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Simon Parker
Tougher times are pushing some commercial real estate agencies to delve into the residential sector to protect their bottom lines, according to the findings of a new report by Macquarie Relationship Banking.
In a presentation about the 2012 Commercial Real Estate Best Practice Benchmarking report, Wayne Tower, associate director at Macquarie Relationship Banking – Banking and Financial Services Group, said many of the issues confronting commercial agents were similar to those in the residential agency space.
The report, due to be released in early December, is based on a survey of commercial real estate agencies undertaken in recent months, and follows a report published in 2010.
Similar to residential agencies struggling with declining sales, property management – along with leasing – is becoming increasingly important to commercial real estate agencies.
More leasing agents are also looking to add property management to their portfolio to help garner additional business, Mr Tower said, based on the survey results.
According to the report, property management now accounts for just over 60 per cent of a commercial agency’s fixed costs, well up on the 35 per cent figure recorded in 2010, Mr Tower added.
A move towards fresh revenue streams has also seen more commercial agencies move into the residential real estate space, Mr Tower said.
One discrepancy that Mr Tower noted was while agencies identified staff recruitment and retention as a lingering challenge, few planned to invest heavily in this part of their business. This was particularly true for small agencies, he said.
On a positive note, more commercial agencies are recouping marketing costs upfront from vendors.
The report also highlighted an increase in the number of commercial property deals valued at less than $5 million, while tighter lending rules continue to crimp overall sales activity. Additionally, the survey revealed that fewer commercial agents were relying on print advertising to promote their listings, with more relying solely on web-based portals to market their stock.
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