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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.

 

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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Shopping Center Managers – How to Reposition and Improve a Retail Shopping Center

Any shopping centre today can be a challenging asset from a performance perspective.  There are many challenges to track, balance, and manage.  The skills of the property manager and or leasing manager applied to the task will be critical to asset performance.

Fees for services

It should also be said that the fees to manage any retail property are also usually higher than the fees charged within industrial or office property management.  The skills of the people deployed on the property will reflect on the asset outcomes, so you must employ the right people for the task.

People Costs

Good quality people with the retail experience will cost more from a salary perspective.  The property outgoings should (subject to local retail leasing laws and regulations) be structured through the leases for management fees and staff salary recovery.

Taking on a new property?

If you are taking on the management of a shopping centre from a previous owner or previous property manager, there are many things to look at immediately and specifically.  Getting things under control quickly should be a priority with a retail asset.  You can use a checklist for that process.  Here are 4 specific ideas to help you get started:

  1. Arrears – Let’s start at the money or rental end of property performance. Understand where the rental arrears are and why they are happening.  Separate strategies will be required to get those things controlled.
  2. Vacancies – What and where are the vacancies now in the property and how are they impacting customer and tenant outcomes? Look at filling the vacancies quickly even if you must do short term rentals at lower base rents.
  3. Tenants and tenant mix – Assess the tenants in the property for current issues and volatility. A weak tenant mix will drag down property performance.  Talk to the tenants and ask about customer sales and customer requirements.  It is very likely that the tenants will know what is needed in a retail property to resolve shop placement and mix problems.
  4. Income and expenditureReview the cash flow results for the property over the last 12 months. You will see the timing factors from high cost issues such as rates and taxes, as well as capital expense items.  Then look at current rental levels, vacancy factors, and upcoming rent reviews.  From these things you can create a budget for the property.  The object here is for you to comprehensively control the money coming into the property and flowing out to the various stakeholders.  You can then shape the financial factors of the property in a controlled way into the future.

These 4 factors will lead to greater property understanding and control.  When you can see what is happening in the retail property or shopping center, you have something that you can base your future strategies around.

You can get more tips about Shopping Center Management and Leasing in our eCourse right here.

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How to Choose the Right Commercial Property Management Software Solution

In commercial real estate brokerage today the property management division of your business will need a dedicated and specialised property management software program to control asset performance for the clients that you serve.  There are many different software packages around, some of which are of the highest quality, whilst others are very average.

Quality is important

If you plan to provide a professional property management service across the best buildings in your town or city, then you will need a high quality software program that can comprehensively cover the needs of the clients and the challenges of the properties.  There are significant and different management requirements across industrial, office, and retail property types.

In saying that you do need to choose the right software program, there are costs associated with all of the specialised solutions available.  Most of the high quality programmes are reasonably costly although they can be easily funded by the correct management fee structure and a good size property management portfolio.

Understand the reporting solutions

If you want to attract the best clients to your professional property management services, you will need a good software solution to support your activities.  You need something that is well proven and cost efficient, and yet something that is easily able to produce the reports that the clients require.  An informed client is more readily able to make the best decisions in a timely way.

Know what you must control

Understand the informational needs of the clients that you serve across an array of activities.  Consider some of the most common challenges that you strike on a regular daily basis, including:

  • The lease documentation and updates
  • Tenancy mix details and variations
  • Expenditure activity across the various cost codes
  • Arrears controls and reporting
  • Regular tenancy correspondence and communication
  • The landlord reporting requirements and report formats
  • Property maintenance records
  • Risk management and documentation
  • Energy management and tracking
  • Environmental issues and controls
  • Income controls and optimisation
  • Rental strategies and budget expectations
  • Property budgeting for both income and expenditure
  • Premises and area detail
  • Tenant contact, correspondents, and records
  • Outgoings activity and performance
  • Cash flow projections

So these are some of the most common requirements in most commercial property management activities.  At a minimum, the software solutions that you use need to cover these and other issues effectively and directly.

The Categories?

You can see from the list that some of the matters are financially orientated, whilst others are linked to documentation, and also tenancy mix occupancy.  One software package has to cover all of the issues in an accurate way.

Choose the best commercial property management software package that suits your typical client profiles, property types, and property portfolios.  Understand the factors of growth that will occur with your property portfolio so that the selected property management solution you choose can give you the best ongoing support into the future as the portfolio grows and building complexity increases.

You can get more commercial property management tips in our eCourse ‘Snapshot’ right here.

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How to Set up a Customer Service Desk in a Retail Shopping Center

As part of the property management strategy for any sizeable retail shopping centre, you can and should develop a customer service station function and service within the property.  I say ‘sizeable’ because you need plenty of tenants in the tenant mix to pay for the customer service strategy.  The cost for operating a service desk can be quite reasonable.

So what’s the idea here with a customer service station in a shopping centre?  Try some of these:

  • It will help customers find what they want
  • It will help control problems and challenges with customers
  • You can use it as a marketing point for competitions and sale campaigns

The station should be located where it will be of the greatest use to the customers within the property and in the common area.  There are many benefits to be had by all with an effective customer service point.

It should be noted that the customer service station is a cost factor for the property that should be allowed for in building operational costs and be potentially funded from property marketing.  There will be salaries to account for and costs associated with the operations of the customer service desk.

Set the Rules

So here are some rules to the process of establishing a customer service station and operations point within any medium to large retail shopping centre:

  1. Integrate security services into the customer service location. There will be many ongoing security issues evolving from both customers and tenants.  There will also be specific factors to consider such as lost children, lost goods, injury, risk management, and personal safety.  The evacuation of the property may involve the people in the customer service or operations desk.  So the desk or customer service point will have a number of roles to fill.
  2. The people manning the service desk will need to be suitably trained and skilled with risk management and injury issues. They may also need to be trained in crowd control, customer service, first aid and safety matters.  The insurance company carrying the risk for the property will have significant interest in risk management controls and safety registers all of which will normally happen from or in conjunction with the service desk and the personnel manning it.
  3. Understand the property and common safety responses and possible risk events. Look at how customers move through the property and into the tenancies.  Special considerations will be needed when it comes to access points, car parking, common areas, and amenities.  How will customers find the customer service desk and or communicate with it in an emergency?  There should be a crisis management plan active that allows for the movement of customers, the activities of tenants, and the management personnel on site.  It is quite likely that the customer service point will be involved in that process.
  4. Lost and found services should be controlled at the customer desk. Registers of lost and found goods should be kept.  In larger shopping centres the amount of lost and found goods on a daily basis is quite high.
  5. The help desk can also guide people in the right direction when it comes to finding tenancies and the common amenities. In large shopping centres that can be a valuable service. A map of the property including all shops should be available at the desk for handing to customers as they seek to find certain tenancies and certain tenancy types.
  6. Some shopping centres incorporate gift wrapping services at the customer service points. When the seasonal sales are active, the strategy works quite well in supporting customers.
  7. Have a place at the service desk where people can lodge applications for casual employment at the shopping centre and with the tenancies.
  8. Gift certificates can be issued from the service desk. Competitions can also be promoted from that location with competition applications being lodged and collected at that point.
  9. Public announcements could occur from the service desk.
  10. A mail drop off point or parcel delivery service can be incorporated into the customer counter.
  11. A directory board should be in close proximity to the service desk. There should be a map of the property incorporated into the directory board layout.
  12. Wireless Internet Services can be made available in close proximity to the service desk. That then is a service for some customers.
  13. Wheelchairs, child prams, and motorised mobility chairs could be hired from the customer service desk.

So the idea here is that the customer service desk is a convenience factor, a communication point, and customer service in many different ways.

Understand the costs of the operations desk or customer service point and the services to be offered.  Build those costs into the marketing budget for the property.  The marketing costs should also be structured and costed into the tenancy leases as a contribution from all tenants across the property.

Tenants and customers will benefit from the establishment of a customer service desk in a shopping centre.

You can get more tips about Shopping Center Management and Leasing in our ‘Snapshot’ eCourse right here.

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Attractive Shopping Centers Create Better Customer Sales and Tenant Results

If you are a specialist in retail shopping centre leasing and management, you will understand the importance of retail property appearance and design.  Customers like to feel comfortable, safe, and happy as they move around within shopping centres and look for the goods and services that they require.

A good shopping centre experience will encourage immediate sales and repeat business.  You really do want your customers coming back to your shopping centre in a regular and ongoing way.  The benefits to both the tenants and the landlord are significant over time.

Shopping Center Facts

Consider the following facts:

  1. A GREAT PROPERTY: A successful shopping centre will attract more customers and tenants in an ongoing way. It is quite easy to see when a shopping centre is trading at successful levels; the customers to a retail property can also interpret and see those issues.  When the tenants are successfully trading within the property, the retail sales are likely to reduce both tenant mix volatility and vacancy factors.  So the focus here is to make your shopping centre visually successful in every way possible.
  2. VACANCY CHALLENGES: If you have any vacancies to work with, then do so selectively and professionally. Keep a close eye on your lease expiries coming up and your lease renewals.  Negotiate those issues early and directly with the tenants involved.  Don’t let vacant shops remain vacant for too long.  Put covers and hoardings across vacant shop areas.  Put advertising material and marketing material on those holdings.  What you want to do here is remove the visual negativity of the vacancy from the property and the customers.
  3. PROPERTY PRESENTATION: Set some standards within the property relating to retail tenant signage and shop presentation. The signage for retailers should be commonly positioned and designed.  Good signage will always help with the level of sales and the customer experience.  Signage specifications will maintain the quality and the positioning of that signage.
  4. VISUAL STANDARDS AND ILLUMINATION: Lighting standards will always help with property presentation and believe it or not sales. Most retail shopping centres today are trading at all hours and on that basis seven days a week.  The lighting strategies within the retail property, in the car park, and within tenancies should be suitably specified and maintained.  Poor lighting directly reflects in poor retail sales.  The lighting within the common areas and within the individual tenant shops should be specified for maximum retail impact and customer safety.
  5. WHAT CUSTOMERS THINK: Understand the customer experience from the very time that they enter the property. Look at how customers into the car park, how they move through the car park and into the shopping mall or shopping centre.  Look at the factors of signage, lighting, security, and common area design.  Are the services and amenities of suitable quality to encourage customer use and help them stay longer within the property?  If you can extend customer visit time, you can potentially improve the levels of sales across the tenancy mix.
  6. TENANCY FACTS: On a final note it is worthwhile recommending that you do a full tenancy review and a tenant mix study with any shopping centre on an annual basis. It is a professional service that you can provide to the landlords that you work with.  What you want to do here is understand where the threats to the tenancy mix are potentially derailing tenancy sales opportunity and or customer visits.  The right tenants chosen for the property will encourage shopping centre success over time.  Any weaknesses within the tenancy mix should be resolved or remove over time.  Understand what the customers expect and require when it comes to the standard shopping experience.  Undertake a customer review all marketing survey on a regular basis so that the tenant mix changes are driven from customer information and tenant mix performance.
  7. KNOW THE FACTS: Delve into the facts about the property. When you take a serious look at your tenancy mix, you can see the challenges, the strengths, and the weaknesses with the anchor tenants, and the specialty tenants; a full tenancy review should occur each year as part of the property business plan.  Split your tenancy mix up into desirable tenants and those that should be removed at the next leasing opportunity.  Also look for the missing tenants within the tenancy mix that you can target and find when vacancies arise.  Visit other local shopping centres on different days of the week and at different times of the day to see how they are performing from a tenant mix perspective.

So there are plenty of good things that you can do here when it comes to retail property performance and shopping centre tenancy review.  Maintain the appearance and the function of your shopping centre so that it can attract the best tenants and for customers.

The activities of customers and tenants are always linked when it comes to shopping centre performance.  As the leasing manager and or the property manager, you are the best person to develop effective and direct strategies across those issues.  Over time that means you will be help in the property performance and landlord results.

You can get more tips about Shopping Center Management and Leasing in our eCourse ‘Snapshot’ right here.

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Commercial Property Management and Leasing – Tenant Fitout Standards are Really Important

When it comes to vacancy leasing within an investment property, the fit out standards that you set and work to are very important.  Those standards will help you when it comes to ongoing occupancy and property presentation.  Over time a property controlled in that way will maintain its appearance and its leasing standards.  That then helps with establishing and strengthening market rentals, and minimizing vacancies.

Poor Property Presentation

Most people can relate to and would have seen a property that is poorly presented and maintained.  In any office building or retail shopping centre you can soon see where the maintenance is inadequate and where things are not being done.  In many ‘owner managed’ properties that inadequacy can be a common problem.  Many investment property owners are ‘too close’ to the decisions required of expenditure and maintenance.  They can sometimes have differing priorities when it comes to property presentation compared to income paid and banked.

A well maintained property will attract tenants and achieve better levels of tenant retention.  A property of that type will also see lower vacancy levels and stable market rentals.  It directly follows that the appearance of the property and the maintenance program within is very important to help the investment improve over time.

Set Fitout Standards

Setting the correct fit out standards and policing those standards as part of the leasing process will help with overall property presentation and tenant retention.  Here are some specific topics to focus on as part of that overall standards strategy:

  1. Shop fronts – When you are leasing a property with multiple tenants in occupancy, the shop fronts and the entrance ways to each and every tenancy should be carefully considered and controlled from a visual aspect. The shop fronts should be standardised to a particular design, size, and lay out.  What you are trying to do here is maintain the appearance of the property.
  2. Marketing material and signage – Some tenants will try to ‘bend the rules’ when it comes to signage and marketing material. As part of the leasing process, the landlord and or the property manager should reserve the right to approve and control any signage within the property and on the premises for the duration of the lease.
  3. Air conditioning – Whilst the property may have central plant and machinery to supply air conditioning conditions, the tenant will need to tap into the plant capability and design. The tenants fit out should be adjusted to the air conditioning capability of the building.  There are unfortunately plenty of cases where that strategy has been overlooked or not properly controlled, and the performance of the air conditioning within the building is thereby compromised.
  4. Lighting – You can specify the types of lighting and layout for a tenancy fitout. That then has benefits from the aspects of energy consumption, illumination, and presentation.  You want a tenancy to look good, and lighting will have a lot to do with that.
  5. Electrical connections – There will be certain capabilities of energy supply to a property and a tenancy. Consumption monitoring is one factor to watch, but energy efficiency today is now a concern in property operational costs and outgoings.
  6. Standards and finishes – In any modern newly constructed investment property, the finishes and standards of fitout will be critical to overall wear and tear as well as appearance. Set the standards in consultation with the building architects.
  7. Entrance ways – The entrance to a tenant area and the entrance to a property are unique spaces requiring control. Entrance design and functionality should be balanced against safety and appearance.  Locks, finishes, and size of entrances will all impact those decisions as well as existing building construction codes.
  8. Fire and safety – Fitout designs require the integration of special factors of fire and personal safety. Building codes apply.  All tenant plans and approvals should be considered given the existing fire and safety codes for the property and the location.
  9. Floor coverings and wall treatments – Good quality floor coverings give longer serviceable life. The walls should also be painted with quality paints that give longer term protection and presentation to the property.
  10. Maintenance – How will the property and the premises be maintained? Who will pay for upkeep?  The terms of the lease will need to set out who pays for regular property maintenance and how that is to be done.

These are some of the bigger issues to work through as part of fitout design, approval, and construction.   Use a checklist to keep things under control.

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Important Facts to Know in Undertaking an Outgoings Audit in Commercial Property Management

Once a year it is necessary to create an outgoings budget for any commercial investment property under management. After the budget has been created, the outgoings should be checked and managed to the budget over time; that is the job of the property manager. An outgoings audit will help establish an efficient and relevant budget for the asset given the size of the building, the age of the property, and the complexity of the tenancy mix.  Over time that helps the landlord achieve the financial results that they seek.

Research The Facts for an Outgoings Audit

Here are some ideas to help you undertake an outgoings audit in a commercial or retail investment property:

  • Understanding cash flow – The history of the property will give you some valuable information relating to cash flow. Over the last few years there will be patterns to property costs and maintenance. There will also be costs to be identified and tracked with rates and taxes. Rates and taxes will usually take up at least one third of your building expenditure budget and those numbers will be uncontrollable. Look at the averages for the area, and understand how rates and taxes have been escalating over recent time; undertake an estimate of what could happen to those figures in the current and future financial year.
  • Finding expenditure savings – The idea of the outgoings audit is to achieve savings and create financial control. In analysing the outgoings for any investment property will see that the rates and taxes component will be the largest of categories. It will be quite rare for any savings to be achieved in rates and taxes; they always go up. On that basis you will need to identify savings within other categories of maintenance in the property. Control will be a focus of the outgoings budget and the spending patterns.
  • Links to rental types – The outgoings categories and expenditure issues will have an impact on the rental for the property. The net income will be impacted by the recovery of outgoings. Understand the average costs that apply to expenditure within the building type. Ensure that your property is within the averages when it comes to occupancy costs. If your property is above the mark when it comes to occupancy costs, you will have some difficulty in leasing vacant premises. The tenants of today understand exactly what they should be paying when it comes to rental and outgoings.
  • Vacancy pressures and non-recovery – Look for the factors of outgoings non-recovery due to vacancies. In a property with vacancy volatility, it pays to allow for some component of landlord outgoings contribution. In some properties, you will never achieve full occupancy within the tenancy mix, no matter how successful you may think your leasing program may be. On that basis the allowance for extra outgoings attributable to the vacancy factor is quite normal.
  • Categories of outgoings – Always split your outgoings into categories so that you can see escalations as they arise within expenditure groups. In an older building, you will see escalations in repairs and maintenance and capital expenditure. Understand how those escalations can impact your expenditure budget over time.
  • Volatility and Risk – There are factors of volatility and risk when it comes to the recovery of outgoings. The volatility factor will be driven from changes in the tenancy mix and the success or otherwise of individual tenants. Keep close to all of your tenants as part of a regular tenant contact program. Identify any occupancy threats or potential vacancy factors as early as possible. Risk is a slightly different factor when it comes to expenditure. Risk will occur as a result of locational factors and business volatility in the region. The suggestion here is that some locational factor beyond your control is likely to impact property occupancy and or occupancy costs. That could be through changes to local government policy, changes to roads, infrastructure changes, and natural environmental issues.
  • Plant and Equipment – The age of the property and the associated plant and equipment will impact expenditure. Some older building control systems and ageing air conditioning plants can be quite expensive to run. That will then have an impact on energy consumption, and plant efficiencies. Any downtime in operational plant can impact tenant occupancy and the ability to trade. There is a fine balance between spending money on plant and equipment versus saving money in operational expenditure.
  • Maintenance Contractors – The maintenance contractors involved in the property can help you significantly when it comes to understanding critical components within the building and essential factors of plant and equipment performance. They can also give you a good working knowledge of plant history and plant performance. They can tell you the strengths and weaknesses of the equipment within the building allowing for both age and existing condition. Importantly those maintenance contractors have to retain efficient performance within the plant and equipment whilst ensuring that the building complies with building occupational and safety codes. Work continually with the maintenance contractors within your investment building, and certainly do so very closely at times of outgoings analysis and budgetary performance.
  • Capital expenditure items – In any commercial investment property you will find some factors of maintenance of a capital nature. That expenditure category will usually be for the larger pieces of plant and equipment that need to be replaced rather than repaired.
  • Sinking fund – It is common to have a sinking fund in an investment property where certain monies can be set aside for larger expected matters of building and property maintenance and repair. Capital expenditure items may also be considered as part of the sinking fund although the monies retained within the sinking fund should always be split between capital items and repair items.
  • Renovation and refurbishment – Most investment properties will get to a point in time where renovation and refurbishment is required. That being the case, a project management approach should occur in parallel with the outgoings maintenance budget. In that way the renovation project can be staged to fit within expected changes to the tenancy mix, established rental income expectations, the known property performance, and the current or upcoming financial year.
  • Establishing a budget of control – The idea with the property budget and particularly that part relating to outgoings is to control the expenditure profile for the property so that you can remove risk and volatility from the net income. In that way the landlord can be prepared for known changes and upcoming property maintenance requirements.

 

So there are plenty of things that you can consider and work through as part of undertaking an outgoings audit. That audit will allow you to set the right targets and parameters relating to the tenancy mix and the lease strategy for the landlord.

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A Busy Day in the Life of a Shopping Center Manager

A Retail Shopping Center Manager when compared to others working in our industry is perhaps the busiest person by job type and specialization.  The type of retail property and the size of the tenant mix will place a lot of pressures on work load and business processes for the Center Manager.  That is why property management fees and support team requirements are significantly higher in retail property when compared to that of office or industrial property.

Can you ‘hack’ the intensity of retail property performance and the specialization that goes with that?  If you can, then the retail segment is a good place to work and grow market share.

Let’s look at the average working day for a Shopping Center Manager.  They have plenty of things to do, and here are some of the most common:

  1. Tenant contact – Most tenants in a shopping center are of the smaller and individual type.  They thrive when the shopping center is performing well; they struggle when the reverse is the case.  For that very reason a good manager will keep in close contact with all the tenants in the tenant mix, and watch the integration of anchor and specialty tenants from a customer and client perspective.  They look for the strengths and weaknesses and work with both.
  2. Marketing – A good shopping center will be comprehensively marketed to the customers and the local demographic.  A market budget will certainly help that occur but the money for marketing has to be carefully controlled to the shopping seasons and the activities within the property.
  3. Competing properties – In any city or suburb it is likely that other landlords and Shopping Center Managers are attempting to draw on any good tenants that they find in other properties.  For that reason it pays for a Center Manager to have a tenant retention plan and leasing strategy to help minimize the vacancy factor.
  4. Tenant mix – A successful tenant mix is one that matches closely the customer requirements and anchor tenants in a property.  The larger the shopping center, the more complex the controls and choices become; there are then issues to consider with clustering of tenants, renovation and relocation issues, and market rents.
  5. Arrears – In the ‘real world’ of shopping center management it is the case that arrears will happen with some tenants from time to time; a lot depends on the success of the property and the permitted use or offering of the tenant.  Look for arrears and catch them early before they do too much damage to the property cash flow.
  6. Lease updates and critical dates – Every lease will have dates to watch.  Those dates will be critical from a leasing and rental perspective.  If the shopping centre has plenty of tenants to watch, then the critical date management process will be all that more complex.
  7. Landlord reporting and contact – Some landlords require intense reporting on a daily or weekly basis; the end of month reporting can also be complex and significant.  The Center Manager has to fully commit to the landlord reporting and contact process.
  8. Maintenance and Risk Management – In every property there will be maintenance issues to fix; to do that efficiently the Center Manager should have a reporting and response process to maintenance that takes into account the elements of urgency and damage potential as well as personal injury potential.
  9. Contractor – Some maintenance contractors are better than others when it comes to maintenance response, prices, skills, and knowledge.  It is not unusual for the contractors in a large shopping center to be assessed annually for the services they offer given the demands of the property.

From these things it can easily be seen that the Shopping Center Manager should have very special skills and good business systems.

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Anchor Tenants Bring Value to Shopping Center Tenant Mix

Anchor tenants today bring a lot of value to a shopping center and the tenancy mix.  The right anchor tenants should be chosen on the match as it applies to the local shopper demographic.  In some cases you may have a few major tenants of this type positioned strategically around the property.

So there are many different types of anchor tenants, some large, some small, and some being part of a much larger group or franchise chain.  What ‘anchor’ would you see as appropriate for a new shopping center in your area or town or city?  It is a question that arises very often as new shopping center developments are created or planned.

Retail leasing experts bring great value to a shopping center when they can introduce quality anchor tenants to the mix and the future of the property.  Here are some questions to consider as part of providing a service like that:

  1. In what location should the larger tenant be located to optimise their function and integration with other specialty tenants in the building?  To answer that question you will need to know why people will visit the property and how they will move through it.
  2. Understanding the demographic of the shoppers coming to the property will help with planning the leasing process, rentals, and market rentals.  Essentially a good tenancy mix will underpin property performance in a major way.  To get to know the shoppers and their needs, undertake a marketing survey in the area and review the transport methods that will bring people to the property.  As part of that, understand the roads and highways that may have an impact on access and exposure to passing traffic.
  3. Most anchor tenants will require occupancy for a long period of time.  That will usually be 10 or more years.  They will ask for options for renewal as part of that initial lease negotiation process.  In considering these facts the landlord should require an early advice as to option renewal.  If the tenant does not require renewing their lease it is wise that the lease provides for notification of such at least 18 months prior to the event.  In that way the landlord can start looking for a new tenant.
  4. The rental structures for this type of larger tenant will be different and sometimes based on turnover with a base rental.  On a ‘per square foot’ or ‘per square meter’ basis the rents will be considerably less that the rent that is paid by the smaller specialty tenants.
  5. The anchor tenant should be heavily involved in the marketing of the retail property with all the other specialty tenants.  There should be a marketing levy for all tenants to contribute to.  As to how that levy is implemented and controlled is a question for shopping center management.

In closing on these points, it should be said that the lease structure for a larger tenant of ‘anchor’ status will likely be a lot different than the standard lease applied to the ordinary tenants.  An expert retail leasing specialist can bring a lot of relevance to the lease negotiation process and thereby optimise the integration of the main tenant into the mix of others.

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Shop Leasing Factors in Retail Shopping Centre Performance

When you have a retail property to lease, there are some important pieces of information that you will need to build a leasing strategy and any marketing process.  Gather the facts before you take steps towards lease marketing or lease negotiation.

Retail Property performance will vary substantially from location to location and city to city.  It is therefore very hard to compare retail properties in diverse locations.  You must know your market in a comprehensive way.  Here are some tips to help you with gathering the right facts relative to leasing any retail vacancy:

  1. Occupancy costs need to be assessed relative to the vacancy.  Occupancy costs will include rental, outgoings, and other sundry charges that apply to leasing and the vacant space.  Any tenant will question the costs and understand the viability of the business to apply in the location.  Occupancy costs and the ability to make sales will vary by location in the property, and by the type of tenant.  This then says that there is a difference in sales and turnover capability between tenant types; they also have differing profit margins.
  2. New tenants to a property will be concerned with premises location and its proximity to other successful tenants.  That’s where clustering becomes an issue in a retail property.  A cluster of tenants can extend the interest and purchase potential of the shopper.  Understand the adjacent leases and just when they will be expiring.  Is there an intention to find other tenants for those locations?
  3. The anchor tenant or tenants in a property are an important draw card for brining customers to the shopping centre.  The anchor tenant lease should be watched for stability and longevity.
  4. Rental types and market rentals will vary according to location and market interest.  You should check out the rentals and vacancy factors in nearby retail properties.  That will help you understand the factors of attraction that apply to finding any new tenant.
  5. What would you consider as the typical demographic shopper profile for the property?  That shopper profile will impact the tenant mix and choice of tenant.  Choose your tenants wisely.
  6. Improvements in the tenancy area and landlords works may vary subject to the lease negotiation.  Understand what the landlord is prepared to do in the premises to attract a good tenant.
  7. The sales averages for the property or MAT (Moving Annual Turnover) will be of interest to any new potential tenant as will the customer counts for the property.  Get those facts and understand how they can provide leverage in leasing any new vacancy.
  8. Lease incentives could apply to attract a tenant to the property.  Those lease incentives will be impacted by market conditions, other properties, vacancy rates, and current business sentiment.  The lease incentives offered to a new tenant will be different and larger than those offered to a sitting tenant considering a new lease in situ.

So these factors will give you a good start to solve the leasing challenge in the property.  Get the facts together before you start lease marketing and property inspections.

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Talking Shop with Commercial Real Estate Leasing Brokers

In commercial real estate today, the leasing process is a significant opportunity for brokerage fees and commissions.  That being said, leasing opportunity can be optimised through understanding the market and the requirements of tenants today.

A good leasing agent will maintain significant ongoing contact with the business community, tenants in occupancy, and landlords.  A professional leasing specialist will usually have several hundred tenants in their database.  Over time the ongoing contact with those tenants will help with leasing opportunity.  A good database of tenants will give you leverage when it comes to attracting landlords with quality properties to lease.

So the basic strategy behind attracting a lease transaction will be for you to work with available property activity including the following variables:

  • The needs of expansion for particular tenancies
  • The needs of contraction for local businesses
  • Relocation requirements relating to business activity
  • That need to reduce or control occupancy costs
  • Tenants that find it difficult to work with the landlords
  • An upgrade of property type to provide a better business image
  • A tenant looking for the benefits of a new lease incentive as part of changing premises
  • Landlords looking to resolve upcoming vacancies
  • Landlords undertaking a property expansion and change process
  • New properties coming into the market providing project leasing opportunities
  • Sale and leaseback opportunities with existing businesses

It should be said that quality vacant listings will always attract solid leasing enquiry.  That assumes that the rental and being asked is in line with prevailing market conditions.  Any rent that is negotiated today can be shaped and improved over time through a well-structured lease document.  Lease terms and conditions can be improved through the negotiation process on behalf of your client.

To encourage a lease transaction, the overall package of rental, occupancy costs, and lease terms need to be well considered and structured.  As the local leasing specialist, take the time to understand the changes in the market, the requirements of tenants, and the supply of available space.  A successful transaction is a reflection of all three factors.  You can be the facilitator of a successful property transaction.

It should be remembered that a successful leasing transaction can always open the door to a property management appointment or a future sale opportunity.  Asking the right questions and staying in contact with the right people will help with those matters.

If you have chosen this segment of the market as your speciality, there are some basic rules to be remembered.  Here are some of the most important ones:

  1. Quality properties will always lease faster than average ones.  For that reason, your prospecting activities should be focused on the best properties in the region.
  2. Ongoing tenant and landlord contact will be a daily requirement.  Spend at least 3 hours per day talking to tenants and landlords in the market.  You can get a significant volume of market intelligence through this process.  Tenants will usually know more about the local market than you do.  They will know about those other businesses that are looking to change and move.
  3. The tenant advocacy process offers significant leasing opportunity.  That being said, it is best to focus on quality tenants with established businesses.  You can also focus on the larger properties as part of that process so that the fees generated will be significant for the amount of work involved and the area under lease.  Small properties and small tenancies can be a large amount of work when it comes to finding a tenant, and closing on a deal.  Recognise the opportunity of working with better properties and larger areas.
  4. Look at the rentals that apply to the average lease transactions within your town or city.  Rentals are usually quite high when it comes to retail property.  Office property rental will usually be reasonably high for the volume of area leased.  At the bottom end of the scale, industrial property will offer a lower rental per unit of area.  On that basis the fees can be similarly low unless you are leasing a very large industrial property.  So you have some choices to make when it comes to your choice of property to lease.  You should also select the best regions to focus your leasing activity within.

There are always good properties to lease in most towns or cities.  Balance the rental to the prevailing market conditions, and the needs of your client, be they the landlord or the tenant.  You can certainly build a good career in the property industry focusing on leasing opportunities.

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Excellent Commercial Property Management Handover Tips

In commercial and retail property management today, you should have a very definite handover process that you can implement simply and effectively.  This can be a significant strategy to capture the required information relating to the property, the client, and the location.  In this way you can move ahead accurately to protect the income and the tenancy mix for the client.

Any new property coming into your portfolio can be complex.  There can be issues within the property that are hidden from any general overview.  That is where the checklist will help you drill down into possibilities and challenges.

Here are some issues that you can merge into your checklist process.  You can add to the list based on the location of the property, your town or city, and the improvements.  It should also be noted that separate checklists should apply to office, industrial, and retail property types.  Each property type will have differences in levels of focus and questioning.

  1. Inspect the property comprehensively before you get into any analysis and questioning process.  You need to understand the property physically including the tenancy mix, the location, and the neighbouring properties.  Look for any issues that could have an impact on property function.
  2. Check out the zoning relating to the property and its location.  Look at the local development plans as they apply to the region.
  3. Assess the factors of supply and demand that apply locally to the property type.
  4. Understand how people get to the property and move through it.  That will require an analysis of transport and road usage.  This factor is quite important when it comes to larger properties and shopping centres.  The customers and the tenants to the property will access it in different ways.  Understand how that occurs.
  5. As part of the initial property inspection, take plenty of photographs.  That will help you remember the key issues and the layout as they apply to the tenancy mix and the building structure.
  6. Understand the local regional property demographic.  There may be other properties of similar size and type locally.  Those other investments are likely to place pressures on your vacancy factors and tenancy mix.
  7. Assess the tenancy mix for its activity today and any threats to income and occupancy.  Look at the critical date factors that apply in each case and with each lease.  Any upcoming critical dates will need to be responded to efficiently and in a timely way.
  8. Ask the landlord about any tenancy matters and outstanding disputes.  Get copies of correspondence that relate to those things.  Seek instructions from the landlord accordingly.
  9. Undertaking a full lease review.  All lease documentation should be checked against the current rental invoices and the tenancy schedule.  Look for any discrepancies or changes.
  10. Ask questions about the risks and liabilities that could occur with the property as a physical structure.  There may be issues relating to property usage, maintenance, access, and tenant occupancy.  It may be necessary to get a building report undertaken by engineers and specialist consultants.
  11. Meet with the maintenance contractor’s to the building.  Find out about current repairs and outstanding issues.
  12. Review the maintenance budget and the income and expenditure budget that exists for the property today.  Check that it is accurate.  Understand how the actual income is tracking towards budget.  Look for any discrepancies in the cash flow.
  13. Look at the vacancy factors in the property today, and understand the strategies behind vacancy marketing and leasing.  It may be necessary to undertake a fresh tenant mix approach with the pending vacancies.
  14. Check out any existing fit out works that apply to occupancy or building renovation.  Ensure that you have the necessary planning approvals and approved drawings.  There may also be a need for property re-survey as a result of building modification.

So this is just the start to the commercial property handover process.  As you can see, there is a real need here for a checklist so that you can stay on track accurately and efficiently.  Ask questions at every opportunity, and document the answers that you get from contractors, tenants, and the landlord.