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Key Performance Indicators in Commercial Property Management

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Personal performance tips in commercial real estate agency

When it comes to operating a commercial property management department, you need to set some performance indicators that will help the individual managers match their services to the needs and expectations of the clients.  That being said, many clients will have particular needs when it comes to property performance, tenant mix and tenant management, reporting, and income generation.  This is all the more reason for the use of the manager benchmarking and indicator assessment process.

Without relevant indicators, you will fail to see any shortcomings in performance and eventually some property management clients will move to other agencies for their management needs.  It is a known fact that the property management process is demanding and time consuming.  Many property managers cannot handle the pressures and organizational issues that come with the job.

Time versus fees

Some properties can be particularly time intense for a variety of reasons; that being said, the fees for service should be suitably structured so that time allocations applied to the property are covered in the base management fee.  Far too many agencies set their fees based on industry standards rather than services to be provided to the property.

So you need some performance indicators to track as part of the function of your property management department.  Each week those performance indicators can be reviewed as part of the regular department meeting.

The primary object of the indicator process is to understand where there are any shortcomings and failures within the services provided to clients, or the overall division.  Here are some typical indicators that you can merge into your review process each week:

  1. Monitor the vacancy factors as they apply to the greater portfolio.  Set yourself some benchmarks that are regarded as the limits of vacancy above which you will or should not go.  Some properties will have greater problems with vacancies and on that basis they will need a specific leasing focus and more complex leasing services.  Some property managers will not be managing their vacancies in accordance with the standards of the business.  This assessment process will help you identify those managers that are not giving the right attention attention to the leases and vacancies in their portfolios.
  2. Monitor the aged debtors and the arrears within the portfolio.  Split those numbers into property managers and client portfolios.  Look for any discrepancies that can apply to the recovery of arrears monies on behalf of clients.  Pay particular attention to the larger portfolios and the ways arrears and aged debts can be hidden within the tenancy mix.  An aged debtors report by client and by property should identify tenants that fall into this category.
  3. A big issue within the management of a portfolio is risk management.  Various risks apply to the function of a property on a daily basis.  The greater number of tenants and customers within a property, the greater the exposure of the client and the agency to risk events.  If you manage a commercial or retail property, you are in charge of the risk of problem and should have a specific program of risk management that is reported to each week by each separate property manager.
  4. Some landlords are demanding when it comes to the performance of their property and the quality of reporting.  That being said, they are entitled to receive what they require when it comes to property management services.  The agency does however need to get the fees correctly set for the services provided.  That’s where most agencies fall down when it comes to matching fee generation and services.  Understand your landlord clients, your fee structures, and ensure that both issues are correctly harmonized.
  5. The responses of a property manager to the maintenance needs within a property should be tracked.  Failure to address maintenance issues in a timely way can expose the agency and the client to liability and negligence claims.
  6. Lease management, tenant retention, and tenant management are all specific lease and income issues.  They require specific systems and solutions on the part of the manager within each property under management.
  7. Look for leasing opportunities, lease renewals, tenancy relocations, rent review negotiations, and specific tenant expansion or contraction requirements.  They can all be opportunities for property income improvement but also fee generation.  Every property will produce different pressures and opportunities of this type, and on that basis have a fee structure that can be applied for the extra work within each of these categories.

This is just the start of the indicator process; there are other things that can be added to the list.  That being said, there is a real need to monitor the performance of each property, each client, and each manager.  The performance indicators will help you do that.  The long term benefits are a stable property management portfolio and clients that trust your services.

Check out more articles like this at our main website on commercial real estate training.

 

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Problems are Opportunties for Commercial Real Estate Agents Today

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Top commercial real estate agents get results.

There are plenty of problems out there in the commercial real estate industry for us to solve.  The landlords and property investors are challenged with vacancy factors, redundant properties, and high operating costs to name just a few.  We thereby become the solution provider in the local area.  Here are some tips from our Newsletter.

It is not a seller’s market, it is not a buyer’s market, but it is an agent’s market.  We have the opportunity to reap the benefits of change; that is change in property ownership, occupancy, and eventually some new developments.  The longer you stay around the industry you will know that the business is always out there, we just need to help the right people at the right time.  Your database is critical to the process.

The property market is going through some reasonable change at the moment, and in many cases it is starting to consolidate and improve.  There is a cycle to things, and right now the cycle has opportunity. 

The moment businesses start to see better sales and improved client numbers, the flow through to commercial real estate is quite fast.  The changes in tenant mix and property ownership start to occur.

  • So what problems can you help with?
  • What value do you bring to the clients and prospects currently?

Here is a list to think about; see where you can qualify as a ‘problem solver’ for your clients.

  1. The tenants in the property are struggling to pay the rent.
  2. The vacancy factor is too high.
  3. Occupancy costs are higher than necessary.
  4. New tenants are needed.
  5. Renovation and refurbishment should occur to maintain tenant interest in remaining in the property.
  6. Leasing strategies are non-existent or unsuccessful.
  7. The tenant mix is wrong and needs adjustment to improve tenant sales.
  8. The shopping centre needs a boost in customer numbers.
  9. There is no business plan for the property.
  10. Competing properties are taking all the tenants.
  11. The property needs to be sold and enquiry is low.
  12. The new property development is planned but tenants are hard to find.

These are all specialised processes.  They require good agents with experience to move the property issues forward.  You can provide specialist services and market yourself through them.  Every problem that a client has is an opportunity.

A tenant retention plan is a good way to help current property owners with the tenant mix and the vacancy factors.  You should charge a fee for the plan and get a fee from all of the leasing activity that you create.

Think outside the square and decide what services you can provide that the property market requires.  To be a top agent you need to solve problems and specialise.

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Commercial Real Estate Agents – Networking Local Businesses for Real Market Opportunity

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Local business owners are a great source of leads and opportunity for commercial real estate agents.

When you work in a commercial real estate agency you can get a lot of valuable information from the local business owners.  For this reason they should feature in your cold calling efforts every day.

Many agents will focus on just property owners as part of their networking process for new business; whilst that in fine, the reality is that the process is hard and slow.  It takes a lot of time to find the right property owners and chase them down for a conversation.  I am not saying that you should not do it; I am just saying that you should mix it up a bit and add the local business owners into the networking process.

Talking to new people every day is part of building your business and your market share.  When you do this regularly you will find that the property market and opportunities within it will open up for you.

How do you do it?

So how do you get to these local business owners?  The easiest process is in using the local business telephone book.  You can also door knock the businesses locally on a street by street basis.  Either way the process is easy.

Many commercial real estate salespeople tend to analyse the process of networking far too quickly and critically.  They think that they should get results from just talking to just a few people.  That is not the case.  On average, you do need to talk to perhaps 40 people to get one opportunity.  For this very reason, the networking process should be a daily event and continue throughout the year.  Keep yourself organised as you speak to new people; gather any leads and information into your database.

Not interested?

Many of the people that you talk to will not be interested in commercial real estate. For this reason, you should simply be asking a few questions to see if they have a need or a future interest in commercial or retail property.  There will always be plenty of business owners and property owners to talk to providing you get yourself organised and talk to lots of new people.

Commercial real estate is a specialised part of the property industry.  Landlords, tenants, and business proprietors will need your assistance from time to time providing you show them your relevance and provide local market knowledge.

When you establish the initial connection with new people, and have satisfactorily qualified them as relevant to you, keep the contact open so they can find you when the commercial real estate need arises.  You should be networking all of your contacts at least once every 90 days.  That is the secret to building market share.

Through this connecting and networking strategy, the following information will help you with future business opportunities.

  1. The business owners will tell you what is going on in the local area.  They will likely know the intentions of some of their neighbouring businesses when it comes to property activity.  They will also have observed changes and pressures that exist with their neighbouring businesses.  Asking the right questions will help you here.
  2. Some of those business owners will be tenants in occupancy.  For this reason they will one day require potential relocation and or market information relating to rental and leases.  Building a relationship over time with these people will help you tap into that opportunity when the need arises.
  3. Some of those business owners may share information with you regards the landlord that owns the property in which they are located.  That can then short circuit the process of finding the property owner.
  4. Some businesses today will own the property in which they are located.  Over time they can have pressures of occupancy, expansion, contraction, or relocation.  They may also consider a sale and leaseback strategy.  You can help with all of these things.  It is simply a matter of building the right relationship.

Sometimes we tend to complicate the networking and cold calling process.  It is not hard or difficult, it is simply a system.  When you understand that, and develop your own processes within the system, you can create massive opportunity in your local property market.

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Commercial Property Agents – Set Your Targets in Sales and Leasing

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Start to focus your career in commercial real estate agency. The results are great in any market providing you work hard on the right skills.

When it comes to working in the property industry, commercial real estate can be very special and unique.  The knowledge required to be an expert in your field is quite specific.  For this very reason it pays to specialize in a property type and a location.  All the ‘top agents’ do exactly that.

You can be a sale and or leasing expert, or perhaps a commercial property management and leasing specialist.  The important thing is that you are very good at what you do and you can talk to the service you provide in a comprehensive way.

I should also make a special note here about ‘retail property’; retail is much more specialized than office or industrial property.  If you are a true ‘retail expert’ then focus on the special issues of retail property performance such as tenant mix, leasing strategies, and increasing sales performance for the retailers.  All of these things lead to a great property performance.

Our clients like to deal with ‘property experts’ that have a very good command and control of the market.  Whilst your office can have a good marketing position and perception in the local area, you personally should also have the same.

Here are some tips to help you get the right focus in your career and steer the process forward.

  • Find a top agent or mentor to help you with ideas and focus.   Experience is a great thing and those that have been working successfully in the industry for a long time will have ideas that they can share with you.
  • Watch the good people in the industry to see what they do.  Some of your competitors will be better than others in market share and closed transactions.  Some salespeople in those competitor businesses will be ‘top agents’.  How did they get to that position and what do they do every day to build their market share?  Look at their marketing efforts and their property speciality; are there any differences in what you are doing?  How can your mirror their ‘good’ processes?
  • Systemise your day so you stay on track and move ahead in your plan.  The only real resource that you have in the industry is the time that you use every day.  Don’t waste a minute of time on things that do not matter.
  • Personally create a database that grows through your daily prospecting efforts and directed action.  You will capture a lot of information in that database that can take you forward into new property opportunities.  The capturing and recording of the right information is a personal skill; ensure that you do all of this work yourself so you take ownership of the information and use it to the fullest of its circumstances.
  • Avoid poorly organised salespeople that make excuses.  There are a lot of these people around.  Negative comments and ideas from these people do nothing for your momentum and market share.  Whilst the property market may appear slow or sluggish, don’t let the comments of ‘poor performers’ hold you back from trying something new and relevant.

In any property market there are always opportunities to be captured.  In most cases your results are driven by the number of relevant people that you know and maintain contact with.  It always comes back to who you know and how you keep up the contact.

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Commercial Realtors – Don’t Let the Client Rush You in Listing

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Control your client from the outset.

In commercial real estate agency it is common for the property owner to put you under some pressure to accept their price or rental in a listing situation.  If you do that, you will commonly finish up with a listing that is over the mark or could contain errors.   A listing with problems will not sell or rent well and can be on your books for a long time.

The key facts should always be known when you list commercial property.  Investigate everything before you comment on price or rent.  For example:

  • A lease in a property may be a positive or negative when it comes to the potential sale, and you will need to look at the lease to understand those facts before the listing is marketed.
  • The property itself may have issues of ownership or orders and notices that can impact the sale process.  In all cases you should do a title search and a detailed property search at the local council before you complete the listing.
  • The improvements in a property may have compliance issues with the building codes, or orders may have been issued on the property for alterations to certain issues.

So the list can go on.  Asking questions of the property owner is a good thing, but sometimes they do not have all the answers or know about the issues.  For that reason you should ask for more time in the listing process.

Here is a checklist that can help you with some of the bigger concerns when listing a commercial or retail property today:

  1. Get copies of the leases for the property and in the property so you know what impact they can have on the sale or lease process.  Look at the critical dates in the leases in case they require response or action before the marketing of the property.
  2. Notices and orders may have been issued on the property by the local council or building authority.  The client should normally know about these things however a checking process at the local council will be a wise move.
  3. Boundary issues relating to the borders between adjacent properties should be checked.  That may require you to get a copy of the latest survey plans that apply to the area.  If any questions appear regards boundaries, then the client should get a survey check done as required.
  4. Property usage currently should comply with the existing tenancy or ownership.  Property usage will or should comply with the requirements set out in the local zoning planning regulations.
  5. Tenant lease issues can vary enormously from property to property and tenancy to tenancy.  This says that you should be comfortable in reading and interpreting lease documentation.  When in doubt see a good solicitor that understands the property type and the leasing process.
  6. Outgoings and other property operating expenses will vary from property to property, although they should compare on average to other properties of similar type and size.  This is where your local property knowledge is quite important in the listing phase.
  7. Improvements in the property should be checked for relevance to the target market, building code compliance, and existing property usage.  Look for any improvements that could require upgrade or refurbishment prior to the marketing process commencing.

This list can be expanded given the property location, the property type, and the improvements.  It is best to have a questioning approach to the listing process so you can get issues and hurdles out of the way prior to the marketing process.

Need more ideas in Commercial Real Estate today?  You can get them at our website http://www.commercial-realestate-training.com/