Want to take on commercial real estate lead generation the same way as residential real estate lead generation?
You will be up for a surprise.
Things often work differently regarding commercial property sellers compared to the residential market.
The decision process is different.
Also, certain data you need for marketing purposes is not as easy.
There are marketing channels you will definitely need to use and others you can happily ignore.
So, there are some pitfalls, but this article will hopefully help you avoid them.
Today, I will cover the following topics:
- Before thinking of commercial real estate lead generation, find your niche
- Types of commercial real estate leads and the one pitfall
- Consider these 7 B2B marketing statistics and how they also apply to commercial real estate lead generation
- How the decision-making process for purchases works in the B2B world
- Takeaways – How to generate commercial real estate leads
Before Thinking of Commercial Real Estate Lead Generation, Find Your Niche
First, let’s establish what commercial real estate is so we’re sure we’re talking about the same thing.
Commercial real estate is one area of the real estate market that consists of commercial properties with a business purpose or aiming to generate a profit for their owners.
There are four different categories of commercial real estate, which can be further categorized into sub-categories.
- Duplexes, triplexes, fourplexes
- Townhouses, garden apartments
- Bungalow courts
- Multi-story apartment buildings
- High-rise apartments and condominiums
- General warehouses (trending for e-commerce because of the pandemic)
- Distribution warehouses
- Light manufacturing properties
- Heavy manufacturing properties
- Data center buildings
- Showroom buildings
- Research and development buildings (trending because of the pandemic)
- Flex storage buildings
- Self-storage buildings
- Coworking office spaces
- Executive suites
- Traditional office spaces (e.g., cubicles, conference rooms, reception areas, etc.)
- Creative office spaces (e.g., wood floors, open layouts, etc.)
- Factory outlets
- Power centers
- Convenience centers
- Neighborhood centers
- Mixed-use retail spaces (e.g., mixed retail and office space)
- Community centers
- Lifestyle centers
This article covered the benefits of focusing on a real estate niche.
One of them is being able to focus better on your business, including lead generation.
Types of Commercial Real Estate Leads and the One Pitfall
So, what do you think?
Can you just run a direct mailing campaign to office buildings and malls to generate commercial real estate seller leads?
Chances are a campaign like that wouldn’t reach the right person or decision-maker.
Because commercial property owners are usually not individuals but LLCs.
Besides, it is also likely that the business entity owning, for example, an office building won’t have its offices in this same building.
And since you are dealing with businesses and LLCs, you would first need to find out who the primary decision maker or makers are.
So, the one pitfall in commercial real estate lead generation is approaching it like the lead generation in the residential real estate market, which is rather B2C.
When you want to generate commercial real estate leads, you enter the B2B market, where you need to consider other strategies and methods.
Nevertheless, while you may deal more with business entities, it’s still human beings you will need to target with your lead generation efforts.
Many forget this, which will show in some bad, boring, and thus ineffective sales copy.
Regarding the problem and need awareness levels of commercial property owners, the same applies to residential home sellers (I discussed this already in this article).
There are ice-cold, cold, warm, hot, and hottest leads.
So, you will find clients from problem and need unaware to repeat clients that refer you to other potential clients (hottest).
The difference to residential sellers is often the problems and needs, though. This leads me to the typical reasons why commercial properties are sold.
So, here they are…
- Cashing out when market conditions are optimal (e.g., maxed out earning potential).
- The owner(s) need the money for something else.
- Right after a major tenant renews their leasing agreement.
- Before a major tenant lease expires, and want to avoid loss of rent or tenant improvement costs.
- Future earnings are at risk or declining (e.g., changing economy, neighborhood, etc.)
- The tax depreciation benefits are gone (the property is fully depreciated).
- The return on equity is not economically sound anymore (the property is underleveraged)
- If business partners don’t share the same personal loan guarantee.
- The passing of the owner.
- A high lease-turn over and an aging property causing a lot of potential work for the owner(s)
- To be able to invest in commercial properties with a higher return on investment
- The business partnership of the owner(s) dissolves.
- To get out of a bad investment.
- A change in the owner(s)’ life situation (e.g., relocations, health problems, divorce, etc.)
- Necessary and costly upgrades because of building code issues.
As you can see, the lion’s share of reasons is of an economic and financial nature and not as often happens in the residential market as a change of life circumstances.
The next question is where to find these sellers or what marketing channels to reach them.
To know where to “attack,” let’s first…
Consider These 7 B2B Marketing Statistics and How They Also Apply to Commercial Real Estate Lead Generation
Generating commercial real estate leads is entering the B2B lead generation game.
So, let’s first learn about the overall marketing situation, including performance.
1) If you blog as a B2B company, you generate 67% more leads than companies that don’t (source), and educational content receives 52% more traffic than when the content is only focused on the company.
2) LinkedIn is the most effective social media platform for B2B lead generation, generating 80% of B2B leads (source).
4) Also, most B2B companies (68%) use landing pages to
generate leads (source).
5) More than half (52%) of B2B buyers state that they are more likely to buy from a brand when they have previously read its content (source).
6) Video is important in B2C and, as it seems, also in B2B lead generation. 70% of B2B buyers watch videos throughout their buyers’ journey (source).
7) Before purchasing, 89% of B2B buyers look for information on the internet about products or services they are considering, doing 12 different online searches for that (source).
Apart from the above statistics, we need another “puzzle piece” to determine the lead generation approach for commercial real estate…
How Does the Decision-Making Process for Purchases Work in the B2B World?
One thing we can already know by common sense.
Just by imagining being in the position of a B2B business owner, we can know commercial real estate owners likely have a longer decision-making process involving several people.
So, it takes longer, and the above statistics confirm this.
While buying decisions are still based on emotions and justified by reason, the justifying part is the one that will take much longer in B2B.
If you remember from the statistics, 89% do 12 different online searches about products or services they consider and are likely to buy from a brand when they have previously read about it.
This all points toward a longer time frame to justify a buying decision.
Since several people are often involved, they may have to present the information about a product or service to other decision-makers and then agree on what to do next.
Besides, stakes are generally higher, and jobs may be on the line when making the wrong decision.
This article worked out the general B2B buying process pretty well, and it can be broken down into the following:
- The recognition of a problem or need (e.g., “we need to sell our office space in 123 Mainstreet within the next 3 months so we can cash out at optimal market conditions”)
- The evaluation and comparison of different solutions (e.g., “which commercial real estate agent/brokerage may serve us best”)
- The definition of the requirements for the product or service (e.g., “the real estate agent helping us needs to have a particular number of past transactions under their belt and be specialized in office spaces”)
- The selection of the supplier (e.g., “let’s work with this commercial real estate brokerage or agent”)
- The justification of the decision (e.g., “we chose to work with this commercial real estate brokerage, because they have XYZ track record in our space”)
The above article touches on the steps of the buying process that can be revisited several times and should not necessarily be understood as strictly sequential.
When you think about it, it makes sense.
As a commercial property seller, just before selecting a brokerage, you may realize you forgot one essential requirement.
You may then have to evaluate and compare different brokerages or agents again.
The time those steps take will also depend on the business size, which is, in our case, the size of the commercial property owner’s business.
It may still be a well-organized one-man-show with outsourced service providers or a large one with multiple partners and employees.
And the larger the business, the higher the chances this decision-making process gets pretty bureaucratic, formal, and cumbersome.
Now, you may wonder: “Well, you just mentioned the B2B buying decision process, but aren’t we talking about commercial real estate sellers here?”
Commercial property sellers may want to sell their properties.
Still, making this happen, they “purchase” or “buy” your professional real estate services.
So, the above still applies.
As one last puzzle piece, I prepared a small overview table below pointing out the difference between the B2C and B2B buying processes.
Then, we continue with takeaways and how you can apply all the above practically for a commercial real estate lead generation strategy.
|B2C Buying Process (Residential Real Estate)||B2B Buying Process (Commercial Real Estate)|
|Consumers buy products and services individually, at most as a couple.||Several decision-makers are involved in purchasing decisions.|
|The payment process is usually pretty straightforward.||The payment process often takes longer.|
|Buying decisions are more based on emotions.||Buying decisions are still based on emotions, but more reasoned justifications are necessary.|
|The sales cycle is shorter. However, in residential real estate, sales cycles are generally longer.||The sales cycle is longer.|
Takeaways & How to Generate Commercial Real Estate Leads
After the previous section, we can now determine the practical commercial real estate lead generation strategy.
While targeting warm commercial real estate sellers is possible, it is much harder.
In commercial real estate, this would correspond to “dissolved business partnerships” or any other of the reasons mentioned above seller(s) may decide to sell.
I have yet to come across a commercial property data provider with this level of in-depth knowledge covering most of the situations that bring sellers to the decision of a sale.
Still, it’s not impossible.
The tenant level is one of the most accessible entry points to find potential warm commercial seller leads with higher urgency.
And the only commercial property data platform I have come across where you can find out about a potential lease expiration or renewal is Costar.
After you filter for these tenants, you will still have to find out the contact information of the corresponding commercial property owner(s) decision-makers.
That’s because they are often corporations.
See, there is a lot more research effort involved to get the right contact information to target them via outbound lead generation methods such as cold calling, direct mail, LinkedIn ads using the contact data you gathered for custom audiences, etc.
However, in residential real estate, you may get away with not having additional educational content on your website and just stay with the outbound methods mentioned above.
But from the statistics above, this is likely not the case in commercial real estate.
Suppose you engage in bottom-of-the-funnel, warm commercial lead generation with outbound methods aimed at leads having to make decisions short term.
In that case, you will still need content supporting the outbound methods. Hence, you help the decision-makers justify their decision to use your services.
I will leave you with the practical strategies you can use to generate commercial real estate leads.
1) To avoid spreading too thin, specialize in one commercial real estate niche and focus on suitable lead generation methods (e.g., content marketing and LinkedIn Ads).
2) Consider using commercial property data platforms to gather contact information to find more motivated sellers you can target better with outbound lead generation.
Commercial property data platforms available are…
3) Use content marketing in written and video formats.
It should target the different steps of the customer journey (my article) of your commercial real estate niche as early as possible and is thus better aligned with the longer B2B sales cycle.
It will generate commercial real estate leads, support your outbound lead generation methods, and improve conversion rates.
Outbound methods you may want to consider in combination are the following:
4) Use a landing page on your business website for the lead-capturing process.
5) For your sales copy and persuasion over the phone, use the different needs and problems that may have led to deciding to sell.
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.