Every landlord of commercial and retail property today will have specific requirements for their asset. That will be in income, outgoings, operational expenses, tenant mix, and documentation. It is up to the property manager to fully understand those facts.
Quality service that is matched to the client needs and property will be very important in any asset or facility management process. If you work in a brokerage with a property management portfolio you will understand what I mean. Happy clients allow the portfolio to thrive and grow; for that to occur the property manager really should be well selected on skill and a clear match for the client.
How Many Properties are Too Many?
Managing too many properties can also confuse the property performance issue, especially if the property manager is trying to do things generically. Other problems can also occur if the manager is fully loaded with properties and tenants, hence finding it hard to get to issues and tasks in a timely way.
It should be said that the property management process is time consuming and the demands of some property owners require a reasonable fee to cover the costs of management. Set your management fees based on services to be provided to the particular property owner understanding what they want in the following categories:
- Rent and arrears management
- Lease documentation and enforcement
- Tenant mix control and vacancy management
- Maintenance controls and reporting
- Expenditure management
- Reporting to the landlord on a weekly, monthly and quarterly basis
- Annual property business plan and budget process
Far too many brokers and agents set management fees with little or no regard for property needs and client requirements; soon they see that they have ‘ under-quoted’ on the management and the property manager has to work harder with little resources to do the job at the standard that the client requires.
The Key Focus?
So the message here is for your brokerage property management portfolio to be built around client and property requirements. Larger properties and certainly retail shopping centers are unique when it comes to work demands. This is how I like to do it:
- Review the property to understand lease requirements and critical dates coming up
- Look at the vacancy factors and lease negotiation issues based on upcoming lease expiries that are known
- Review the tenant mix and the tenant profiles to see what challenges they may present as part of occupancy
- Interview the client so you can know what they will want of property performance, cash flow, reporting, and budgeting.
- Check out the competing properties to see what they could do to your tenant mix and expected vacancy factor
- Review the business sentiment locally and the upcoming property developments to see what impact they could have on the managed property
After you have done all of these things, you are ready to consider the number of hours that could be required to manage the property on a weekly basis and by how many people. After that point it is a simple cost analysis of staff and business costs versus income from the asset.
As a final note make sure you can recover the management fees from the lease structure and the lease documentation with existing tenants. That will be a valuable cost recovery when you are trying to negotiate reasonable management fees.