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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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Leasing system for finding commercial tenants

 

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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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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Shopping Centre Managers – How to Do Your Monthly Report for the Landlord

When you manage a retail property there are a lot of things going on that need control and communication back to the landlord.  That is where a good reporting system will help you greatly as a centre manager.

It is no secret that the retail property market can be a challenge at the moment with a significant shift between retail sales on the internet, versus retail sales in the shop.  It is the retailer that suffers the downturn in trade, and as a consequence they must revisit their product and service offering.  If they cannot make a go of it, then a distressed tenant soon turns into a vacant tenancy.  The landlord then suffers in loss of income.

Today more than ever before there is a strong bond between tenants, customer, landlord, and property manager.  The balance and success of a shopping centre sits in between all of them.  They all have a vested interest to make a retail property work and perform as an investment.

Whilst it is nice to have a tenant and a lease for retail shop premises, a vacant tenancy is a waste of time and energy for all concerned.  It is in the landlord’s best interest to help a tenant succeed in a retail shopping centre.  The link between the two parties is the property manager.  A good property manager knows how to help a property thrive and grow as an investment; they also know how to assist a distressed tenant get back on track with sales and customer numbers.

To keep the landlord fully briefed on the performance of a retail property, the monthly reporting system needs to be comprehensive and advanced.  Here are some of the big topics to help you structure and provide a monthly report to your landlord client.

  1. Tenant mix activity should always be tracked.  That will include the changes in a property and the upcoming lease activities.
  2. Lease rent reviews and lease options coming up should be planned and actioned early.  Do not leave these things to the last minute.  Many a landlord or property manager has been taken by surprise when it comes to a lease document that they did not fully understand.
  3. Tenant renovation will always be a priority in retail shopping and shopping centres.  A shop that looks poorly for any reason will deter customers not just for that particular tenant, but also for those other tenants that are nearby.
  4. Maintenance in the property will occur for both planned and unexpected events.  You must report on maintenance budget activity and results each month.
  5. Sales by tenant category and by tenant will give the landlord an indication of just what tenants are successful and those that are struggling.  Trend these numbers in a graph so you can see what is going on in the property.
  6. Vacancy marketing will always be important to minimise the impact of loss of rent.  Any existing or upcoming vacancy should be comprehensively marketed to attract new tenants to the property.
  7. Centre marketing to the local community will help with sales for each tenant.  There should be a marketing fund for this process.  The tenants lease should allow contribution by each tenant to the marketing fund.
  8. Income and expenditure will be updated each month for the property.  In an ideal world the income and expenditure should track closely to budget; that being said, there will always be challenges that need resolve and management.

If you manage larger retail properties, then this list will get larger and deeper.   Control will allow you as the property manager to keep the property on track as a retail property investment.