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:
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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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