In commercial property management it is easy for a manager to get tied up in the daily events of the property and the client. Quite soon they are just doing a job rather than providing a professional service. The pressures of the job soon take over and the ‘bigger’ picture of property performance gets lost in the events of the property.
Quality property performance and control involves a forward looking approach to the asset given the market conditions, tenant mix, and property improvements. Strategy and timing are everything in the services to be provided. The property manager must have the discipline and the skills to do the job well; that involves a good fee and the right person for the job.
So many local property brokerages and agencies claim to be the ‘best’ at what they do in managing a client’s commercial or retail property. If that is the case then they should be able to prove that they are indeed the ‘real deal’ when it comes to quality property management services. Quality and accuracy are key components of the services to be provided. There are real differences between the services provided in office, retail, and industrial properties. The property manager should understand each and be proficient in one or more based on experience.
Why do I say this? It is a fact that many commercial and retail property managers are overwhelmed with daily work due to the demands of the client, the size of their portfolio, and an imbalance in fees for service. Many agencies set lower management fees just to get the appointment to the property. Those fees then have little relationship to the requirements of the client and the increasing demands of the property and tenant mix.
So the ‘golden rule’ in pitching for a property management is to understand the package of services that will best suit the client and the property. If you apply your fee assessment on an ‘industry standard fee’ as a percentage of passing income, then track that back to the work required and the size of the property and tenant mix.
Here are some other facts to add to the assessment:
- Client focus in the future of the property
- Property performance challenges from the leases and the tenants
- Vacancy profiles and upcoming leasing challenges
- Long term plans for the property including renovation and refurbishments
- Tenant mix changes and lease critical dates
- Cash flow requirements from the rental and the outgoings
- Property improvements and maintenance
- Targets in rent, operational challenges, leases, maintenance, and reporting
- Business plans and tenant retention
- Tenant lease negotiations
There are some real facts and issues to be managed here. A good property manager chosen for the property type will understand how to do that. Balance your client’s fee for service against the time required in management and the challenges of the property.
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