Negotiating Rent Reviews in Commercial Property Management

Every investment property should be carefully managed when it comes to the leases and the tenancy mix. Part of that process will be the controlling of rent reviews and options in all the leases. Rent reviews are critical to the cash flow in the property. They can be of different types and called many things such as:

  • Market reviews
  • Geared to consumer price index
  • Fixed percentage reviews
  • Fixed amount increase
  • Stepped increases

Whatever the process of review used in any lease, the important issues to watch for are the dates of the review and the correct services of notices. All of these will be detailed in the lease.

This then says that property managers and investors controlling commercial property should be very familiar with reading leases and enforcing the terms of the rent review clauses. Some lease dates are critical dates and should be observed and actioned correctly to be enforceable.

It is not unusual for a property manager to get involved with or take over a new property management portfolio where the rent reviews have been overlooked or not correctly served. For that reason every new property taken into a management portfolio should go through an audit of the leases and a thorough checking of the lease terms and conditions. All critical dates in the leases should be checked against the rent charges and outgoings charges raised in the end of month tenants invoices.

A well managed property is one that has been optimised in lease and physical performance. Commercial and Retail Property Management is not an experiment for inexperienced people; Agents and Property Owners should carefully control the managed asset. Mistakes can be costly. Only use the best people to help you with the property management.

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By John Highman

John Highman is an International Commercial Real Estate Author, Conference Speaker, and Broadcaster living in Australia, who shares property investment ideas and information to online audiences Worldwide.

One reply on “Negotiating Rent Reviews in Commercial Property Management”

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