In commercial property management, if the individual manager you employ is struggling in knowledge, performance, and or client service, you will soon have a portfolio problem of one type or another. You can lose business and fees.
Usually the affected client will soon become unhappy, timeliness will be lacking, errors will be made, and eventually, the property will be taken away from the agency. Losing business is not a good thing in commercial and retail property management. It takes significant time to set up a new management and then keeping it for the long term is a whole different thing. (NB – you can get plenty of Property Management ideas in our Snapshot series right here – its free)
Complexities and Properties
As a special note, large and complex managed properties require special attention and care in the day to day management of tenants, cash flow, and maintenance.
Looking for performance problems is then a critical fact to refine in monitoring activities in property management. It is usually the case that the agency principal will know very little about the specialist tasks and duties of the property managers; agency principals usually only get involved when something goes wrong. They unfortunately and generally have very little understanding of the day to day property manager ‘activities’. That is a risk exposure in any brokerage.
Facts to Watch
So, what are some of the important performance secrets of this ‘specialist’ part of the industry? What do you look for to identify problems with your property management team? Try some of these for starters:
- Arrears – Look at the amount of rent that is accumulating as arrears on a property and ‘per manager’ basis. Some concern should be raised if the numbers are growing and or extend beyond 14 days as an aged debt. The questions should then be asked about each situation with each defaulting tenant and each building. Look for arrears problems and seek answers. Don’t let the clients be the first people to approach you and ask questions about arrears.
- Lease critical dates – These are the important dates that come out of the lease and tenant occupancy situations. When you have many tenants in a building, then the dates are important to watch. Look for the dates that relate to important things such as expiry, options, rental increases, insurance, and operating costs recovery. A forward diary system should keep those dates under control; that, of course, depends on how the lease dates were originally entered into the diary system initially.
- Landlord reports – Every landlord will have requirements with reports relating to income, expenditure, and tenant management. Those reports should be timely and accurate. You can ‘test’ the integrity of each landlord report at the end of the month to ensure that the managers have indeed looked at the financial results and indicators before the clients see the ‘financials’.
- Tenant contact and feedback – Some property managers do not spend enough time connecting with tenants and helping those tenants with occupancy issues. That is when the ‘relationships sour’. Make sure that there is a tenant contact and meeting system that covers every building and tenant. The landlord can be briefed each month on tenant changes and meetings.
- Building maintenance – A property that is not well maintained will usually be a risk management disaster. That, in turn, can expose the agency to unacceptable problems associated with personal injury and tenant injury. A property under management should frequently be inspected, and records of the process should be kept for action and future reference. Ask to see the reports that exist on each building. How often should a building be inspected? That depends on building size and type. With some buildings, the inspection process should happen at least weekly; on others, the process can be monthly.
So, these facts are just the start of the ‘performance checking process’ in commercial and retail property management. You can take these factors and add to them based on client requirements, building types, and portfolio size.
Stay well ahead of the potential performance problems in commercial and retail property management. Know the capabilities of your staff and the requirements of your clients. Match your property managers and their skills to the clients that you serve.