Cracking the Commercial Market

Real estate rewards the ambitious. Michael Burgio from Novak Properties, in Sydney’s Northern Beaches is a case in point. At only twenty-eight years of age, with sheer determination, he has cracked the notoriously difficult commercial property market of panel beaters and coffee roasters.

He says, “Commercial’s a lot harder than residential.” But he knows how to work hard. At fourteen and half he managed a local Domino’s outlet, working 35 to 45 hours a week. He says, “I was doing more work outside of school then I was actually at school. The biggest thing I learnt, which really helped when I came into commercial property, though was how to adapt fast and deal with older people.”

At barely twenty one, he had to learn to talk the language of commercial landlords and win their trust. With commercial properties, negotiations are emotional and you have to deal with savvy people. Michael says, “Landlords are very successful in what they do, either through property or other businesses. When I started, I’d call them to do the business, and they would say, “Well we’ve already got three agents.” So I was like, “Well what’s the risk of a fourth? It doesn’t cost you anything. I’m the new kid on the block, young, hungry. Just give me the opportunity.” By showing his passion and understanding of the property and the numbers owners came to say, “We want you in front of the buyer, because you’re going to stand up for us, and you’re going to know their dollars.”

In his first year in commercial, Michael earned between $550,000 to $650,000 in GCI, and then the next year he cracked a million. He says, “At the moment, I have probably 20 to 30 sale listings for commercial, with probably ten residential, and then 150 are lease deals. What I love about commercial is you don’t have to wait for the market to grow to increase the value. You can sell a property that is identical to another, for double the price – if it’s managed well.”

Landlords work with Michael because he floods them with information, data and numbers. He says, “It’s really all about numbers. I do a lot of buyer feasibilities. I would look at the property, and say, “This is what your property is. You are currently getting $200 a square metre, based on all the last 20 deals, it should be $250, so let’s see if there’s that value.”

He then offers suggestions for what the site could be used for and produces a detailed Excel spread sheet with the costing projections for various options. He says, “I get a lot of business now, because of the data and information I present. An owner really just wants to know their agent can talk the language of the buyers. It’s even more so in commercial, because buyers are so different. The buyer who does child care, has different needs from the ones who do gyms, or over 55 developments. They all look at it with different eyes. It’s not about which agent will do the best photos or videos. It’s being able to talk the language, because the buyers are the savviest negotiators out there.”

He thinks the wisest purchase is a building with lots of small tenants. He says, “I would rather have ten smaller tenants than one big one, because it diversifies and spreads the risk.” In terms of the current market, from his perspective, it’s been tough for the last twelve months. He says, “A lot of people are like, “What do you mean? But all I’m hearing is 98 per cent clearance rates.” For the last twelve months, people haven’t been taking bigger shops, people haven’t opened up second locations – they are just trying to survive in the current one if not downsize. We can leverage, and that’s where I’m fortunate I do both residential, commercial. If one’s slowing down you can pick up on the other as well.”

Five top tips

1. Marketing

Apply the standard from top level residential marketing to commercial. Market yourself. Michael’s name and face is everywhere all over the Northern Beaches. He says, “At Domino’s – you market, you get business.” Every morning, Michael and Mark Novak, do Novak moments, which is live at 7:45 AM on all Novak social media channels. Michael says, “We do a live video, or webinar and we just talk about what sort of comes to our mind. Whatever happens, happens. We love what we do. We’ve always got a lot to say. We get one to 5,000 views of each episode in a week.”

2. Use Bing

Michael says, “Bing is a service where they will print, envelope, and distribute a letter via postal mail, email, SMS or fax. It’s more expensive, because you’re doing the letters but it’s very effective in generating leads. We do a three-minute campaign at Novak. So a homeowner, or anyone can text a property address to my mobile, and within three minutes I’ll give them an estimated price. It is through RP Data. I’ll type in the address and RP Data has a really good price estimate and I’ll send them a PDF letter. It’s useless for commercial, but it’s a lead generator. The point of the exercise is to get the names, numbers, and addresses of people who own properties. I trialled it on residential, it works phenomenally.”

3. Pick the brain of your principal

Michael says, “They are the biggest tool in the shed, and half the agents don’t use them. For example, I still take Mark out to appraisals, not all of them, more the significant, larger deals, because he’s a tool in the shed for me to use.”

4. Use WhatsApp for Vendor Management

Michael says, “Commercial can have five, six, seven, ten owners and they’re not always related, and a lot of the time they don’t even talk to each other. So we create a group chat with all the owners in there on WhatsApp. So either myself, or someone from my team can put a message or buyer feedback in there, and it’s all there. When I see a property I will do a voice memo of the feedback, put it in the WhatsApp, they can listen to it in their own time, or all ten owners listen to it. It saves me doing 10 phone calls. That’s been a big game changer for me.”

5. Embrace technology

It is a point of difference. Commercial clients like see all the information and it to be delivered to them in the most powerful and convenient way. Michael says, “That’s where Web Books come in very handy.”