The clients that we work with in commercial property management expect experience and confidence in the managers that they use. Those clients like to know that the person chosen to manage their property can handle the variables of income, expenditure, tenant mix, and lease negotiations.
So why worry too much? The experience and confidence in any property manager will be important to the client service process and also to the brokerage fees charged for services rendered.
Inexperience is Dangerous
An inexperienced property manager can be a costly and concerning problem in property performance for any investor. Invariably that is the time when errors and omissions occur with the critical factors and tenancy activities.
So the property manager needs the confidence, knowledge, and experience to know how to look for upcoming concerning issues in the leases and with occupancy, and how to position the property for better results in investment outcomes.
Every landlord and property owner will have certain unique targets to merge into that property performance equation, so the balance becomes a bit tricky. That is where the right property manager for the asset and the client should be considered.
The complexity of many office and retail properties requires specific experience and knowledge to help the property stay on track from an investment perspective. Errors or omissions create problems with any property and its performance.
Critical Confidence Factors
Here are some ideas to help you with this. Any property manager should be specifically familiar with the following topics as they apply to the location, the client, and the property type:
- Income – The levels of income in any property will be impacted by local vacancy factors, current market rentals, and business sentiment. If a property is to grow its income base with rentals that are market aligned, the property manager really does need to have advanced skills with tenant management and property leasing. Remembering that many leases exist for a number of years, the property manager is the person responsible for qualifying the tenant, then establishing and growing the cash flow.
- Expenditure – Rarely will property expenditure decline and that is why a specific budget is required to keep property expenditure under control. Energy costs, operational costs, and property usage place pressures on expenditure each year. Operational costs within most properties are escalating. There are seasonal factors to look into as well including climate conditions, and the associated energy consumptions.
- Tenant placements – When you have a number of tenants within the same Investment Property, you will have challenges when it comes to positioning, occupancy, and property use. Some tenants have an impact on other tenants around them. As part of any lease negotiation, specifically choose the right tenants for the right location and then control them within the existing lease documentation. Understand the businesses in each case and the types of people that will be accessing the tenant and or the property. What pressures will happen as a direct result of tenant existence and occupation? You may need to put certain controls within the lease document to keep things on track within the tenancy mix.
- Lease negotiations – Every lease negotiation should be looked at in balance allowing for current market conditions, vacancy levels, market rentals, and the locations of other tenants within the property. Some leases will come to an end within the same property at a particular point in time. Most owners cannot afford to have escalating vacancy factors across a large percentage of the property. Negotiate your leases so that the cash flow of rental is not overly impacted by lease expiry dates.
- Vacancy strategies – Like it or not vacancies will happen in any property. The impact of those vacancies can be lessened through finding new tenants, moving tenants around, and modifying the property use.
- Maintenance strategies and costs – During the year things will happen in any managed property. You will have maintenance issues occurring for all types of reasons, and some of those repairs will be timed whilst others will be unexpected. You need response systems for all levels of maintenance including emergency responses.
Are you ready to improve your confidence and knowledge in commercial property management? A successful property management division in any brokerage will bring many advantages to the business over time.