should not be a party affiliation thing.  While there are no perfect solutions for how to make Atlanta a more friendly urban environment, I don’t believe that the only way to solve it is to block every piece of legislation that comes up for vote out of fear, which is what we currently do.

5. Can we please figure out a way to make North Fulton and Bobby Jones golf courses both affordable and not crowded? How hard is it to run a public golf course, and not stack up people right after each other???? Does anyone want to play a 6 hour round of golf?  NO!  And your courses sucks because they are overplayed.  The government should just subsidize the courses and allow young kids and the middle class to be able to play affordable golf.  Young kids need things like golf, especially those in the inner city.  We should just make Bobby Jones into a sweet 9 hole golf course and actually build a driving range in the city.

6. On that note, build a driving range in the city!  That is an official wish. I am sure all of us want to join a country club, but sometimes I just want to go hit some golf balls in a t-shirt and shorts without driving 45 minutes.  Is land really that valuable that we can’t afford to build a driving range inside the perimeter?  Talk about the middle class getting the shaft. Can we just hit some golf balls without having to shell out $100K to join a private club? Even if you do join a private club, sometimes you just want to hit balls with your friends who aren’t in the club. Shoot, New York City has a cool multi-level driving range in a cage in the city. C’mon Atlanta, we can do better…

3. OUTLAW SPAM FOREVER IN ATLANTA! Its like all the older people who actually run most companies finally realized that they can direct market to people using email, and just freaking let it rip.  I get blasted with a bazillion propaganda emails every day.  Even the companies I used to like, aka Scoutmob, now spam me for stuff like women’s jewelry and other pointless things.  Shoot, I get a darn email from every office landlord broker in the city every day! I work in commercial real estate for a living and I don’t know that you have vacant space at your building??? Every building has vacant space these days!! Seriously, as I am writing this, my inbox just blew up with three new spam emails from office buildings. You should not be allowed to email me something that I didn’t ask for. Do what you do well, build your brand, and stop voluntarily spamming me.  Someday I am going to run for office and outlaw spam email. SERIOUSLY. Vote for me.  Make people get business the old fashioned way. If you spam, we will hunt you down and throw you in jail…..or something like that.

1. Can we please stop with the awful trend of making all of our local restaurants into “mini-chains” across the city?

Its as if these spots, and I’m not naming names, but for instance – Tin Lizzy’s, Six Feet Under, FIGO, Flying Biscuit, Noche, etc. – think that we all don’t travel outside of our local neighborhoods and don’t know that the Noche in Brookhaven is not the ONLY Noche.  Can we please just stop reproducing the exact same experience in every little neighborhood of Atlanta?  I’d like for Buckhead, Brookhaven, West Side, Inman Park, and Virginia Highlands to actually have their own unique feels and not just copy one another…..I remember in the old days when my buddies at college who grew up inside the perimeter (ITP) would make fun of me because the suburbs had all the “chain” restaurants and all the stuff in the city was soooo “cool”. Well, unfortunately , if we keep up the same pace as now, Atlanta will just be a city full of chain restaurants that pretend they aren’t. And, to top it off, these mini chains act like they are all local.  You know what it reminds me of?  The band who decides that they are tired of making great music and just want to cash in on some dollar bills, and then make a stupid pop album.  Aka, OAR, and every other small time or small town band that sold out for the paycheck.

2. Stop trying to spend my tax dollars on a new Falcons stadium in the EXACT SAME PLACE as the old one!!

What the people of Atlanta really meant when they said they wanted an outdoor stadium was actually code for we want a stadium somewhere OTHER than downtown!  It has awful parking, no places good to tailgate, and is frankly inaccessible for most people who don’t travel downtown that often, get lost when they go, and don’t feel safe bringing their kids to the game at night.  Heck, even the law firms moved out of Downtown as soon as the figured out they didn’t have to walk to the courthouse anymore….My wish is that we either relocate the stadium to Chamblee or the Perimeter, or just leave it alone for another 10 years. The Dome is only 20 yrs old, but the loan for the new stadium is based on 30 years. The math doesn’t add up. The way I feel is that the people of Atlanta were given a bait and switch by the Falcons….getting us all excited about a new stadium, teasing us with the thought of moving it outside of Downtown to get us on board, and then pulling a switch to now say the only way it is possible is to keep it in the same place. Why don’t we spend the next 10 years fixing the real estate around the Dome, so that when we build a new stadium there again, it actually has the chance to be cool and attract people before and after the game to hang around. I guess that’s too logical to work…

Over the past year, I have spent about 40% of my time helping Patrick Braswell and Scotland Wright on a software company called Ten Eight

For those of you who don’t know, it is a company that is focused on eliminating the paper tour book and revolutionizing the way companies evaluate commercial space.

A few weeks ago I was jokingly scolded by some friends in the business who said I was wasting my time getting distracted with software… While they were kidding, that actually wasn’t the first time I have been cornered with the same questioning, mostly from people who are seriously doubting my sanity and questioning my strategy.  Don’t take your eye off the ball they say…..

Well, they are right about one thing, I don’t actually have much of a set strategy. I’m not even sure what the “ball” is in CRE.  Have you ever actually tracked how you got each of your clients?  I bet it is a lot more random than you think…….a lot less from cold calling than you think…  So, in reflection, here are three reasons that having a side job in CRE can be a good thing for business:

1. Becoming a thought leader in an industry is never a bad thing
2. I have met more new people than the previous three years combined
3. You can talk about something other than real estate with your clients

You see, most people look at us brokers and think that we all look the same, dress the same, drive the same Lexus, and sound the same.  Anything that you can do to stand out in a crowded industry is a good thing.

So, I guess the important question is “how has business been this year in brokerage?”.  It’s been my best year ever, by far.