We Are Selling with Lee Woodward
We Are Selling is a weekly podcast about real estate, business and tackling life's challenges. Hosted by renowned real estate industry coach, Lee Woodward, learn from experts in their field and maximise your life.
We Are Selling with Lee Woodward
150 - Commercial Success - Joshua Barnes
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Are you curious about the vibrant world of commercial real estate in Newcastle? Join us for an enlightening conversation with Joshua Barnes, a 22-year-old commercial agent whose journey from Dubbo to Newcastle is inspiring and empowering. Joshua's story takes us through his early beginnings, fueled by a passion for real estate and a serendipitous introduction from his partner's grandfather. We explore his preference for commercial over residential real estate, driven by his love for business-to-business interactions and the analytical challenges of commercial deals. His courage to start anew in a thriving market, bolstered by the coaching at Movable, offers invaluable lessons for aspiring agents.
This episode also highlights a fascinating case study from Newcastle's commercial scene—a creative transformation in Islington where a coffee roasting business morphed into a retail surf store. Hear about the nuances of negotiating commercial leases and the vital role of understanding diverse business needs. Joshua shares insights into Newcastle's booming industrial sector, propelled by the coal industry, and offers practical advice for those looking to carve a niche in commercial real estate. With a focus on business acumen and negotiation prowess, listeners will walk away with actionable insights to elevate their careers.
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Hello and welcome back to the podcast we Are Selling. Today we're going to take a look into the commercial real estate space. Unusually for us, we're going to be speaking to a young commercial agent who's done very well in the New South Wales, newcastle area. He joins us today, joshua Barnes. Joshua, welcome aboard. Thanks for having me on, lee, Joshua Barnes. Joshua, welcome aboard. Thanks for having me on, lee, josh, very excited to have you on. A lot of our agents don't really study commercial. They're mainly into residential. At time of recording, josh, how old are you?
Speaker 2:I'm 22 as of Sunday.
Speaker 1:Happy birthday, thank you. What age did you come into real estate?
Speaker 2:I came in when I was freshly 19, three years ago, and I've worked with Movable for those three years, studying commercial industrial.
Speaker 1:So commercial, industrial? Where were you living prior to moving to Newcastle?
Speaker 2:I was living in Dubbo. I grew up there, I was born there, I went through my schooling there, worked a full-time job there managing a retail store, and then I was looking to get into real estate and it just made sense Newcastle was the closest beach to Dubbo made sense to make the move here Much better climate and I was very fortunate to join the Movable team, a team with lots of experience, and it's been invaluable to me.
Speaker 1:How did you get the opportunity to get a job with Movable?
Speaker 2:It was a bit of a funny story, Lee. I was sitting down with my partner's grandparents at a dinner we were having back in Dubbo a few years ago.
Speaker 2:And her granddad, toward the end of the night, was grilling me a little bit, saying what I was going to do with my career and how I was going to go. I mentioned to him that one interest I had was real estate. I feel that I'd been interested for quite some time. And he mentioned that I really should go speak with the guys at Movable, as they manage a few of his commercial properties and he can't fault them.
Speaker 1:What a great method of introduction. But here you are, 19 years of age, you're going to pick up, move everything to Newcastle. You're leaving Dubbo. How was that?
Speaker 2:Frightening, certainly for me, even though Newcastle, you're leaving Dubbo. How was that Frightening? Certainly for me, even though Newcastle is a large regional town. It felt like I was moving to the big smoke, picking up and leaving Very much sort of sink or swim and very nerve-wracking. After a few weeks of being here, seeing the experience and the team I was surrounded by, I was very confident that it would be okay.
Speaker 1:Josh, that's a big move. And tell me, did your?
Speaker 2:lovely lady follow you along or did you go alone? Yes, my lovely partner Angel came with me. She was actually living in Orange at the time. I said that I wanted to make the move to Newcastle and, being very supportive, she decided to move with me and came up here to study speech pathology.
Speaker 1:Wow, this is an interesting story straight away. So, josh, why commercial real estate versus residential? And I bring this up because I really wanted to interview you today, because you're doing some incredible work in commercial, but commercial is quite often dominated by the senior agents of town. What got you into commercial?
Speaker 2:Well, my interests from a very young age were in businesses and particularly public markets such as the stock market. So from a very young age I was looking at companies' balance sheets, evaluating public listed companies, working out where to put the little money I had at the time and really enjoying that I had at the time and really enjoying that. So I think my natural go-to is a sort of business mindset. I think with commercial it's the same. It's a business-to-business industry. Quite often the landlord's there They've got a commercial interest. They want to rent something, they want to sell something, they want to develop something. That's a very much business-minded thing.
Speaker 2:And on the other end of it you've always got a tenant or a buyer who's looking to open up a business in the space. So I think I really enjoy the business-to-business transaction more so than a residential transaction, where you've got someone looking at something solely with emotion.
Speaker 1:Great answer. And, josh, throughout the last two years you've come through our super coaching program, but it's been a custom program in-house for Moveable, where the residential team and the commercial team have been training together. How's that been for you to see the similarities between commercial and residential?
Speaker 2:It is very similar in that we're both residentially and commercially either trying to sell or lease real estate, so it's similar in that regard. It's been great to learn the differences and learn the ways in which residential agents are doing things differently to us commercial agents. I take a lot of that away and I take a lot of that back to commercial to use with my own properties, my own vendors, and it's definitely a unique skill set that I don't think many other commercial agents are using because they're not exposed to such training.
Speaker 1:Couldn't agree more. Josh, at 19 years of age, you've hit the commercial scene. You're 22 now. We'll talk about some of the great deals you've been doing, but take us into a typical week of Josh in commercial, because there's a lot of young agents listening to this right now who think I just don't know anything about commercial. What's your week look like? What's the work you're doing, and are you doing leasing and selling?
Speaker 2:Our work is leasing and selling. That certainly keeps us busy. Quite often my average year will look like doing between 60 and 80 lease deals and probably upwards of 24 sales. So the transaction volume is quite high. Therefore my average day is quite busy. There's lots of emails to reply to, lots of people to keep up to date. It's not unusual for me to have up to 40 listings between commercial leasing and selling at any one time. There's plenty of vendor updates to share now, plenty of solicitors to speak to. I like to get started with my day nice and early by getting up, doing a bit of exercise, coming into the office early before anyone else, getting out all those vendor updates early in the morning, so they've got something to wake up and look at before they ring the agent. And then from there I'm quite often showing people through different properties. When you've got a high volume of stock, there's plenty of people that want to get through these, and then the rest of the day is just made up doing up heads of agreements, sales advice and other administrative work.
Speaker 1:Excellent view on what you're doing, Josh. What's been some of the interesting properties you've worked on that for? You have had that great connection and a good case study.
Speaker 2:I worked on a property earlier this year which I thought would be a good case study. The property was in Beresfield and it was an industrial property with ancillary offices. And the story of the property was it was built custom for an engineering business and it was leased to them on a four-year term with a four-year option from when it was built. The property was purpose-built. It was a bit unusual and at the end of that eight years the tenant had outgrown it and moved out. The property was put up for lease with another agent, although they struggled to find a tenant for it given the specialised nature of it. So we were invited in to have a look at it to get our thoughts on could we lease it. The owner of the property decided to give it to us to sell. He'd had enough of trying to lease it and he thought maybe the property needs to be offered for sale. So I'd like to go into that one Lee.
Speaker 1:Yeah, take us into that. That sounds like a great case study.
Speaker 2:Yeah, quite an interesting one. It's always hard to appraise unique properties, as a lot of agents would be aware. We suggested an expressions of interest campaign just so we could capture all the interest, give all the parties a fair amount of time to do their due diligence and to prepare a really detailed offer, and it would allow us to select the best offer we got that was in the owner's best interest Throughout the campaign inquiry was fairly limited.
Speaker 2:We had just under 30 inquiries and from that we had three groups through the property on separate occasions. One of those groups, I believe, was an owner-occupier, so someone looking to buy the building to run their business out of. I could tell from the get-go that they were a fairly serious inquiry just from the fact that they were there early, stayed for a long time and even toward the end were discussing where they would put different things, which is always a good sign. We worked with this inquiry throughout the four-week campaign. They inquired fairly early on and throughout that process they requested that they get a valuation at their cost done before they put forward an offer and I think it's worth noting at this point.
Speaker 2:I knew what the vendor wanted and what the purchaser was looking to pay were two very different numbers. So I asked the inquiry are you bound by this valuation? Will your board of directors be totally limited by whatever the valuation is? They said no at the time, which was great for me. I knew from the start that they weren't going to be limited. When the valuation came in, it came in at 3.2 million.
Speaker 2:This was a fair bit under what the vendor was looking for. They were looking for the 3.5 to 3.8 range, yes. So we went back to them and, with the permission of the vendor, negotiated with them quite substantially. We ended up getting the offer agreed at $3.99 million plus GST, with a four-week settlement term, which had our vendor absolutely delighted, and I just think that that's a great result to share, because it's an interesting case study where the property didn't really suit anyone and we were able to get that capture, that one inquiry really work with them and assist them in getting everything they needed done to lodge their EDC upon exchange, which meant that they could move in fairly quickly.
Speaker 1:Josh, that's a great case study and interesting as you go through that. There's so many moving parts to the commercial deals. It's not hard to be out by half a million very easily due to the type of person, tenant situation and what they want to run in there. Josh, you've got such great knowledge at such a young age. What's been the response from the marketplace when they realise how young you are and working on such brilliant big properties like these?
Speaker 2:A lot of people will speak with me on the phone first or email me first regarding looking at their property when they're looking to engage an agent to sell or lease it. I think from that they assume I'm much older than I am and upon meeting them I think sometimes they can be a little bit shocked, although generally speaking the market's been great in that they see through the age, see the knowledge, see the enthusiasm, see the skill level and they're still very keen to work with a young agent. Certainly, being young in commercial is unusual. A lot of the agents are an older demographic, but I think the market's taken really well to it and certainly having those runs on the board now, so to speak, has helped me massively.
Speaker 1:Yeah, and I was chatting to you about this when we're doing some training about being a modern agent and pushing that through the marketplace In 2025, josh, we're going to see more video of you as you take yourself out there and market you in the wonderful way you've got the opportunity to. But what's the attraction to a young, modern agent in commercial?
Speaker 2:Yeah, I think the attraction to the marketplace is a young agent, like I mentioned, is unusual and a young agent, as I've been able to explain to people, can be great in that we have access to all these new technologies that perhaps some other agents in the industry aren't utilising, these new technologies that perhaps some other agents in the industry aren't utilising.
Speaker 2:And explaining it to people that I was actually hired because of my age, because they needed a young, enthusiastic agent that was familiar with all the technologies and that could do the job in a modern way, was very attractive to a lot of vendors and landlords.
Speaker 1:Josh, what's another case study of a property that's meant something to you? Be it fit out change that you can bring to our story to give a better understanding of the work you're doing.
Speaker 2:Surely this time I'll mention a lease deal. I did. I quite enjoyed this deal, although it was very long and complex. I'll try to keep it simple. But the story with this property it was quite a prominent property in Newcastle in a suburb called Islington. Now the property was owned and the business in it was operated by the same person. It was a coffee roasting business. It's quite an unusual business and it was set up and tailored for a coffee roaster with different mezzanine levels, ovens and other equipment that you need to roast coffee. The gentleman that owned this business and this property sold his business. The purchaser of the business decided they didn't need the space and moved out. They didn't take on a lease for the property, they didn't buy it. So we were left with a job to find a tenant to take over this large and unusual space. It was just shy of 500 square meters and it was in a more retail type area, so it was a bit of an unusual offering given it was a warehouse.
Speaker 2:Throughout the campaign we received plenty of inquiry from many different users, being bulky goods retailers, hospitality users, even people looking to open up a bar.
Speaker 2:But what we ended up landing with and it took some time to negotiate, but we ended up landing a tenant that wanted to open up a bar. But what we ended up landing with? And it took some time to negotiate, but we ended up landing a tenant that wanted to open up a surf store. They were a local tenant looking to move from their current location and upsize and, given the property was so unusual, there was a lot of nuances to the deal. But we were able to work out a structure where we gave the tenant a discounted rent for the first five years of this 10-year lease they took and in return, the tenant brought the property up to all the modern council standards with all the accessibility requirements. So they installed an accessible ramp, bathroom door, excess fire exits and other fire measures, which was great. That's a capital add for the landlord. But in addition, they spent about half a million dollars fitting out the space and turning it from a warehouse that coffee was roasted in into this absolutely beautiful retail space where you can go get your surfing goods.
Speaker 1:What a great story. And, Josh, I can hear from your voice and the excitement of working business to business. You're passionate about people and business. The fact you were reading spreadsheets at such a young age is a unique thing for you. What have you learnt most there about servicing the commercial industry and meeting all these different types of business owners and entrepreneurs and big coffee shops, bars, pubs, big commercial space warehouses. You're seeing so much. What's the best part you've learned from working with all these different types of business owners?
Speaker 2:Well, lee, I like to think of myself as a bit of an entrepreneur, and I like to think of all these other business owners as entrepreneurs too. So it's great for me to interact with like-minded people, and I think where my skill set really shines through is identifying what commercial arrangements work for each party and working out can we come to an agreement here that's going to service everyone's requirements, keep everyone happy and a deal that will really work long-term for everyone.
Speaker 1:And Josh, what businesses are thriving out there at the moment? Because Newcastle's going through a huge heat of transition. We've got a lot of people moving north. There's a lot going on in the residential space and the commercial space, but what's making Newcastle buzz at the moment?
Speaker 2:Well, lee, newcastle is still a coal town. We're heavily dominated by mining industry. Something that a lot of people don't consider is the related industries to coal, and a lot of these businesses want to occupy industrial spaces. But certainly in the Newcastle market, industrial has been outperforming and continues to outperform.
Speaker 2:We're in a unique situation with our industrial stock, given that a lot of it is close to the M1 in Beresfield and Thornton, we have a limited availability of land out. That way, there's not a lot of new land coming on. So, with the demand for land continuing to way outweigh the oncoming supply, we keep seeing an escalation in land values coupled with high building costs, heightened building costs. Over the last few years the industrial sector has been performing from a real estate point of view very well and of course the cost to build these things and the cost of the land going up has resulted in the rents coming up. They are lagging a little bit, but they're still coming up a fair bit and the businesses in those sectors, particularly those more directly related to mining, seem to be doing very well. The commentary we get from them is positive. They're booked out for many years in advance and they simply just need more and more space.
Speaker 1:Josh, for any of our listeners listening to this right now who consider a career in commercial because they don't often bring that on their radar what is it you would recommend? Or get them to study so they can actually be doing the work that you are doing?
Speaker 2:Well, lee, I was very fortunate to learn most of the real estate skills on the job with minimal study, which was fantastic. The best thing about commercial is probably the fact that you get your weekends back. There's no open homes on weekends. I quite enjoy my Saturdays. To myself, that's quite favorable. But in terms of what I would recommend people study, it would be business and commerce. It's no longer just a real estate transaction. It's very important that you understand the businesses you're working with, understand their limitations and understand what's feasible for them. And when you know those factors, you can achieve the best result for your landlord or your vendor, because you know where the tenant maxes out or you can propose terms that you think would be favourable for both parties.
Speaker 1:I think terms and negotiation in your space are so different to residential. Even taking a reduced rent over a 10-year lease, allowing them to fit out, get all the building up to speed with the ramps and the accessibility items that you need, that's a big deal because everyone's got to collaborate, to work together. So you've definitely learned a lot about negotiation.
Speaker 2:It's been fantastic in terms of exposure to negotiation, exposure to business, and the more and more you deal with these businesses, the more you can propose terms to both parties that you're fairly confident that they will accept once you've got a good understanding of them.
Speaker 1:Now, josh, you've progressed so fast from a kid coming in at 19 to 22 years of age doing the transactions and what you're doing, and you're surrounded by some very, very good talent at Movable. Actually, there's just been a big record sale in Movable. Which one was that?
Speaker 2:Well, lee, that's a great thing you bring up. Recently one of my colleagues was invited to look at a property and I was fortunate enough to be involved in the transaction. But the story with this property was that it was a large property in Tomago. The business that was occupying it was mining related. Funnily enough, they're a drilling company and they also specialised in conveyor belts. They'd built the premise for themselves to occupy.
Speaker 2:The owner of that business was in his late 60s and perhaps looking to access some of that capital that he had tied up in his business and all this real estate.
Speaker 2:So he approached us about the possibility of a lease back, which is where the business on a lease for the property and they sell the real estate. Now we gave him some advice about where the rent numbers should be and what the approximate sale price would be for the property. We put this lease in place and, prior to marketing, we took it to our database of investors and we were able to sell that property in total for $10.499 million $800. So just shy $200, shy of 10.5 million, which was a fantastic result. It was a fair bit more than what the vendor was looking to get. It allowed him to get all that money out of the real estate while still having the lease hold on it. So he was absolutely stoked and it gives him scope to be able to sell that business that he's running with the lease in place on the building, so he can essentially take all his capital out of the business and the real estate and retire somewhere nice on a beach.
Speaker 1:Absolutely brilliant story. The Movable team has just done so well this year For everyone in there. They've all got your own little niche that you're working in. And, Josh, what's on for you for 2025? What are you excited about in commercial?
Speaker 2:My plan for the next year is to keep working with what I'm doing, keep doing the leases and the sales. As I've sort of highlighted with a few of these case studies, I really enjoy the unique properties. I'd like to do more work on unique properties, particularly when people are struggling to lease or sell them. It's great to be able to get involved, provide some insight, provide a lot of value to them and achieve a result. So targeting those unique, larger properties would be fantastic.
Speaker 1:Well, joshua Barnes, fantastic interview and it's been nice to speak to a real estate sales and leasing person in commercial different to our residential marketplace. We wish you all the best with your success and we look forward to having you on the program in the future.
Speaker 2:Fantastic. Thanks for your time, Lee.
Speaker 1:And that concludes another edition of we Are Selling. In our show notes you will notice the short courses link. We have so many brilliant short courses now available for your study, including the latest one with Mr Mark Kempwell called Purchased, which is the ninja level biomanagement masterclass. I'm Lee Woodward. See you next week. Thank you for listening.