Property Management

Tenant Induction Procedures in Commercial Real Estate Leasing and Property Management

When it comes to leasing and managing a commercial or retail investment property, it is wise to develop a tenant induction process that standardizes and controls the introduction of a tenant to a property.  This is certainly the case when it comes to larger quality property investments with many tenancies.

In some retail shopping centers, and some high rise office buildings, you will find the typical property management team including a tenant services manager for this very purpose.  The role of that manager is to ensure successful tenant integration into the property and provide professional tenant communication into the future when it comes to any general matters of occupancy.

So the property manager or the tenant services manager should develop a tenant induction process relative to the managed property and its daily operations.  Here are some topics to merge into the induction plan:

  1. Access to services and amenities within the building will be of concern to the tenant, especially at the commencement of occupancy.  Tenants will want to connect into the specialized property services such as gas, water, power, security, air conditioning, and communication systems.  Some buildings will be more complex than others with providing each of these services; it is the job of the property manager or tenant services manager to manage the tenant connections.
  2. It is useful to have available the plans and drawings associated with the final property construction and layout.  The tenants moving into the property can then see from those plans how they can connect into the lighting grid, electricity grid, air conditioning infrastructure, communications backbone, hydraulic system, drainage, and electrical supply.  The ‘as built drawings’ are very useful to help with this discussion and final tenant connection.
  3. Most buildings will have preferred hours of operation.  This is certainly the case when it comes to larger properties with many tenants.  Every property should have a designated window of time where the building is fully operational and accessible by tenants and customers.  Outside of those hours a Security System will control access; most modern buildings today have advanced Security Systems that allow tenant integration and use.  There will be a cost to the tenant of their use of the Security System which then becomes a recoverable charge based on the usage requirement.
  4. All buildings today have air conditioning systems operating on a daily basis in normal building trading hours.  The hours in the case of an office building are normally Monday to Friday between 8.00 AM and 5.00 PM; in a retail shopping center the hours will be extended to and or include Saturday and Sunday.  Outside of those standard hours the air conditioning system should be available for tenant activation and use as required, however the tenant should pay for the cost on an hourly basis.  You can install metering systems to monitor the tenant use of air conditioning outside of business hours.  It is then a matter of charging for usage based on the costs of operating the plant and machinery.  Include in that calculation a factor for wear and tear.  Mechanical engineers can consult and advise on the costs associated with these charges relative to your building and its plant and equipment.
  5. The power grid within the building will provide the tenants with energy.  When it comes to a larger building, it is common for the tenant to purchase the energy from the landlord based on the energy tariffs available in the open energy market.  The charge to the tenant should be based on current tariffs for the levels of power consumed by that tenant; the landlord may achieve economies of scale and a saving with energy if they purchase large volumes of energy in bulk for the building from the energy grid, and then on charge individually tenancies.
  6. Create a ‘Building Manual’ associated with property use and occupancy.  It can be given to all tenants at the start of their lease occupation.  The Manual itself will provide relevant property information in a convenient form for new tenants to the property.  It will tell them how things happen and who to contact if they have any questions.
  7. You can provide a ‘Tenant fit out guide’ to help new tenants to the property understand how they can move through the fit out process legally and correctly given the current building design, landlord approval processes, and current building codes.  Ultimately the ‘tenant fit out guide’ will allow the tenant to stay within occupancy rules and finish specifications.
  8. Make it easy for the tenant to contact the property manager when any issues of concern or urgency arise.  Give the tenant contact information for the property manager to be used at any time and also in cases of emergency.  In a building with many tenancies, the matter becomes even more important.  Urgent issues arise at any time and require immediate and accurate responses.
  9. Matters of health and safety relating to building occupancy are of prime importance.  Occupancy codes will dictate safety systems and routines to be followed by the building contractors and the building tenants.  The property manager and or the tenant services manager should instigate the necessary systems and procedures associated with occupancy health and safety.

So you can see that there are plenty of things to do here when it comes to introducing a new tenant to your commercial or retail investment property.  The induction process can help you with introducing many tenants into the property efficiently and correctly.

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