Commercial property management is a professional service usually provided by experienced property professionals to their clients as part of a comprehensive real estate service. In a commercial real estate brokerage, a property management service sits well with other services such as investment sales and property leasing.
So why provide this service when the commissions from property sales and leasing are potentially easier to convert and initially larger? The fact of the matter is that the commissions and fees from property management are a long term cash flow for the operations of a successful real estate business.
It should be said that the asset management service provided is quite special when it comes to office, industrial, and retail property. Refined skills and factors of property knowledge are required. Many brokerages get the whole concept wrong because of one or more of the following:
- Choosing the wrong people for the job without due care in understanding relevant experience and knowledge.
- Loading the property managers with too much work without any relevance to service quality.
- Setting the wrong fees for the tasks involved with each property under management.
- Failure to integrate the property management division with the sales and leasing team activities and results.
- Not knowing how to take a property and improve it across financial, physical, and strategic processes.
- Forgetting the stakeholders to the appointment such as clients, tenants, and customers visiting a property.
Property Management Systems
Respecting all the important issues above, here are some systems and ideas to merge into structuring a commercial property management division in your real estate brokerage:
- Landlord Plans and targets – most landlords today have specific goals and targets when it comes to property performance over time. Those targets will include tenancy mix, cash flow, property modifications, maintenance, and rental returns. Take the time to understand those goals as they apply to every client in your property management portfolio.
- Comprehensively review the local area – your local town or city will have specific pockets of property activity when it comes to investment sales and leasing. Businesses will be attracted to those locations as part of property occupation and future business growth. Generally those locations will be ideal for targeting property management clients, and investors currently self-managing.
- Every property should be specifically understood – take the time to review any new property management appointment so that you can tap into the issues, concerns, and activities across lease management, maintenance controls, property performance, and the threats of any upcoming vacancy.
- Fees for service – the fees that you set for managing a property should not be based on property cash flow and income. Whilst there may be some industry standards that apply to percentage based fees, it is very wise to compare those fees to the amount of time required to manage a property. It is a known fact that many properties are highly complex and demanding from a property management perspective. On that basis, there is a degree of relevance between task, time, asset performance, and the skills of the management team. The correct fee needs to be set for the management services to be provided in each case. Far too many brokerages fail to apply this logic when setting new management fees. On that basis they fail to achieve a profit on a division or departmental basis.
Take the time to fully understand the services that you can provide as part of a commercial property management service. Understand the different requirements of management when it comes to retail, office, and industrial property.
Find the right people to service the clients that you interact with. Make sure that the people in your property management team have the required skills and knowledge to allow your property management business to grow. Any successful commercial real estate brokerage will usually have a large and diverse property management business operating successfully as part of their business model.