In commercial real estate today the activities of leasing and property management can help transform property performance over time. They are specialized services that you can and should build into your brokerage activities.
So what can you do here with property performance? You can change the tenancy mix, you can change the tenants, and you can improve the income. The strategies are worth noting here as something that you can use as leverage with the clients that you serve. You can do more for your clients across a variety of challenges with their assets and properties.
Are you a ‘Top Agent’?
Our clients today like to know that they are working with the top agents that have the right resources, the best ideas, and the required confidence to take an asset forward. Do you ‘tick all the boxes’ in that regard?
What listings do you have now?
Consider your listings when it comes to property performance. Every quality listing and valuable client should be assessed for future brokerage business and commission opportunity, that being those things evolving around property performance and investment enhancement. Here are some ideas to help with that:
- Understand the income currently – Look at the passing income for the property from the existing tenancy mix and lease structure. Some leases will be better than others, and on that basis should be assessed as to both strengths and weaknesses.
- Understanding market rentals for the location – Market rentals change throughout the year and certainly may not always rise. Market rentals are always impacted by supply and demand within particular property types locally. Incentives offered in any leasing situation will also impact market rental.
- Understand the opportunity of the improved tenancy mix – Can you move tenants around into new and better locations in the same property? That’s what happens in retail shopping centres frequently as part of improving property returns and minimizing risk.
- Look at how you can reduce the threat of vacancy – There are lots of costs that come with a vacancy in a property. Commission, advertising, loss of rent, incentives and market rental determination all bring with them some degree of cost.
- Look at the lease documents – Many leases are individually written for a single lease negotiation. This means that one building may have many leases that are not constructed to a standard. From a property performance perspective that is a real problem. Look at the leases so you know what you have to work with given all the existing tenancies and their documentation.
- Review the net income potential – Given the different rental types (net and gross) you have some property expenditure and outgoings to consider in the calculation that takes you to the final net income. Are all the outgoings recovered? Or are there leases that leave some outgoings for landlord cost coverage? Small changes in lease rental structure and outgoings recovery can lead to better net income. That has the benefit of helping the landlord with property yields and capitalization.
So there are some good things that you can do here with your property review processes that ultimately can help you improve property performance for the clients that you serve. Set up a checklist that will take you through the important occupancy factors of office, industrial and retail property performance. Check the list as part of the property review.