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Commercial Property Management Business Plan – Tips for Property Managers Today

Every commercial property should be managed and optimised to a plan. This is in fact, a business plan or version of it and it is to be prepared by property managers. 

It should be prepared once a year and just before the commencement of the financial period to which the building performs. 

It should be monitored monthly and adjusted as required quarterly during the year.

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Set your property management plan in place

Commercial and Retail Property Management Planning

At the end of the year, your good property management practices should have brought you in on the targets to your plan or close thereto. This gives the property a performance plan and KPIs for rental and expenditure performance.

The parts of your plan should include:

  • Income budget for current and future 3 years
  • Existing tenants
  • New tenants
  • Vacant areas
  • Expenditure budget for current and future 3 years
  • Rates and taxes
  • Insurance
  • Energy
  • Cleaning
  • Repairs and maintenance
  • All other known outgoings in separate categories
  • Outgoings recovery budget for existing tenants
  • Reconciliation processes
  • Lease recovery provisions
  • Default strategies
  • Rental strategy
  • Net rents (existing and targeted)
  • Gross rents (existing and targeted)
  • Lease options and expiry strategy for all tenantable areas
  • Existing tenants and tenant mix
  • New tenants
  • All tenant lettable areas
  • Standard lease practices and terms for new leases
  • Incentive strategy where necessary for new and existing leases
  • Capital expenditure strategy for 3 – 5 years
  • Arrears processes and default monitoring of tenants
  • Refurbishment plans and timelines
  • Maintenance plans for ongoing property performance
  • Insurance and risk monitoring
  • Any heritage matters and risks
  • Any environmental matters and risks
  • Any workplace health and safety matters and risks
  • The monitoring of critical lease dates and covenants
  • Tenant contact plans and progress reports
  • Expansion and contraction plans for existing tenants
  • Matching of the plan to the owner’s holding pattern or disposal pattern within their portfolio.

When looking at these things you need to consider all know and expected issues. 

Get the Property Management Checklist here

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The checklist for creating an asset management plan in commercial real estate.

Starting Your Property Plan

Firstly, it’s crucial to prioritize the tenants residing in your building. Take into account the kind and dimensions of rentals that you can provide from your property.

When looking at the potential return of the property from the tenancy mix angle, the cash flow aspects requiring future awareness include:

  • rent review profiles
  • lease expires
  • lease term
  • rent types
  • incentives
  • option periods
  • outgoings recoveries

Managing multiple tenants can be quite complex. It’s important to consider factors that could impact the property’s future income.

Keep an eye out for fluctuations in tenant mix and placement, as well as potential opportunities for improvement.

business materials on desk
Review all the property facts.

Balance Your Leases and Expire Dates

You should explore the ramifications of all such tenant events, and any others in the relative property leases that impact the owner. In doing this the property is carefully prepared for sales activity, leasing opportunities, and all other future property income opportunities.

Seek to minimise major ‘dips’ for your clients in cash flow and the threat of vacancy periods. The lease and the balance of all the leases against each other is, therefore, a big part of the tenant mix balance.

You would not usually want several leases falling vacant at or around the same time. This is only done when you want to remix or redevelop the property; hence, the only way to achieve that would be by creating vacancies.

The best way to consider and construct the multiple tenant activities and plans in a complex property are to graph the tenants in a calendar display over say the next 3 years. You can then see where you need to handle cash flow exposure issues created by lease vacancies and expires.

business charts on desk
Plan your real estate property business.

Larger Property Planning

The larger the property, the greater the need to have a business plan to consolidate the performance of the property. The business plan will have ramifications on the design of the tenancy mix.

The business plan will set directions for the property given the known demographics of the community and the local businesses. Business plans in property performance are very useful with retail properties. You can tune the tenancy mix where the success of the tenant is driven by the customer’s acceptance and use of the property.

The business plan for property management is designed to set essential standards and targets within —

  • choices of tenant
  • ideal lease terms
  • expiry profiles
  • targeted rentals
  • product offering for customers
  • levels of rental relevant to rent reviews

As the agent working with the client to enhance the tenancy mix requirements, you can adopt this business plan approach with adjustments for the suitability of tenants and the size of the property.

Click here or on the image below to get your asset management checklist file copy in PDF.

man holding ipad and drinking coffee
The checklist for creating an asset management plan in commercial real estate.

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