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Service levels in commercial real estate can leave much to be desired. This post is a study completed to examine just how bad it can be and the reasons why. Hint: you will appreciate the value of a tenant broker a little more after reading this.
We set out to measure just two things...response time and response rate to queries regarding available office space for lease. As experts in commercial real estate leasing, we know service can be poor, but nobody has really done a study to quantify it.
What We Measured
1. How bad is it for commercial real estate agents trying to find space for a client?
2. Is it any better or worse for the tenants who do not have representation?
3. Does email work better than voicemail?
4. Is there any service improvement for larger tenants?
Setting It Up
We took the following steps in order to run as unbiased of study as possible:
1. First we needed a real commercial real estate agent, and one of our staff members volunteered. He has 16 years of commercial real estate experience and is well respected in his city.
2. We also needed a prospective tenant that would make enquiries about space that was unknown to the market in question. One of our staff members filled that role.
3. We ensured that the gender was the same.
4. Selecting the spaces to call was randomized. We printed a survey of available options in the market, cut it up into pieces - each piece showing the building and suite, and then pulled them out of a hat, one by one.
5. For each target, both the broker and the tenant would contact the listing agent in the same way...either both by email or both by voicemail.
6. We had two email templates and two voicemail templates so that we were not sending the exact same message. We alternated who used which template, and who contacted the agent first.
7. We decided that 100 sample inquiries for each category would be enough of sample size to see some credible results.
8. The requirements for the inquiries would be 2,000 to 2,500 square feet and 5,000 to 6,000 square feet.
9. The study was conducted over a full month to spread out the inquiries evenly over each business day. Starting times for inquiries were alternated, starting at 9am and 1pm to ensure an even distribution of contact throughout the day.
As you can see, the total number of inquiries was 800, broken down in the following categories:
Here are the email templates we used:
I trust you are well. I noticed your sign on <address>. I am looking for 2,000 to 2,500 square feet of space with 3 offices and a boardroom. Can you please let me know if you have space that could work and attach a floor plan if you have one?
I am looking for 2,000 to 2,500 square feet of space for 3 offices and a boardroom. Do you have a floor plan and marketing flyer you can send me?
Note that the second email is a bit shorter, more to the point and a bit less friendly. The voicemails had matching words.
1 - There is a benefit to working with a broker. The voicemail and email response rates were both better and the broker heard back more than a full day sooner.
2 - Email trumps voicemail. Email response rates were higher and response times were quicker. We looked into how many emails were replied by the agents via smart phones: 72%. As listing agents are out showing space, it is painful for them to come back to the office, check voicemails and get back to people.
3 - The larger the tenant, the better the service. We were not surprised about this one as the listing agent's commission is tied to the size of the space. There was an improvement in responses for both the broker and the tenant. We did notice however that the service level for the tenant looking for the larger space jumped dramatically, while the broker had only modest improvement. We suspect that the improvement in responsiveness has to do with the size of the tenant and their lack of representation. If a 5,000 square foot tenant calls a building without a broker, there is an opportunity to show the space and then try to become that tenant's agent.
4 - Tenants should be nice. Brokers should be direct. The longer, friendlier email and voicemail were more successful for the tenant, but the more direct templated worked better for the broker.
Post Study Follow Up
We never actually toured any office space. We approached the listing agents who did not even respond to our inquiries, came clean about the study and asked them why we did not receive a response. Here are the categories of responses:
If you are touring buildings without a real estate agent, expect that you will not hear back from all agents. Most signs on buildings have phone numbers and not email addresses, but if you can find the agent's email you will have more success. Be sure to be as friendly as possible and be as specific as you can...agents will discount you if they feel that you are a flakey tenant.
If you have hired an agent, also expect that they will not hear back from every listing broker, so follow up with him or her on sites that they have inquired about and have not yet received the details.