When it comes to managing older commercial properties, you will need to develop a system to control the problems that evolve from property ownership and tenant usage.
It is a simple fact that older properties cost more to run and maintain. That can then have a significant impact on the net income for the landlord and create stress when it comes to property function and convenience for the tenants. Property managers need to understand the plans of the landlord to manage these older assets.
This says that you should be very careful in managing older properties so that you comply with the many challenges and factors that can come at you and need attention. Older properties produce regular problems such as these:
- Vacancy factors can be high. This means that you will need a good business plan for the property and a strategy relating to leases and vacancies. Keep your current tenants very happy in occupancy.
- Tenants can move to other properties and are likely to be targeted by other agents looking to fill newer properties or developments. Monitor all the new developments in the planning phase. The rental incentives that they offer may pull tenants towards them.
- Rental types and levels will vary by property type and also in the particular property based on tenancy location. In the older assets it is not unusual for rent to fall. On that basis you should track the trends of market rentals and other properties nearby. Most businesses relocate locally to maintain customer base and convenience for staff. Watch for situations where your tenants could be influenced to move to a property nearby.
- Recovery of outgoings will be difficult in situations where the vacancy factor escalates. You can’t recover outgoings from tenants in parts of the property where you have vacant space. This is all the more reason to create a tenant retention plan in the asset.
- Keeping outgoings at realistic levels so your tenants have acceptable levels of occupancy cost. Outgoings will change as the property ages. If the outgoings get too high, the tenants are likely to leave. You can adjust the outgoings strategy around the use of net and gross rentals.
- Essential services will need to be maintained regardless of the age of the property. Any failure to do so will see the property risk factors rise and that can lead the landlord and the property manager into situations of negligence and liability.
- Building codes and compliances will need attention so that the property can be safely occupied by tenants. If the property does not comply with the necessary building codes and laws of occupancy, then you can see problems with the occupancy certificate for the property being removed. In that case tenants will be unable to occupy. That situation can also happen after natural disasters when the building has been damaged.
- Energy costs rising are an unfortunate fact today in owning a commercial or retail asset. In older properties there are some limits on technology so energy costs are likely to be high based on occupancy and property use. Most tenants and landlords will already be suffering the consequences of rising energy costs. Some things can be done in the older property to achieve savings. Get some help from expert energy consultants to achieve the possible savings.
So these are some factors that you can work on when it comes to managing the older asset or investment property. It is a fine balance, but it does need the attention of a qualified and experienced property manager.