Commercial property management can be quite challenging for many agents considering working in that part of the industry. That is largely because of the specific property knowledge requirement and the personal ability to do many complex things at the same time. With any commercial or retail property, there will be plenty of things to monitor across issues such as the tenancy mix, leasing activity, financial results, and landlord requirements.
At the top end of the commercial property energy industry, the complexity of portfolio performance is significant. When you consider the size and cash flow in any major property asset, you can soon understand how any small errors and omissions can impact the property result and the landlord’s investment returns.
To overcome any roadblocks and obstacles in commercial property management, it is necessary that you stay on task when it comes to property matters, and be fully aware of the requirements of the landlord given the functional factors of the asset. Every landlord will have unique investment requirements to be managed and optimised. Every property will have specific challenges and systems to be managed in a productive way.
In the management of any major investment property, there will be critical dates to administer and look for. Those dates will be driven by lease documentation and tenant activity. There will also be other issues relating to property reporting, cash flow, and plant and equipment.
Organisation and time management will help you stay on task in managing a commercial or retail asset. That being said, it is personal process and does require specific effort. The following is a check-list that will help you move through critical property issues and challenges with reasonable focus.
Checklist for Commercial Property Managers Today
The list below can be changed and modified based on your location, the property type, and the activities of the landlord.
- Landlord focus – the property owner will have specific requirements when it comes to cash flow, tenancy mix, and leasing strategy. All three factors should be fully understood and controlled through a property business plan. That business plan can be upgraded every 12 months taking into account the shifts in the property market, and the changes in the tenant mix or building. The business plan should also be forward-looking to take into account the investment directions of the landlord.
- Reporting and control – in any major asset under management, there will be specific reports to work through and prepare. Those reports become valuable control tools when it comes to tracking lease activity, tenancy changes, cash flow, and property changes. Typically the types of reports that you would prepare for a major asset would be prepared at the end of each month based on actual property activity; there may also be some interim reports prepared on a weekly basis to update the landlord and other interested parties.
- Get to know your tenants – the tenants in the tenancy mix form the basis of the cash flow for the property. It is essential that the tenants be controlled and also communicated with regularly so that any weaknesses in the tenancy mix can be identified. In any large property the tenancy management process can be quite significant. In larger properties, it is normal to have a tenant liaison officer maintaining regular ongoing contact with all tenants. As part of that process they can and should be preparing a monthly report summarising tenant contact and current activities, to then be merged into the property report.
- Do an income audit – when you review the financial aspects of a major property, the income results and income structure will be driven by both lease activity and property expenditure. As a basic principle of property performance, the rental income should be optimised for the landlord and the expenditure should be correctly managed. The net income will generally be the main focus for the landlord, and that net income will have an impact on property values taking into account current yields and capitalisation rates. Understand where the rental and other factors of income are generated within the property. Consider special aspects of change such as upcoming rent reviews, licensed areas, and rentals from leases, gross rentals, net rentals, and incentives.
- Do a lease audit – every lease will be unique and different. Review every lease document so that you understand the requirements imposed on the tenant and the landlord. Critical dates will emerge from that lease audit. Those dates should be tracked and actioned through a computer based diary process. Always work well in advance when it comes to actioning lease critical dates.
- Get expenditure under control – there are many different types of expenditure evolving from a managed building. Rates and taxes together with operational costs will impact the total expenditure for the month and hence the net income. The only effective way to control your expenditure is through a direct and accurate expenses budget. Look at the outgoings averages that apply to other properties locally when it comes to expenditure. Compare your managed property to the industry averages.
- Know your maintenance contractors – the plant and the equipment in your building will require maintenance. That plant and equipment will also need to comply with operational safety, and building codes. Safety and efficiency are the main priorities when it comes to the performance of property plant and equipment. Consult with your contractors to understand how efficiencies can be created given the complexity and the age of operational plant.
- Do a risk assessment – the function of a commercial or retail building will involve tenants and customers. They, together with the landlord are the major stakeholders when it comes to property performance and risk. On that basis every commercial or retail property asset should regularly undergo a risk assessment; in that way you can identify the threats to the property physically and financially. Adjustments can then be made to allow the asset to consolidate and grow to a plan and a strategy. A risk assessment can be merged into the property business plan on an annual basis.
Taking all of these things into account, you can see how you will be able to manage a commercial or retail property effectively and efficiently. That will then help you overcome any roadblocks or obstacles in property performance.