Given that you have a territory and property type to focus on, look at the indicators and look at the opportunities.
Given that things change so frequently throughout the year across sales, leasing, and property management, a good degree of brainstorming and business planning should occur regularly and specifically for your target markets and business territory.
Actions and Ideas
In this audio, John Highman talks about the importance of brainstorming your actions and your results. He gives you ideas relating to the essential facts to watch as some of the key performance indicators and categories of trending.
Improve your position as a broker or an agent through some simple direct and reliable brainstorming activities at least quarterly, and perhaps monthly. In that way, you can understand what is happening with time on market, enquiries, prices, and transaction activity.
You can get the audio here below, where John Highman talks about this essential business skill in commercial real estate brokerage today.
The idea of inspecting every property in your commercial real estate portfolio can be a bid daunting given that there are plenty of things to look at and investigate as part of the inspection. The greater the number of properties that you have to manage, the bigger the process of review and documentation. (NB – you can get our free commercial real estate course for brokers right here)
When you have lots of tenants in occupancy, the whole equation of inspection becomes more complex given that many tenants are in occupation and they all run different businesses. So the inspection process has to be comprehensive and records need to be kept. The property manager or the center manager has to implement the property inspection process regularly and in a detailed way.
In this audio program, John Highman talks about the routine inspection process that is all important in the commercial and retail properties under management.
Commercial property management remains an important part of the professional property services that brokers and agents offer.
Property managers can offer alternative strategies to improve property performance, net income, and occupancy. Their job is complex, specialized and valuable to investor clients. You can understand why the service is so valuable to a successful brokerage over time.
The commercial property management segment of the market can be quite lucrative from a brokerage perspective. The clients that you serve in that way require specialized skills and services over an extended period of time. The complexity of the property can involve strategies and activities across the tenancy mix, leasing, vacancy resolve, maintenance management, asset planning, and income performance. There are many things to do and many ways to approach the challenges that the client may face.
So the message here is that you can and should develop a significant property management portfolio in your real estate brokerage. Take the time to develop a list of clients and prospects who will need your services in management at some stage in the future. Develop a prospecting process to open the doors to management opportunity.
The best way to attract commercial real estate clients and those needing management services is to directly prospect the owners of the best buildings in the best locations. It is always preferable to manage a building with multiple tenants in occupancy and multiple levels of income generation.
The bigger buildings and those with a complex tenant mix require expert management help. They also require complex software management programs to administer the required controls on leasing, maintenance, tenant mix, and income optimisation.
So there are some distinct advantages here to be optimised. In this audio recording, John Highman talks about the opportunities of commercial real estate property management in brokerage today. See if you can use some of the tips that John talks about to open up your brokerage opportunities in this way.
In commercial real estate property management, procrastination can be a big issue or hurdle in getting the harder jobs done. Let’s face it, there are difficult things to do every day of the week in our industry. Have your people in the management team got the right knowledge, experience, and commitment?
Workload pressures in commercial property management are usually consistently high. Free time and spare time is a luxury if and when it occurs. Most days of the week are quite busy. Stress can also be a problem for some people.
What is the Focus?
The best commercial managers are the ones that get the work done first and foremost every day. They prioritize their time so that they are effective in the best possible ways. So what are the issues that put the pressure on? There are many pressures arising from separate categories such as:
So the best property managers know how to optimize their time and will usually do so efficiently and directly. Any inefficiencies in the job role will usually create problems with clients and property performance.
Any team leader in commercial property management should be careful to select the right people for the tasks and the portfolio under management. The team of people within the division should work to a system or plan to help them get the work done and to control the assets in the best possible way.
SOFTWARE: At the top of the list would have to be the selection and use of a specialized software program controlling property performance. There are many different programs available for the task, and some are better than others. Typically, a program will need to control rental monies in all categories, arrears management, tenant communication, lease administration, critical dates, and property maintenance. The best programs tend to be somewhat expensive, however they provide high levels of property control and reporting. If you are going to manage high quality assets for quality clients, then you will need such a program.
FILE ACCESS: Cloud based storage is always very useful. When the managers are out in the field meeting with tenants and landlords, cloud based storage can help when it comes to file access, reporting requirements, and all communications.
CLIENT ACCESS SERVICES: Develop a dedicated client portal for all client communications. All of the client reports can be stored online within a dedicated portal for VIP client access and communication.
TENANT COMMUNICATIONS: You can enhance tenant management through a special web site where any maintenance issues and communications are directed or first initiated. The website can retain all communications and redirect as required to the right people in a timely and efficient way. Like it or not, some of maintenance issues occur at the strangest of times, and you will need an effective communication process to handle those things.
MAINTENANCE PERSON: As the property management portfolio grows, there are benefits to be achieved by employing a specialist maintenance manager. The manager can oversee the day to day maintenance requirements and unexpected portfolio issues for all of the managers.
LEASE ADMINISTRATION: Appoint a year lease administration person to monitor the lease critical dates and upcoming lease changes and issues. The larger the portfolio, the more desirable, essential, and efficient you will find this position. A lease administrator will be a good addition to most property management portfolios.
TRUST ACCOUNTS AND FUNDS CONTROL: The handling of monies, rentals, arrears, and property performance will require an experienced accounting person understanding the issues of lease documentation, tenant management, and property law. There is high value here in choosing the right person for the role.
The commercial property management business is quite special in so many different ways and the same can be said for retail property management. From a portfolio of managed buildings, as an agent or broker you can generate many sales and leasing opportunities over time.
There is one specific thing to remember here. Property investors require specialized help in an ongoing way when it comes to optimizing property performance, improving the tenancy mix, maximizing cash flow, and serving both tenants and visitors to the property.
If you really understand property performance and how to enhance it, then that can be a good way for you to build your real estate business.
Are you the ‘Go to’ Property Manager?
Given that you should understand the local property market in a comprehensive way, you can be the best person to provide targeted solutions to the clients that you serve. Those solutions can be matched to the property, the tenancy mix, and the client. That’s how you grow a property management portfolio over time. Be specific and be real in the way in which you serve the commercial property and the client.
Show the client that you really have a grasp of the industry, the management process, and local tenants. There are some clever ways to do that.
Here are some other strategies to help you grow a property management portfolio:
Look at your location so that you understand where the best assets and buildings are located. When you manage, lease, and sell properties in the prime locations, your image and profile as a local agent will escalate quite quickly. Tell the local property market about your recent major appointments in management.
Find the better properties through deliberate assessment. Check out the properties for income potential, vacancy exposure, tenant popularity, and lease stability. You can learn a lot about particular properties by talking to the occupants, the landlord, and other businesses in the proximity.
Connect with the better landlords so that you can convert ongoing leads and transactions through well established relationships. The property owners locally will fall into different categories. Understand how you can serve individual property owners, corporations, public companies, small investors, and property trusts. In any town or city, there will be plenty of people in each category to connect and work with.
Use a professional software program for all of your property managements. It is a known fact that you cannot control and manage complex assets without using a significantly proven and well tested property management software program. When you have a number of tenants in a building there will be many active issues and things to control. The property management software needs to cover the bigger factors such lease documentation, rental cash flow, occupancy compliance, maintenance, budgeting, and financial performance. There is no way of managing a complex building without the right software to help you.
Integrate and assess your tenant lists so you know what is happening in a property and across a location. The tenants in a building will tell you a lot about the location and other businesses nearby. That market intelligence is valuable.
Improve property performance so that your services can be seen to be valuable in the bigger picture of property growth and change. When you are successful in turning around a difficult property, poor tenant mix, or refurbishment project, tell the local property people about that through articles, editorials, and social media.
Portfolio growth with any of your clients is a possibility. If you have some bigger clients in your portfolio, they are very likely to be candidates for alternative services such as project refurbishment, leasing, tenant relocations, and vacancy minimization. You can have a strategy for each.
Fees per management should be critically assessed so that you get the fees for the job involved. So many agents under quote to win a property management appointment. That is a recipe for disaster. Know every property for what it is and its demands, and then decide how much professional time you will need to devote to managing it on a weekly basis. Set your fees accordingly. It is easy to work out just how many hours you should be devoting to managing a property; from that point it is simply a matter of determining how much your time is worth.
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:
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.
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.
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.
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.
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.
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.
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.
In a commercial property today a landlord has to be fully briefed on lease and tenancy matters if property performance is to be optimised. The process of reporting to the landlord is a key part of the role of a commercial or retail property manager. The reports should be comprehensive and provided monthly together with the financials for the asset.
The aim of the lease and tenant report process should be to optimise the tenant mix and control the rental cash flow. The landlord for the property will have a plan and targets that impact rental, vacancies, tenant selection and refurbishments. That is why each property should have a property business plan that is established for the plans of the landlord and then regularly updated.
At the start of any asset management service, the property manager should interview the landlord to understand the factors that are important to property function and income. The reporting and control plan can then be established.
Here are some topics to incorporate into the landlord monthly report:
The income for the property will be of key focus to the landlord. The income will be impacted by the leases, and on that basis, the manager of the asset will need to understand each tenants lease comprehensively. Care needs to be taken with critical dates and income rental charges. In some cases you can find that the critical dates in the leases are based on dates where ‘time is of the essence’. In that case action is required by the selected dates.
Changes of rent charges will be relative to the lease and any agreements that the landlord and tenant have. Everything of that nature must be in writing. Good records will help you stay on top of rental changes and charges.
Outgoings recovery will be based on the occupied areas for each tenant. That recovery will have a relationship to the lease for each tenant. Some leases have limitations on the outgoings that can be recovered so care should be exercised in checking that information for any reconciliation of rental and tenant payments of outgoings.
Market rentals will change from time to time based on the area in which the property is located and the property type. On that basis the monthly report to the property owner should have some update on market rental trends and changes that could impact any upcoming market rent assessment in the property.
Lease expiries coming up should be tracked and recommendations be made early to the landlord so the vacancy downtime can be managed and minimised. In such situations it pays to work 12 months in advance so that problems of vacancy can be solved early.
The report to the landlord of a managed property should be seen as a tool of control and record. When it is done well it can help all parties involved with the property make the right decisions in a logical way. Want more information? Subscribe to our mailing list right here.