When you manage a commercial property, it pays to have a formal process in maintaining and managing all physical aspects of the property. That will include issues associated with tenant occupancy, property function, and building performance.
On an annual basis, maintenance programs require a budget so that costs are controlled within acceptable limits for the particular property type.
In the first instance, a property manager needs to understand the acceptable levels of expenditure that applies to maintain a property locally. That will vary from property type to property type. There will be cost averages that can be applied to the maintenance of industrial, office and retail property.
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Establish a Property Maintenance Program for the Asset
So here are some tips that can be implemented into a maintenance program for a commercial or retail property.
- Inspect the property at the time of property handover so you can completely understand the factors of property occupation and usage. It is wise to involve the existing maintenance contractor’s for the property in that process, so they can share information regards plant and equipment, and repairs and maintenance. They will have an awareness of the plant and equipment that is likely to fail or be a threat to property occupancy.
- Existing tenants within a property may place particular demands and pressures on property use. For example, a call centre in a property will extend the hours of operation and place pressure on costs associated with energy and security. If you have any tenants that are unique and special in this regard, it pays to look at their lease to understand any aspects of cost recovery that can be attributed to their occupation and lease.
- The owner of the property will have certain objectives for the investment. They may wish to own the property for a number of years as part of a long-term investment strategy, or alternatively dispose of the property quickly when the local property market is suitably placed. The holding strategy will impact the maintenance strategy.
- When it comes to maintaining a property with a number of vacancies, the cost of property maintenance can be a real challenge. There may not be enough income from the property to cover the cost of the required maintenance routines. If that is the case, you will need to work with the landlord to understand how that shortfall will be managed over the immediate term. Some maintenance costs cannot be avoided given that they will impact property occupancy and usage.
- The separate leases as they apply to the tenants in the tenancy mix should be reviewed for clauses relating to maintenance. Some tenants will have obligations of maintenance that they must undertake on a regular basis. The lease will explain how they handle those costs and how the maintenance should occur. The leases will also impose terms and conditions on the landlord relating to maintenance. On this basis, every lease should be comprehensively reviewed as part of any property management taken up.
- Identify the factors within the plant and equipment that are likely to fail and disrupt the property. In older properties, this is quite a common event and an essential process. There is a balance between machinery breakdown and machinery replacement; older properties present this challenge and the costs associated with replacement will normally be regarded as a capital item.
So these are some of the key issues that will allow you to enter into a property maintenance review process of commercial or retail property. After the initial property take up and the associated maintenance review, each year the annual review should be updated as part of the business plan for the property and the landlord. In this way, you can control income against expenditure and improve the net income performance.