Absolute Standards in Commercial Property Management Portfolios for Agents

When you manage commercial property, you should be quite selective as to the properties that you take on and control within the agency.  The fact of the matter is that low quality properties will take more time to manage than good properties.

As you would expect, low quality properties also produce low fees.  It is better to let the landlords of lower quality properties struggle with their own property management processes.  Over time they will learn the value of a professional commercial property manager and agency.  If a landlord of such property requires help, then you should charge a fee that is based on the work involved and not the passing cash flow.  I go back to the point, that a quality property management service deserves a fair fee.  That may not necessarily be based on passing income.

So when you take on a new property management portfolio or building, there are a number of things to look at when it comes to fee assessment and client selection.  Notice I said client selection.  The inference is that you should select the client and not let the clients select you.

  1. The stability of the tenant profile as it applies to the tenancy mix
  2. The ability of the property to expand with both income and tenant numbers
  3. The attitude of the existing tenancy mix when it comes to running a business and presentation within the property
  4. The quality of lease documentation as it applies to the existing tenants and the property function
  5. The amount of vacancies in the property currently
  6. The expiry profile of the existing leases
  7. The occupancy intentions of the current tenants
  8. The arrears that apply to the existing tenancy mix
  9. Outstanding matters that relate to lease occupancy, property performance, tenant involvement, and landlord commitment.
  10. Risk and liability associated with the plant and equipment within the building together with the maintenance of essential services.
  11. The overall quality of property maintenance and presentation.
  12. If the property is of a retail nature, then take a look at the customer numbers and sale numbers.

You should only take on the buildings that you can see will bring you a sustainable property management portfolio growth and good reputation.  There is absolutely no point in taking on a commercial, industrial, or retail property with little future and stability.  Invariably they will have higher levels of vacancy, tenant volatility, and difficult arrears.  Quite soon you will be saying that the amount of work required is not covered by the small fees that you recover.

It is worthwhile noting that many real estate agencies will take on a property management building or portfolio at a low fee assuming that they can get extra fees from leasing and or sales.  Whilst that is the case, you will suffer the difficulties of low property management fees and stressed out property managers.  High quality property managers will simply move on to an agency that provides top quality service for a fair fee.

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