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How to Overcome Roadblocks in Commercial Property Management

Show me a commercial or retail property manager, and I will show you a busy person.  Rarely will a property manager have much spare time; 10 hour working days are not uncommon.  Systems of control and reporting are required to keep the workload of a property manager in balance and optimised for the best results.


Large properties have teams of people to control and respond to the numerous property events as they happen; shopping centres are a case in point.

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Property Management Pressure Points


So, why is a commercial or retail property manager so busy?  Here are some of the most common reasons:


  1. Large properties are active assets of importance and volatility. Lots of things are happening most of the time with tenants, customers, maintenance people, and property performance.
  2. Reports have to be prepared and submitted on critical property facts such as income, expenditure, budgets, lease events, and critical dates. Every landlord will have certain requirements with their reports and facts.
  3. Maintenance issues will be both planned and unplanned. Either way, they have to be managed to a budget and a safe outcome.  The larger the property, the more complex the maintenance events; risk events also have to be watched.  There will also be ‘unplanned matters of crisis’ that occur, so be prepared for all issues.  It pays to have some structure in place to monitor all the larger mechanical elements of the property to contracts and routines.  If you have a good group of contractors, the maintenance issues are supported by contractor communication and regular reporting.
  4. Financial matters vary throughout the year. Income expectations will vary based on occupancy, leasing, incentives, expenditure, and tenancy movement.  That being said, most of the factors of property income can be structured to a budget, so the client does not have too many variables to contend with.  A good property budget will bring stability to an asset over time.
  5. Undertake a lease audit as soon as possible and stay ahead of lease events and critical dates. The greater the number of leases in the property, the more significant the time required to keep ahead of lease changes, dates, and events.  A lease audit will show you the critical dates and lease changes applicable to rent reviews, options, outgoings reconciliations, and the lease expires.  The important fact to remember here is that all leases should be optimised for a good market rent and long-term  Vacancies will happen, but you can stay ahead of lease vacancies with a proactive marketing campaign to attract new tenants.  That is what shopping centres do most of the year, so they are not exposed to rental disruption when leases come to an end.


Taking all of these points in balance, it is easy to see why a commercial or retail property manager is ‘busy’ most of the time.  When they are then loaded with more assets and properties, the ‘busy factor’ just gets deeper.  Ultimately that can lead to stress and property performance problems.  Unfortunately, that is all too common in the industry.


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Learn how to handle the struggles of commercial property management
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Tenant Mix Challenges in Retail Shopping Centre Leasing

The retail property market segment is quite special when it comes to tenant selection and tenant placement.  The right leasing choices need to be made to protect the performance of a shopping center for the landlord and the balance of the tenancy mix.

It is a fact that one poorly selected tenant can drag down the sales and trading activity of other tenants surrounding it.  The tenants chosen for a shopping center should be placed with due regard for the concepts of clustering and sales improvement.

A tenant that is selected for the property should bring benefit to the overall product or service offering, given the existing customer demographic to the property.

Here are some of the larger problems that we strike today when it comes to working with leasing and tenant issues in retail shopping centers:

  1. Keep a close eye on the changes to sales and customer requirements as they apply to the property and the region.  Research your customer frequently.  As part of that process, you should be tracking the competing properties in addition to your own.  Look at the changes that occur with vacancies, tenant placements, and tenancy mix offering.
  2. Any new shopping center introduced into an area will have a major impact on retail trade and customer spending patterns.  For this reason, monitor the activities of any new retail property developments coming into the market.
  3. Given that the customer and consumer sentiment has a direct impact on the sales within a shopping center that can flow through to the landlord’s market rental structure.  If a retail property is struggling due to economic circumstances, then it is wise to establish a tenant retention plan as part of the overall business planning structure for the property.  It is better to keep a good tenant in the property at a reduced rental than experience a lift in vacancy rates which will likely be a harder problem to solve.
  4. Car parking facilities at the shopping center should be convenient, modern, and safe.  If any of these three factors are lacking you will find that the customers will soon locate another property to shop at.
  5. The roads and the transport corridors that feed your property with customers should be convenient and direct.  Work closely with the local council to ensure that road access and customer convenience is maintained.  Signage and exposure will be part of that problem.
  6. Other retail property landlords and leasing executives will be chasing your better tenants to encourage relocation to their property.  Keep in close contact with your tenants to ensure that you are satisfying their occupancy needs, together with issues of expansion and contraction.
  7. There are differences between tenancy types within the mix.  Pay particular attention to the requirements of specialized tenants to complement your anchor tenants.  Track the sales of tenant groups so you can see what segments are successful and those that are not.  Make adjustments where necessary.
  8. The lease for an anchor tenant is likely to be quite long and hopefully secure.  That being said, the anchor tenant needs to integrate quite well into the profiles of the specialized tenants.  The relationships between the two are quite important and will bring in more sales, thereby underpinning rentals.

A retail shopping center should be vibrant, modern, and convenient to encourage customer sales, tenant success, and growth of property income.  To achieve these things the property will also require a marketing campaign to underpin customer awareness and return visits.

You can take all of these issues further and a greater depth depending on the complexity the property, the number of tenants, and the landlord requirements.  Retail is a very special part of the property and real estate agency industry.

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Renovation Strategies for Retail Shopping Centers Today

A retail shopping center is a business within itself.  It is a cash flow produced from the tenancy mix and the customers to the property.  The shopping center manager and or shopping center leasing manager should be well versed when it comes to optimizing the performance of the property.

A successful shopping center is a fine balance or equation when it comes to the following issues:

  • The rental for the property produced from the existing leases
  • The minimization of vacancies across the property given the existing tenancy mix
  • Market rent reviews that are negotiated as part of ongoing occupancy
  • Lease renewals with the high value tenants that you have chosen within the mix
  • Stabilization of anchor tenants and their interaction with other tenants across the property
  • The renovation and refurbishment strategies that apply to the common areas, tenancies, and exterior building.

With a focus on the last point in this list, you can easily be seen that renovation and refurbishment is a critical component of retail property performance.  The wear and tear factor that applies to a retail shopping center is much higher than a commercial or office building.  This then says that the shopping center needs to be carefully managed when it comes to appearance, renovation, and the overall shopping experience.

People shop for just two or three reasons.  Those reasons are:

  1. Requirements for their necessities of food, convenience, and clothing
  2. A feel good experience when it comes to buying the discretionary items of life
  3. Goods and services required to replace worn out items

A shopping center therefore has to have a mixture of tenants that satisfy all three needs.  The tenancy mix within a retail property is therefore critical to ongoing customer interest.  A retail property without customers will die very quickly.

Taking all of these things into account, the renovation strategy that you adopt for the Retail Property should be woven into the intentions of the tenancy mix, lease renewals, new tenants, and customer spending patterns.  Here are some rules to the process:

  1. There will be better times of the year to renovate the property.  Understand the patterns of the shopper as they apply to shopping throughout the year.  These patterns will help you understand the best times to undertake renovation.  It may be that renovation is only partially undertaken in different zones of the property as the year progresses.
  2. Prior to any renovation commencing, communicate the fact to the broader customer community and tenants.  Let them know what is going on.  Send flyers through the tenant customer sales activity, as well as the local mailing distribution lists.
  3. The renovation of the tenancy should be well publicized and well marketed.  If you know the replacement tenant to move into the renovated area, put that information on to the surrounding billboards and protective hoardings.
  4. As part of refurbishment, you may wish to change the size of tenancies and or the type of tenancies.  This therefore becomes part of the overall business plan for the property.  Plan the clustering is of tenants around particular zones and traffic areas.  Take special care when it comes to the entrance ways to the property given the image that renovation and refurbishment can have at the entrance way.
  5. It is normal for a landlord to justify the renovation of a property based on increased return.  That return will normally come from an improvement in market rental.  Market rental will only increase if you create more tenancies, renovate on a rising market, or bring new tenancies into the property that are of high quality and cash flow.  Be very careful when it comes to the expectations of tenant and income profiles over the coming financial period after innovation.  Many a landlord has made a mistake when it comes to income expectations.

All of this then says that the renovation or refurbishment can occur providing you balance the tenants, customers, leases, and seasonal sale patterns to the renovation requirement.  Plan the process, and everything should do quite well.

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