Making an Educated Decision When it Comes to your Commercial Real Estate
The Role of Market Intelligence
By Krista Leetmaa, Director of Intelligence & Marketing
In a world that is becoming increasingly data-driven, with inconceivable amounts of information being shared, processed, and understood at any moment, the message is more clear than ever: knowledge is power. But the pure volume of material can be daunting. How do you capture, understand, and analyze the available information for every part of your business? How do you harness this knowledge to ensure you’re benefiting from everything available to you? Increasingly, the answer is: you work with an expert to process it on your behalf. When it comes to your real estate, it should be no different.
What is good market intelligence?
The role of a Market Intelligence team is to provide all the information required for you to make informed, smart decisions about your commercial real estate needs and consequently your business. The primary advantages of high quality, tailored, market intelligence are:
Creating leverage in negotiations. Being confident in the decisions you make related to your business and its associated real estate.
Understanding the market means you can easily identify a good deal versus a bad one.
Making decisions based on facts, not reactively or emotionally You get to focus on your business, instead of your real estate
Guess work should never be used, regardless of the scale of the question. Confirming zoning of a potential site can be just as important as a full scale market intelligence analysis. In addition, the challenge of understanding the market is multiplied by the number of locations in your real estate portfolio. For companies which stretch across Canada the idea of keeping up to date from coast to coast can be daunting!
What are some of the reasons that relying on experts is so important?
Submarket and building type matter: vacancy and rental rates can vary significantly depending on where in a city a building is located and on its characteristics. Basing decisions on average rental rates for an overall metropolitan area is superficial and does not get good results.
Checking the zoning of a potential property and deeply understanding your use clause is critically important. However, cities do not interpret zoning by-laws, they only provide access to information. You need someone with experience to understand and analyze the by-law on a case by case basis before making financial decisions based on zoning.
Always be looking forward: a lease typically runs from 3 to 10 years in length and market conditions can change significantly in that time period. Understanding where the market is trending, what major projects are under development, or if a primary resource operations might be closing down, is key to understanding if you’re making good real estate decisions.
Costs of not being informed
When you don’t have proper information, you risk wasting both money and time.
Too often, companies make decisions about their real estate portfolio in a time-crunch, with little occasion or ability to uncover market intelligence prior to making critical decisions. Being reactive costs you money in both the short and long term. Agreeing to terms higher than what the market commands has a snowball effect and will affect you for at least the term of the lease, and probably beyond. To negotiate down from a previously inflated rental rate is much more challenging than landing on a fair market rental in the first place.
You also have to be conscious of protecting your renewal rights by exercising before the option date (when desired) and understanding the rates set out in your legal document (who exactly gets to decide on “fair market rental”?). This requires targeted and timely Market Intelligence.
Time can be wasted by chasing unsuitable sites or struggling to fit a square peg into a round hole (trying to make a site work when you’re out of other options). Having the information you need upfront allows you to make decisions efficiently.
How to get the information that’s important to you
Working with a trusted partner who understands your real estate and its associated markets is the most effective way to harness and take advantage of available information.
Landmark’s Market Intelligence team is composed of market research analysts with multi disciplinary experience in urban planning, geomarketing, urban economics, and more. Their experience encompasses all Canadian markets, regardless of size and location. They first work to understand your particular portfolio, then provide curated market intelligence that will ensure you’re making an educated decision, every time.
You are the expert in your business. Trust Landmark to be the expert in the management of your commercial real estate portfolio. Partner Smarter.