Managing a commercial property is not just about offering low fees. Many a property manager has offered low fees for the sake of attempting to win new management. The real facts here to remember is that low fees do nothing for property control and asset performance.
Most poorly managed commercial and retail properties are the result of a low fee priority simply to win the new business. At that point, the property manager then does not have the time or the skills to get the job done efficiently and to the expectations of the client.
Face the facts; the services of commercial and retail property management are intense, they take experienced people, and good systems of control across matters of finance, legal documentation, and business communications.
Key Strategies in Property Management
The better way to approach the new property management situation is through a ‘bundle’ of ideas and strategies that encompass the following:
- Vacancy reduction is important. Tenants will come and go from the asset. Staying ahead of those issues will allow you to reduce the impact of vacancies. All landlords dislike the impact of the loss of rent. They have bills to pay, financiers to keep happy, and a property to maintain. The cash flow from the property is critical to that equation. Build some vacancy control solutions into your property management business.
- Stability of tenant mix can be achieved through a tenant retention plan. That will involve the layout of the property, the existing tenant mix, the better tenants, lease professionals, and rental budgets. A good property management process is to establish a tenant retention plan for the asset and the client each year. The plan can then be reported to every quarter.
- Quality reporting and monthly financial controls will keep the client fully informed. Every property will have management challenges based on the age of the asset, maintenance, and locational pressures of occupancy. Don’t just collect the rent and think that ‘all will be OK’ with the client. Any experienced property investor will require detailed monthly and quarterly reports. Build your property management systems around that.
- Asset control will be a ‘by-product’ of the last 3 points. Add to that the requirements of risk reduction and you have the foundations of a professional property management service. Think ahead when it comes to managing a property for a client. A good window of time to work to is a full 18 months ahead with lease and occupancy issues. Look for anything that can change or impact the property at that time. Work to minimize asset disruption. That then leads to the next point.
- Improvement of net income from leases and tenants. It is a fact that the business community today is changing. The impacts on the way businesses operate is now a real and relevant factor of leasing and property use. Less office space and tenant space is required. Tenants like to do more with less. They like to keep full control of predictable occupancy costs. Rental aggressive landlords pursuing a high market rental at all costs will generally destabilise tenant occupancy and thereby lift the vacancy factors in the property. Tenants eventually leave a property if they cannot get sensible rents and fair property maintenance to support their business activities.
- Lease documentation control is always important. Every lease is different. On that basis, every lease should be ‘dissected’ for critical dates, special terms and conditions, and property performance issues.
Bundle your client recommendations and property management strategies in this way. Design your property management services to be professional and comprehensive. Low fees will not normally be a part of that process.
Put your best people on the quality properties to manage. Be prepared to walk away from clients that simply want the lowest fee for the property management service. Why position yourself and your brokerage for ‘difficult operations’ and financial pressures that come with managing too many properties and getting low fees for the process?