When it comes to property performance today, a commercial office building is quite complex and demanding. There are things to control and manage and that is where a professional property manager is required; not some inexperienced landlord self-managing and trying to save money by doing things themselves.
The variables of the building design, function and operation need to be matched to the tenants in occupancy and the targets of the landlord. A good property manager knows how to do that.
Property Changes Happen
Each year there will be aspects of the local property market that are changing. You could say that professional property management is based around a set of rules and processes that are shaped to the events and pressures of the property market. You can learn a lot by looking at other properties and tenants in occupancy.
So exactly what is commercial property management and why do it? In essence the role of a commercial property manager is quite special and it is centred on the provision of professional services to allow the improvement of the property asset over time. That improvement is possible across physical, financial, and documentary aspects of the property.
Good Managers Help in Adding Value
Professional property managers can add significantly more value and service control to a high quality property asset. They have access to an array of industry updates across a broad selection of properties for a location or property type; they have a good awareness of market trends particularly with vacancies and market rentals, plenty of business tools to help control the asset, the leases, and proven systems to improve the tenancy mix. Self-managing landlords typically do not have those things.
So let’s look at the typical property under management. The following variables occur quite regularly:
- Changes to the tenant mix – Given that tenants are running businesses in what can sometimes be challenging economic cycles and situations, some tenants will be more successful than others in a given property or city. Choosing the best tenants for a location or premises type is always a quandary and helping them remain successful is another challenge. Understand what tenants require from a property, but also seek to understand what tenant types are likely to be more successful than others given the particular property and premises.
- Leases coming to an end – I like to recommend that leases are watched for expiry and option renewal at least 12 to 18 months out. That then gives the property owner plenty of opportunity to negotiate lease issues with sitting tenants and those that may be considering leaving the property. A vacancy in a property is not a bad thing, it just requires control and management.
- Leases requiring attention – The different types of leases used in commercial property investment today bring factors of law and compliance to a property and premises. Critical dates will be set in the lease for things to happen and responses to be made. Understand all the critical dates in your lease documentation and track those dates in a timely way. Many a property manager has been erroneous or negligent when handling lease actions and date responses.
- Vacancy factors occurring in the property – You will have upcoming vacant tenancies to deal with. Planning the process will help. A tenant retention plan and a leasing strategy will help with minimizing vacancies and lowering the vacancy rate in the property.
- Maintenance issues requiring attention – One of the bigger matters to watch in any complex property will be that of property maintenance. You could say that the plant and machinery required in operating an office property each day is very similar in concept to the process to running a ship with hundreds of passengers in occupation. At different times of day things happen and comfort conditions are to be maintained. A property manager ultimately makes the key decisions in plant performance and expenditure and the contractors in the building provide the expert opinion and control.
- Factors of risk and liability occurring – When you put a lot of people into a property there are risks and factors of liability to look for. The customers and the tenants within the managed building create a lot of pressure and demands when it comes to maintenance and property upkeep. It is all too easy today for people to seek damages and instigate legal action when something has not been well maintained or injury has occurred. The property manager is at the front of the line when it comes to response to risk and injury events.
- Market rental pressures and changes – In any period of 12 months, there will be changes relating to occupancy, property running costs, leasing strategies, tenant enquiry, and market rentals. Any good quality property should have an established business plan detailing key performance indicators and targets within each of those categories. In that period leading up to a change of financial year, it is normal to review the property business plan based on the trends within the industry and the location. That is where the professional property manager can help guide the landlord and the property in so many different ways.
- Aspects of property documentation needing enforcement or attention – Many situations can evolve during the year with lease occupancy and tenant volatility. Every lease will bring with it an array of dates and issues of compliance to be managed. When you have a large number of tenants within the building or a property, the complexity of the tracking process can be significant. There are some very effective software programs used by property managers today to track essential tasks and critical dates within the lease documentation.
Taking all of these things into account it is easy to see how important a professional property manager is to a high quality property asset of any type.
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