There is no doubt that commercial property management is very different to residential property management, yet so many real estate agents put their ordinary property managers (with only residential experience) on to the management of commercial or retail property. The process sets the scene for incompetency; the problem is magnified when the property in question is retail given the uniqueness of retail property performance and tenant mix.
The two people that suffer through all this are firstly the property manager because they just do not know what to do and secondly the landlord because the property is poorly managed. If the situation is not closely monitored the agency will lose a client and expose itself to the potential of litigation.
Agency principals beware; if you are going to manage any commercial or retail property, only do so with the right people and give them the knowledge to support you.
Without knowledge and experience in commercial property, residential managers find the change of property type really hard. They just do not have the experience in the things that happen every day such as:
- Vacancy management
- Lease optimisation
- Tenant mix strategies
- Maintenance controls in larger properties
- Budgeting property performances
- Lease documentation and enforcement
- Expenditure controls
- Risk management
- Landlord reporting
- Supply and demand management of available space
- Forms of lease documentation and negotiation
- Critical date management from the leases
- Rent review and renewal negotiations
- Environmental and heritage issues
- Lease assignments and sublets
- Lease negotiations and variations with new tenants to the property
- Essential services management and compliance to codes
- Occupational health and safety
The list can go on into many different things and special challenges. The larger the property that you manage, the more complex the issues that will have to be handled.
At the very centre of the commercial and retail property management processes and the basic keys to what you are attempting to do. Here is a summary:
- Manage the tenants in the property to the rules of the leases and the occupancy codes applicable to the property and the location
- Maximise the income for the property given the local property market, the leases, and the focus of the landlord
- Control the expenditure of the property given the requirements of each lease and the authorities of the landlord
- Maintain the property to the targets of the client, the budget and the pressures of occupancy
- Integrate the property into the community and the business segments that it serves.
- Optimise the income through vacancy minimisation.
If none of this makes sense, then knowledge is required to build up the skills and processes in commercial and retail property management. I did say earlier that retail property is very special; it requires a unique awareness of rents, tenant mix principles, and retail leasing property legislation. When in doubt see a good property solicitor.
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