The Deflation of the Tech Bubble
May 04, 2016
Top Ways Salespeople Can Maintain Steam
As we enter the fifth year of the latest "tech boom," there are some pretty compelling signs that the "party is almost over." The tech bubble is experiencing an apparent decline in investments in startup technology firms, tight reviews in funding for seasoned firms that now need second and third round funding, and the amount of interest in office space is quickly dwindling.
As office space goes, so does all of the service providers who support the office market such as real estate brokers, attorneys, architects, furniture sales, IT and telecommunications. This is the domino effect of the tech downturn.
What downtown San Francisco will look like within the year is still unknown. However, most are already feeling the market beginning to slow down, not quite "crash." If the tech market is in fact slowing down, then the conventional businesses that remain will not be able to continue paying the high rental rates seen in commercial leasing. This will eventually create a downward cycle that will reduce demand for office space in San Francisco, as well as the surrounding Bay Area, and lead to lower office rents.
If you've been lucky enough to sell in a "tech market" the last several years, consider yourself blessed. The hot market that has made you more of a "tour guide" rather than a real estate professional consultant. Just like the residential real estate market, our job was to find a way to get the tenants the space they need and worry less about what it would eventually cost.
It was not uncommon that whatever the asking price was for the space, our advice to our client was to consider paying ten to twenty percent above that number in order to secure the space.
As salespeople we will need to use different skills to remain successful and continue a lucrative business in this new, slower market. Here are the best ways we can continue success:
- Fight for your clients. Gone are the days when clients were coming to us. Now, we have to pick up the old practice of cold-calling, networking at events and marketing ourselves to get in front of as many potential leads as possible so we secure our share of the remaining market.
- Position yourself as the best person to do the job. You will have to convince clients that you are the right person to service their needs. This will require a thorough understanding of the current landscape in terms of:
After these careful consideration, you must then figure out a way to reduce those options to only three or four maximum and then sell your client on one in oder to make an offer and close a deal.
- What the competition is offering.
- What comparisons can be found to justify where you believe the market is.
- Service your client with more options– this means that you will have to cross check what your client is looking for against multiple opportunities.
- Give more... A lot more. Provide more tours, more landlord concessions, more space planning and lease negotiations between attorneys. Surprisingly, every experienced broker who has been through several booms and busts will tell you that you make more money in this type of market then you do in a thriving tech market. How so? Firstly, you are needed and more so clients will become more loyal to you. The process will take longer which means that the clients will have more time to make better decisions and therefore allow you to consult your clients with more time to do so as well.
This is also a market where you will see less competition as the tour guides will fall by the wayside because they never developed the necessary skill sets in this past market to succeed in a market downturn.
Photo Credit: brennan.browne via Compfight cc
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Written by: Hans Hansson
Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 31 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email email@example.com or call him at (415) 765-6897. You may also check out his website, www.commercialspacefinder.com.