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.

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.

Commercial Real Estate Leasing Brokers – The Additional Benefits of Working with More Local Tenants

If you are a commercial real estate leasing agent, you can get plenty of market traction if you work with local tenants and business owners.  They tell you things and that then leads to listings and better commissions with quality property transactions.

Always err on the side of leasing quality when it comes to any property listing or property choices.  Why is that?  Consider these things:

  • Quality properties create better levels of inquiry
  • The rents are higher per unit of area
  • The commissions are better due to the higher rents
  • The tenants are drawn to a quality listing
  • Modern buildings offer a level of improvement and services that most tenants require

What are the Leasing Positives?

There are some good things evolving from working in property leasing and resolving tenant needs.  Think about these:

  1. Leasing leads to Property Management – Many landlords are open to property management services when you have just solved a complex leasing issue for them.
  2. Leasing leads to Sales – A lease today is likely to be a property sale in the future, particularly if you do a great job for the landlord property investor.
  3. Tenants share local property information – Local tenants will tell you many things about their location and other nearby businesses.
  4. Landlords want help with tenant placement and tenant mix – Whilst a landlord may have a fully occupied property right now, many leases may be in need of upgrade and renegotiation at the right time in the future. As a general rule, weaknesses in leases can be negotiated away over time with better leases and rents.
  5. Rental and lease strategies are highly specialized – There are many different types of rents and leases; they can be mixed and matched to the investment requirements of the landlord and or the occupancy needs of the tenant (it just depends on who you are engaged by as a client). You can drill down into market rent strategies and leasing alternatives.  That will then make every lease negotiation more valuable for the clients that you serve.

So you can do a long way in the property market as a specialized agent or broker by starting from a ‘leasing base’.  Understand the linkages between the 5 points mentioned and build your skills and property market around them.

In closing on these points, recognize the differences between office, retail, and industrial property.  Understand the leasing opportunity in each property type, and then choose the segment that offers you the most market activity over time.

You can get more commercial real estate broker leasing tips in our ‘Snapshot’ eCourse right here.

Commercial Real Estate Brokerage Leasing – Tenant Orientation Tips

When you are to lease a commercial property, the facts about the property and the leasing process should be at your fingertips.  Tenants will ask you plenty of questions as part of the property inspection and enquiry process.  Lack of information can slow down or derail a property lease negotiation.

You may only have one opportunity to convert your tenant to an inspection or a negotiation.  So it is important to remember that preparation is the key to converting more leasing activity in a positive way.  I like to do a lease orientation in preparation for that tenant attraction process.

Let’s face a few facts about property leasing:

  • Every tenant will have different demands
  • Every landlord will have specific ideas about rental, lease terms and conditions, and occupancy
  • Some modern and new office or retail properties are very complex when it comes to lay out, fit out specifications, and the as built factors of design
  • Property improvements, services, and amenities differ significantly from location to location

So there is plenty to think about here if you are the leasing agent.  There are a lot of things to understand, look into, and review.  Without capturing the interest of the tenant, they will quickly move on to another property inspection with another agent.  You will only have one short opportunity to interest the tenant in the property and the vacancy.

Lease and Tenant Orientation

Here are some elements of lease orientation that I recommend you undertaken as part of every vacancy assessment and marketing process:

  1. Size – Understand the layout of the premises and the vacancy. The size and the configuration of the floor plate will be critical to tenancy design and business function.  Some businesses require floor plates that offer flexibility in office configuration and departmental interaction.
  2. Tenancy use – Every vacancy should be assessed so that the ideal tenant profile and permitted use can be decided. The existing tenancy mix within the property may also have some relevance to the vacancy and the new tenant selection.  Understand the pressures and the priorities that apply in choosing the right tenant with the correct business orientation.
  3. Access and security – Understand exactly how tenants will move to and through the property as part of their business operations. Security today is also a factor of concern for many businesses as they strive to service customers and protect staff.  The tenancy itself may have proximity card access within a certain zones and certain floors.  Advanced levels of security help when it comes to attracting corporate tenants today.
  4. Fit out standards – Within certain buildings there will be a need to establish and manage the standards of fit out construction. In that way you can preserve the quality of the property and the presentation to both tenants and customers.
  5. Rents and outgoings – Set some targets when it comes to market rental negotiation. As part of that, you will need to consider the incentives that apply in the leasing process for the location and the property type.  Do a full market assessment of rental trends and opportunities as they exist within the property type.  Advise the landlord accordingly, and set some flexible rental ranges that apply to any potential lease, the associated incentives, and the terms of lease occupancy.
  6. Strengths and weaknesses – Every property will have certain strengths and weaknesses to be understood and worked through. The strengths can give you significant points of difference when it comes to marketing, inspecting, and negotiating.  The weaknesses on the other hand will need to be addressed prior to any lease inspection or lease enquiry.

So there are some good things to be understood and optimized as part of the lease orientation process.  As the professional leasing expert, you can get these things under control at the earliest stages of lease marketing and thereby improve the levels of enquiry, and the negotiation outcomes.