Residential agency owners are diversifying into commercial real estate services to cater to the wider needs of their clients and expand their revenue streams.
Over the last two years there’s been a 25% increase in the number of LJ Hooker businesses which have expanded with an affiliated commercial business and service experts.
LJ Hooker Southern Gold Coast Principal Daniel Alexander has been part of the movement to commercial, opening-up LJ Hooker Commercial Southern Gold Coast.
The office now employs six dedicated commercial staff and has more than tripled the size of its commercial property management portfolio.
The key to the business’ success has been appointing commercial specialists. Mr Alexander said the need for dedicated commercial specialists became apparent when they inherited 20 commercial property managements as part of a wider real estate rent roll purchase.
“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 us what we intended on doing with the commercial properties (on the roll),” he said.
“There’s a lot of management requirements which are different to residential, so it carries a different type of risk.”
As part of their growth strategy, Mr Alexander was joined by now business partner Brett Gleeson, a Chartered Accountant who was formerly of KPMG. They introduced a commercial-specific CRM and invested in commercial marketing subscriptions, then recruited two well-regarded commercial specialists in the local area, Greg Watson and Tara Imlach, to spearhead the team.
The office has since been responsible for some major deals on the Southern Gold Coast, including the $6.2m sale of Man on the Bike neighbourhood shopping centre at Tallebudgera, and the $4m sale of The Collective retail precinct at Palm Beach.
One of the benefits of the expansion into commercial property has been the scope to retain the relationship with clients across all their property interests, said Mr Alexander.
“We have clients who dabble in both residential and commercial and when the market is so competitive, it’s critical to be able to service clients for all their investment and divestment needs,” he said.
“We all work from the one office and we’ve worked hard to integrate the two disciplines.
“Once you show a residential agent what is involved in commercial, 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.”
LJ Hooker General Manager Network – Australia, Stephen Mutton, said diversification was an increasingly popular business strategy for real estate principals.
“We’ve had a surge in residential principals adding on a commercial license, taking advantage of our tools and support to make the expansion,” said Mr Mutton.
“LJ Hooker offices sell homes and manage investments for business owners and high net-worth investors, so it makes perfect sense to have all their property interests catered for by an integrated brand.
“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.”
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