A commercial office tower is a complex asset to manage in more ways than one and requires the right person to undertake management. Any mistakes and omissions can create costly outcomes on property income, occupancy, and risk management.
Many cities and towns have office towers of one scale or another; they are great properties to manage. In saying that, multiple floors and numerous occupants create pressure on property management systems.
How many things to control?
Many things need to be watched, directed, and controlled over time in any high rise office tower. Commercial property management is not just a matter of income recovery and expenditure control. Think about these topics for starters:
- Tenants needing to relocate due to business pressures
- The competition of vacancies from the broader market is impacting leasing
- Special conditions of occupancy evolve from lease documentation and lease negotiations
- Rents require collection and negotiation given current market conditions (be they good or bad)
- Expenditures escalate in running the property during the year and through the different seasons
- Minimizing the risk of vacancy and income loss as tenants move and change business activities
- Budget requirements are to be set to achieve a satisfactory outcome on income and costs
So there are many things to watch and optimize in commercial property management for the best overall outcome. The skills and experience of a commercial property manager will have impact on the running of the property.
How do you do this?
The stakeholders involved in the successful management of a high rise commercial office property are tenants, maintenance contractors, property financiers, the landlord, and customers or visitors to the property. The operations of the property will impact all of the stakeholders in one way or another.
So the property manager is the right person to balance the performance of the property and the interests of the stakeholders. The skills of that property manager should be matched to the asset, the landlord’s investment requirements, and the volatility of the prevailing property market.
Here are some ideas to help any property manager get started with the management of a typical CBD office tower:
- Risks – When any property is to be newly managed, it should be checked for immediate and predictable risks. The risks would cover things such as lease documentation, rent collection, plant and machinery performance, property use, property occupancy, tenant business activities, improvements, maintenance, and property design or code compliances. Look for the risks and investigate them. Remove risks where possible through changes to asset performance and occupancy.
- Environmental and location issues – When you look around a property or city location you can see factors evolving from the environment or location that could have some form of impact on the asset in the future. You can include in that list climatic conditions (cyclones and heat), flooding, earthquake, and storm damage. Many CBD properties are located in cities where climatic events happen frequently. In that case the property and the property owner should have a ‘crisis management plan’ and an appropriate insurance risk cover to limit damage and recover in the case of property damage.
- Cash flow – Lease documentation and tenant rent payments are valuable factors in property performance planning. That being said they need to be checked for relevance and accuracy to the tenants in occupation, and any or all lease agreements. It is quite common for a matter of lease renewal or a lease critical date to be overlooked in some way by an inexperienced or overloaded property manager. Good lease documentation will support rental payments and growth over time. Poorly prepared leases will place stress on tenant management and occupancy.
From these 3 simple points you can see that the initial stages of commercial property control are all about gathering and checking property information. Get things under control from the very start. When you understand the operations and occupancy factors of the office tower asset you can set about controlling them.