If you work in commercial or retail property management, you are likely to be very busy most of the time. That being said, the problem needs to be controlled.
It is interesting to note that many professional property managers over time become quite frustrated with the momentum that they are trying to achieve in portfolio management. The reason for frustration usually centres on their inability to control workload and portfolio requirements. The variables of clients service and portfolio activity place pressures on the working day.
It is worthwhile noting that many property managers are overloaded when it comes to the number of tenants and the number of properties. Perhaps the problem stems from the requirements to satisfy a certain level of fees in each case. If you want to build some efficiency into your property management department and within your career, it is necessary to strike the appropriate fees for the property management tasks involved and the clients concerned.
Here are some tips to help you get your career back on track:
- The role of a property manager is a bit different to that of a sales or leasing executive. A property manager has to control and process a lot of documentary issues, lease negotiations, and matters relating to property performance. That requires paperwork, processes, checking systems, and planning. It is best to get the paperwork done at the beginning of the day between 8 am and 11 am. In devoting 3 hours to intense paperwork, your mind is fresh, and more inclined to deal with the issues.
- One of the biggest errors that is all too common in the industry occurs when the managers are handling emails first thing in the morning. The only reason you should look at emails at the beginning of the day is to see if any urgent issues have arisen overnight. Everything else in the E mail inbox should wait till the later part of the morning or the day. Don’t let the e-mail system divert you from the requirements to get essential paperwork done. Understand your priorities when it comes to property performance, client service, and tenant contact. Some of those things can be shifted and prioritised.
- At the end of every month, the property performance and reporting requirements are extensive and time consuming. It can take many days to compile the necessary property reports for the clients that you serve. Don’t cut corners when it comes to checking reports and the financial information from each portfolio. Take the time to ensure that the records are correct and accurate relative to the tenancy mix, the leases, and the clients instructions.
- Stay on top of tenant leasing issues and the critical dates that apply to every lease document. The best way to do this is to monitor the critical dates at least 18 months out. That then gives you plenty of time to react to the upcoming events.
- Some matters of property management can be quite urgent with maintenance being one of them. Be aware of the maintenance tasks that can involved personal injury and risk. Have an emergency response process to implement when something of a major concern arises within the physical property relative to maintenance.
When a property manager believes that they are in control, the quality of work will be higher, and the clients will be serviced more effectively. There is a big difference between being reactive and proactive when it comes to commercial and retail property management services. The best fees for service come from a professional manager working to the clients property performance plan and targets.
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If you have a need for a new commercial property manager or perhaps a retail shopping center manager, is the training process of a junior person worth it or should you employ an experienced person for the required role? You can go either way but the strategy is different and your choice will have to do with the demands of the portfolio and your existing property management clients.
Here are some basic facts to be considered:
- Some clients require special attention and information. The property that they own may be very complex or demanding. A junior property manager will struggle and over time can threaten the stability of your agency appointment. They can also make costly mistakes and involve the agency or brokerage in a litigation claim.
- A complex and large property will have high workload demands; on that basis the fee for management should be suitably high to reflect the time and task input by the brokerage and property manager.
- The landlords that you serve will have special reporting and communication requirements. Every property manager should understand the financial reporting systems as well as the tenant and lease management systems to help with the reporting to clients. Each day the systems will need to be accessed to see if any critical dates or lease events are happening. Early implementation of critical dates will keep things under control.
In saying all of these things it is worthwhile noting that experienced property managers will ‘short circuit’ and ‘fast track’ any new property portfolio appointment; they will know what to do and how to get the job done. So there is a balance here between the salary costs of an experienced person for the role, versus training a new person.
The tasks controlled by a good property manager are complex; they are best described as including these bigger issues:
- Understanding the focus of the client is high on the list. When you understand the client you can adjust the strategies associated with income and expenditure. The same will apply with leasing and tenant management. The client will have needs of cash flow and plans for the property that should be understood. The reports that are prepared for your clients will be specialised to the property and the client.
- Strong and positive tenant relationships will help a property perform financially and physically. The property manager needs to stay in touch with all tenants in a positive and ongoing way. It is not an easy task and requires good communication skills on the part of the property manager.
- The leases for the property underpin the income and expenditure performance. For this reason the property manager must keep a close eye on the leases and the tenant mix. Stay ahead of critical dates with rent reviews, options, renovations, and other special lease terms.
- The maintenance of the property will have an impact on the tenants, vacancies, customers, and landlord cash flow. The property manager should monitor those things and make the right recommendations.
Should you employ an experienced property manager to your team? The answer is always ‘yes’, so you can get the professionalism into your management systems and client relationships. When you have a couple of highly qualified property managers you can consider training juniors to rise up through the ranks.
You can get more commercial real estate training tips like this in our Newsletter right here.
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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The management of a commercial property can be a complex issue. There are things to consider and plan for. The management process simply doesn’t just involve the collection of rent. There are many other things to do. A skillful property manager has to be chosen for the property type based on experience.
The larger the property, the more demanding it can be when it comes to property activities and management structures. The larger properties have complex lease structures, tenancy mix strategies, property business plans, and lease strategies.
Here are some things to merge into your property management processes whilst helping your clients to move ahead with overall investment performance.
- Most clients will be focused on the rental as the foundational issue for property benchmarking. The rental will be in the form of gross income and the net income. From the gross income there will be deductions for property running costs and expenditure. The expenditure needs to be well managed so that the net income is equal to or better than the other properties of the same type in the same area.
- The type of property will dictate the levels of enquiry and benchmarks of market rental. Review the local property market regularly to understand that your property is similar to others when it comes to market rental.
- The expenditure for the property should be managed to a business plan. Every expenditure structure should be split into the categories that apply to each property. That will include municipal rates and taxes, insurances, fire and safety, security, energy, and repairs and maintenance. As you split the expenditure, you can see where the averages are appropriate for the property type. If that is not the case, then changes need to be made.
- The tenancy mix and the lease structure will be quite important when it comes to the overall cash flow. A tenancy mix should be supported by a good standard lease document that covers the requirements of the landlord and the property as an investment. The landlord should consult with their attorney or solicitor to create a lease that is suitable for the long term cash flow that they require. A good property manager will understand lease terms and conditions and just how to administer them.
- The tenancy mix and the vacancy profile for the asset will need to be carefully tracked. The vacancy profile should be reduced whilst the tenancy mix should encourage ongoing tenant success. This then suggests that a lease negotiation is not a separate and individual thing. A good lease is created to integrate into the surrounding tenants and the property tenancy mix overall.
- The maintenance for the property will be ongoing and should be manage to the expenditure budget. Keep in close contact with the contractors for the building so that you can understand where the major items of expenditure can have an impact on property cash flow. Preparation is the key to success when it comes to expenditure and maintenance. Large costs should be managed to a time where the property can afford the expenses.
So these are some of the big things that will have an impact on your property management structure and service. Take these things and refine your services to help every client improve property performance.