More and more residential agencies are turning their attention to the commercial real estate sector, according to one network.
The LJ Hooker Group is reporting a 25 per cent increase in the number of its agencies expanding into the commercial space with a commercial licence.
According to the network, these outfits are not only aiming to become all-encompassing of their clients’ needs, but they are also seeking to expand their revenue opportunities.
Daniel Alexander, principal at LJ Hooker Southern Gold Coast, said it is one such business that has introduced a commercial real estate division in the last two years and admitted: “It didn’t really strike me how different commercial real estate was until we went to the lender to purchase the rent roll, and they asked what we intended on doing with the commercial properties (on the roll).
“There’s a lot of management requirements which are different to residential, so it carries a different type of risk.”
Now, he knows that the key to cross-divisional success is the employment of specialists in the sector.
In response to this, LJ Hooker Commercial Southern Gold Coast now employs six commercial staff and has tripled the size of its portfolio. A core component of the office’s growth strategy was the arrival of Brett Gleeson, a former chartered accountant at KPMG who is currently Mr Alexander’s business partner.
Together, the pair introduced a commercial-specific CRM and invested in commercial marketing subscriptions before acquiring two local commercial specialists — Greg Watson and Tara Imlach — who spearhead the team.
Touching on the benefits of entering into the commercial space, Mr Alexander regaled how, given the brand has “clients who dabble in both residential and commercial”, it has facilitated their ability to maintain client relationships across all their property needs, a crucial factor in being able “to service clients for all their investment and divestment needs”.
He explained how “once you show a residential agent what is involved in it, like the preparation of an information memorandum, searching through caveats and regulatory requirements, they quickly see it’s a very different proposition, and they’re happy to hand it over to one of our commercial agents and receive a referral”.
The Gold Coast outfit has been responsible for some major deals in the local area since its inception, including the $6.2 million sale of Man on the Bike neighbourhood shopping centre at Tallebudgera and the $4 million sale of The Collective retail precinct at Palm Beach.
Stephen Mutton, LJ Hooker general manager network – Australia, outlined how with diversification growing in popularity as a business structure, the brand has had “a surge in residential principals adding on a commercial licence”.
He expects the interest to continue: “We anticipate more growth in commercial property over the future, especially as the SME market benefits from the re-introduction of skilled workers to Australia.”