by Paul Smith
Less than a year ago, potential occupiers were queuing up for office space in the West End and letting agents were regularly disposing of accommodation on behalf of grateful clients following a single distribution of broadsheet particulars or a few well-placed “early” telephone calls.
Since late last summer economic and political uncertainty generated by high interest rates has caused many office occupiers to think twice about locating from existing premises. This “sit on the fence” attitude had led to a fall in demand and emphasised the need for active marketing, particularly when a relaunch is required following abortive negotiations or a sustained period of availability. In such circumstances an effective remarketing campaign is usually essential if interest is to be rekindled and a letting achieved within a reasonable period.
Initial considerations
In a growing number of circumstances, when a remarketing campaign is put in hand, the opportunity is taken to supplement the existing agency team.
The addition of a joint agent can be extremely beneficial, bringing new ideas and broadening the property’s market coverage. There will inevitably be an element of healthy competition, but this is unlikely to be to the detriment of the campaign, provided that the client is prepared to allow the joint agents to act as one — giving combined recommendations and sharing the various tasks involved.
However, where joint agents are instructed on a multiple agency, the level of competition between them can sometimes be so intense as to be destructive.
One of the more important tasks which should take place prior to a remarketing campaign is an analysis of why those prospective occupiers who have received details and carried out inspections are no longer interested. This can often reveal the reason for the accommodation’s continued availability. Was it too large or small? Was it too expensive? Was it in the wrong location? Was the specification lacking?
Subject to budget, it may be possible to overcome some of these objections and regenerate interest from those who have alredy inspected the property. For instance, in the case of a self-contained building, the accommodation may have been offered only as a whole, but a look at the inspections to date could show that most interest has come from potential occupiers requiring floors or multiples of floors. Taking into account investment considerations and the physical layout of the property, it may well be worth offering the building in floors as well as in its entirety.
Setting a budget for a remarketing campaign can be a bitter pill to swallow for a client who will probably have already spent a considerable amount of money on marketing and, in addition, may have lost out on potential rental income.
It is, however, important for the campaign to be viewed as an entirely different exercise. The slate is wiped clean and the task at hand is the disposal of the offices at the earliest possible date thereafter. This is not say that the entire “new” budget should be allocated immediately. Marketing is a continuous process rather than a single one-off exercise and, as such, proposed expenditure should be spread over a period of time.
“First impressions are lasting impressions.” This is an important consideration, particularly in the light of current market conditions. It is vital to present available office space in the best possible way. When it comes to remarketing, this can mean carrying out a certain amount of cosmetic work to the accommodation to compensate for the lack of regular cleaning and general daily maintenance.
Where offices have been vacated during (as opposed to prior to) the initial marketing period, it may be time to look at minor refurbishments such as the renewal of threadbare and stained carpets, the replacement of torn and marked wall coverings and the stripping out of redundant wiring. The price of such works must, of course, be weighed against the client’s “holding” costs, but such expenditure can often prove to be cost-saving if a transaction results soon after.
Having upgraded the premises accordingly, the addition of strategically placed indoor plants, pictures and items of furniture can help to create a less clinical environment.
After a sustained period of marketing, a property can become “stale” and, even if offered on new terms, will not command the best attention of acquiring agents or their clients. In such circumstances the renaming of the building or the alteration of an identifying marketing logo can add new life and help to regenerate interest.
When a property has been on the market for a long time, it can be tempting for the agency team to recommend a reduction in the quoting rent. Possibly the premises have become over-rented, but it could also be that demand for such accommodation is not price-sensitive. Again, a look back at the comments of previously interested parties may help in deciding whether or not a rent revision is required.
If it is agreed that the quoting terms should be revised downwards, a straight reduction in rent is only one of many ways in which the offices can be made more competitive. A phased rent, rent-free period of a reverse premium may be the answer. The precise option taken will very much depend on cash flow and investment considerations.
Other forms of incentive, such as a gift to the successful acquiring agent, might be considered, but one should be careful not to cheapen an otherwise quality product.
Campaign components
A well-placed letting board can often be the most cost-effective form or marketing, particularly in areas of high pedestrian flow. Unfortunately though, many leases preclude the display of such boards and even a verbal request to the lessor to waive the pertinent clause can fall upon deaf ears.
However, at the time of remarketing, it may prove fruitful to try again as very few landlords wish to see their buildings partly or entirely vacant for a long period, even if they are receiving regular rental payments.
In a market where otential occupiers need to be encouraged off the fence, a colour brochure can have more impact than broadsheet particulars and so be more effective in producing inspections. If a brochure has already been used unsuccessfully, it may be helpful to produce another.
For example, in the case of a new office development, the initial brochure may have been produced prior to completion of building works with the only visuals being artist’s impressions. A new brochure full of photographic shots could highlight many features that were not adequately presented originally.
Direct mailing may not have been used to its best effect during the initial marketing period.
Agent mailing will probably have been covered by distributions of the letting particulars or brochure to all central London commercial agents and by selective correspondence with relevant individuals at the most active agency firms.
However, as soon as mailing stops agents may tend to presume that the property is no longer available and therefore under offer, let or withdrawn from the market. Frequent mailing will, it is to be hoped, also keep the accommodation in the forefront of acquiring agents’ minds when preparing schedules for their various clients’ requirements.
Occupier mailing, if not selectively carried out, is no more than a numbers game and as such can prove to be costly. A look back at the list of previously interested parties should disclose the business categories from which a potential occupier is most likely to come and, by targeting these factors more intensely in the remarketing campaign, the chance of a successful “hit” can be vastly improved.
A telephone follow-up to an occupier mail shot can be very beneficial. Sometimes the marketing literature will not reach the appropriate individual within an organisation, or the merits of the property to that organisation may not be immediately obvious. In both cases a telephone call can rectify the situation.
However, it is crucial that the individual making the call has a good knowledge of the property and can answer relevant technical questions if raised (or at least quickly refer such questions to someone who can). Follow-up calls tend to be very time-consuming, but, provided the direct mail campaign has been well targeted, they are an effective form of marketing.
Advertising can be a very expensive marketing component and as such it tends to be looked at most critically in a remarketing exercise.
Advertisements in property journals and the property sections of the national newspapers will inevitably be read by the same agents to whom the marketing literature has been or will be sent. This “belt and braces” approach should not necessarily be viewed as overkill. It can assist in ensuring that the accommodation is in the forefront of the acquiring agents’ minds. There is also the strong possibility that such advertising will be seen by potential occupiers directly, as the individuals concerned with making the decision to relocate offices will often have some form of property background.
Having decided on the target business categories, direct advertising to potential occupiers can be achieved by placing advertisements in specialist trade journals such as Accountancy Age or Computer Weekly.
Advertising style is important and should be designed to stand out from competing advertisements, creating immediate impact with a view to generating inquiries. An advertisement that is too wordy may fail to do this.
Any publicity is not necessarily good publicity, but free publicity can be a great advantage, especially when the marketing costs to date have been considerable. If an item is newsworthy it will almost certainly be printed; in drafting a press release to coincide with a remarketing campaign thought should be given to making the content as interesting as possible.
A big step towards achieving a letting is to persuade agents and prospective occupiers to inspect the property and let it speak for itself. In retrospect, this may have been one of the main shortcomings of the initial campaign: a high-quality product but a low level of inspections.
An agents’ reception and/or open day for prospective occupiers (usually linked to a direct mailing campaign) can be useful marketing tools in this respect. Although it would be wrong to presume that all invited guests will leave with a favourable impression, their overall opinion can be greatly influenced by the presentation of the accommodation and the style of the hospitality.
Frequent marketing meetings can be helpful to the agency team and the client alike. The agents will detail what marketing has taken place since the last meeting and what interest has been generated as a result and the client will be able to quickly respond to the advice given on future marketing in the light of the successes or failures to date.
Such regular communication is very important, particularly in difficult market conditions. It is usually better for an agent to tell the client that there have been no inspections during the past week rather than to stay silent because from the client’s viewpoint, silence can mean lack of action.
Current market conditions in the West End dictate that marketing of office space needs to be carried out more actively and effectively than for several years. This is particularly the case when a relaunch is required. Clients will probably have already spent a considerable amount of money in the form of marketing expenses and accordingly there will be more pressure on the agency team to produce a positive result as quickly as possible.
To help to achieve this goal, the agency team must regularly communicate with their client and both sides should view the remarketing campaign as a fresh start, with the lessons learnt from the initial marketing helping to decide the emphasis of new components.
