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.
To manage a shopping centre effectively and efficiently, the shopping centre manager needs to be knowledgeable but also time efficient. There are many pressures to balance as part of the property management process.
In an average working day, the following activities are some of the big items that will usually require attention on the part of the manager:
Collection of rental relative to the leases
Connecting with tenants regards day to day matters
Ensuring that the customers to the property receive the correct services and experiences
Marketing vacant tenancies within the property
Staying on top of the critical dates relative to the tenancy schedule and the existing leases.
Maintaining the property physically as to maintenance and essential services.
Balancing the tenancy mix with an affective a business plan and tenant retention plan
Reporting to the landlord on a regular basis regards income activity, expenditure activity, and rental arrears.
Marketing the property from a customer trade perspective to improve sales across the tenancy mix
Finding new tenants for the property based on the requirements of the mix and the upcoming vacancies.
So there are many things to do when it comes to managing a retail property. The larger the property, the more challenging the workload and the diversity.
It should be said that the larger shopping centres will usually have a team of people splitting the key issues of the property into different disciplines. When that happens, the cost of the staffing structure will be built back into the recoverable expenses for the property. It is quite normal for the centre management cost structure to be a recoverable item within the lease documentation.
So here are some strategies to help Retail Property managers stay on top of the workload and the challenges of the job.
Create check-lists for processes. You can have check-lists across leasing, maintenance, reporting, tenant mix, tenant contact, budgeting, and landlord contact. The same process can apply when it comes to property handover.
Start the day early, and get the difficult documentation and paperwork out of the way. The first 3 hours a day should be devoted to paperwork and processes.
Where ever possible, delegate key tasks to members of your team. A successful retail property will be built around the strengths of the team, and the professionalism of communication.
Document everything when it comes to tenant and landlord contact. Over time the notes and the event recording processes will support you in the case of any litigation or negotiation.
At the beginning of the week, hold a team meeting where you can cross reference critical issues across the property, within the tenancy mix, and with the landlord. Create an agenda for the process, so that you can stay on track with critical issues. Follow things through where complex issues apply or negotiations are continuing.
The income and expenditure activities within the property will be important in many different ways. Tenant occupancy, lease structures, and critical dates will all have an impact on cash flow. Understand all of those factors as part of providing a top service to your clients. Stay ahead of the critical dates and be prepared for the negotiations that follow.
A successful retail property is one that is managed effectively, efficiently, and correctly. Give due regard to occupant and customer safety, as well as the rules and regulations that apply to building codes and essential services.
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When you work in commercial property management it is very easy to suffer the effects of stress. They say that some stress is a good thing and that it helps us get the job done; the unfortunate fact of commercial property management is that stress can be relentless and continuous. Workloads are high most of the time. Here are some tips from our Newsletter.
So why are things like this? The reality is that commercial property managers are very busy most of the working week. If they do not handle work variety and pressures well, then they are likely to suffer in one form or another. In this industry you really do need to be organised and have a level of knowledge that supports workplace efficiency.
Far too many property managers are overloaded with too many buildings and tenants by agency principals that have little or no idea about the amount of work involved in the management service and process. Another problem in the industry is not charging sufficient fees for the work involved in managing buildings.
On any given day a property manager is likely to do many different things including:
Meet with tenants
Talk with landlords
Expenditure controls and management
Trust account monitoring
Remittance of landlord funds
Payment of accounts
Report on lease and tenant matters
Find new tenants
Inspect vacant tenancies with new tenants
Market vacant premises
Interpret lease situations for risk and response
Write several dozen emails and letters
Talk with contractors about maintenance matters
Arrange maintenance response to repair requirements
Look at competing properties under management for tenant changes and opportunity
So this list is deep and meaningful. There are many things in this list to keep a property manager fully occupied.
Given the large variety of things to do it is very important that they be good at time organisation and management. Organisation removes a lot of stress and pressure in the job.
So just how many hours should a manager work per day? To be realistic, the job is demanding and complex. A 10 hour working day is not unusual. That being said, you really do need to be diligent on the type of work that you do and build efficiencies into the system of the day. When you believe and feel that you are under control, everything else gets a lot easier.
Ultimately our job is to provide the landlords that we work for with relevant property control and focus. If you are graduating from residential property to commercial property, understand that the property shift does require a different approach to the property under management, the landlord, and the tenants. Relationships are more business-like. Decisions made are usually based on logic and the factors of income and expenditure.
In closing on this point it should be said that commercial or retail property management is a great career choice for those that want to work in the industry. It is just a matter of establishing the right time management systems and controls to get you through the working day efficiently and correctly. Enjoy your career in commercial property management.
In the commercial real estate industry it can be hard to establish a property management portfolio as part of your commercial real estate business. It is hard for the simple reason that most property owners see the change of manager or agency just too difficult to implement.
In simple terms the property owner or landlord wants to protect their cash flow and consequently will not disturb their tenant mix. Many a property owner will put up with a poor property management service to keep stability in their property. That being said, a poor property management service will eventually self-implode and the property will suffer.
If you want to win new property managements from clients that are using another agent, it is best to create the relationship with the client and stay in touch for the time that the property owner is ready to move.
So now let’s look at some other strategies to take matters forward and help you establish a good property management portfolio. The stability of fees and clients produced from the property management process will help you when the sales or leasing market becomes slower or more difficult.
Here are some ideas for you:
Sales activity will always be an opportunity to pitch for a property management appointment. This then says that every property you sell to a property investor is a great opportunity to present and pitch for the property management.
The sales activity of other agents will also be a good opportunity to pitch for a property management. If another local property is sold publically (such as at auction), it is quite easy to find out just who the buyer may be. Make the contact and see if they will take a proposal from you to manage the property.
Leasing activity will be a similar opportunity to pitch for the management of the property. If you served the client well in the leasing appointment, they should take a proposal from you to manage.
New property developments are great opportunities for management. Check out the upcoming developments regularly at the local planning office. Most property developers require a professional property manager to help them, simply for the aspect of perception. It helps them lease the property to new tenants; that being said you should also pitch for the leasing appointment.
Portfolio owners in your local area may own a number of properties. They may use a number of property managers, however they will have a preferred manager that stands out as ‘professional’ and of ‘high quality’. Get to know who these portfolio owners are and connect with them on a regular basis. Eventually they may let you pitch on some new management requirement.
The property management part of the industry is quite special and requires the right people. Do not employ ‘juniors’ for the process without having some other ‘experienced’ managers in the team. It is the experienced managers that can win the business given their market awareness and property management skills.
When you manage a lot of commercial or retail properties you will know how frustrating and diverse the issue of security can be with many different property types. Each property will have factors of security that should be managed and optimised. Every tenant has to integrate into the security plans and systems for a managed property.
There is a lot of difference in security systems and procedures that are utilized in retail, industrial, and office properties. On that basis you really do need to know each managed property very well when it comes to security needs and responses.
A well-managed and operating property will be a reflection of the good property management systems that are implemented on the property. Security is part of that. Here are some security concerns and aspects that could be considered as you manage your portfolio.
Fencing around the property should be reviewed for effectiveness. That will include any breaches, lighting issues, modification, and stability.
Many properties will have car parks that require special security considerations. Customers and tenants using the property should be provided with a secure car parking environment both in office hours and out of office hours. The location of the property will have some bearing on this car park issue. Do not forget to look at how the car park is used at different times of day.
Loading docks in the property will be accessed at special times and with differing types of vehicles. How is this done and what security concerns evolve from this?
The entrances and exit points to the property should be looked at. As part of that process consider the door ways and the exit points that are involved in emergency evacuations. It is likely that you will need expert consultants to help you with planning workplace health and safety issues as they apply to property use and access in times of safety or emergency events.
Lighting in a property will always be of concern. Lighting should be checked frequently to ensure that it does the job it is required to do. If the building is used after hours by customers or tenants, the lighting will need special consideration.
Guards and security patrols may be required in a managed property. It really depends on the property location and the tenant mix.
The age, design, and location will always impact the way that a property is used by the tenants and the customers. It should be noted that a retail property will usually have greater levels of security coverage and response to keep the property safe and secure for occupants and customers.
Security is a valid need in property performance and function, and on that basis should be structured into the outgoings costs recovery for the property.
When it comes to leasing commercial or retail real estate today, there is a distinct timeline to the process that should be optimised and driven by the commercial agent or realtor. Failure to drive the process can see the landlord or the tenant slow the entire process down. When the property market is tougher like that of today, a slower lease transaction is not a good outcome for any of the parties.
As a special note it is worthwhile observing that many a solicitor working on the part of the landlord or tenant will also be a source of slow action or response. Yes, I know solicitors are busy people, but the landlords lease document and transaction is really important.
So here is a timeline to develop and use in the marketing and leasing of commercial or retail property today. These are the main issues to consider in leasing, and you may be able to add to the list based on your location and property type.
Inspect the premises to be leased so you really know the features of the property and just how you will take people around the premises. A well-considered inspection process will help in negotiations and conversions from initial enquiry to the creation of lease.
Remove any hurdles or presentational issues in the property before the marketing starts. That may mean renovation and carpeting or similar upgrades.
Define the target market for the property to be leased so that you really capture the right people from your marketing efforts.
Establish a targeted marketing campaign to attract the right enquiry. As part of that process, choose the right factors that help you promote the property on the internet and in the newspapers. What features exist in the property that will help lease it?
Get a signboard on the property early in the marketing campaign to send the message to all the local business owners and property investors. When the signboard
goes up, take brochures to the local nearby businesses to spread the word about the property availability.
Qualify the tenants coming off the marketing efforts before you show them the property. The same rule applies when someone rings you off an advert in the newspaper or on the internet. Ask the questions; in many cases the call may not be genuine and could be competitors seeking information.
From a good property inspection, any lease negotiation should be evidenced and initiated in writing. This will be by way of a well-constructed letter of offer or lease agreement. Get the parties to show their intention on paper. As part of that process ensure that you get a good deposit commitment from the party making the offer. That should also include an agreement to provide a bond or band guarantee to the landlord as part of taking a lease from the tenant.
If agreement is reached between the parties to do a lease, then documents should be prepared quickly by the landlord’s solicitor. There should be a follow up process to ensure that the signing of the lease can occur quickly and effectively. Add to that the necessary paperwork and deposit or rental money and you have a complete cycle of lease.
When all factors of the lease agreement are correctly actioned by all parties, then and only then should the keys to the premises be made available to the tenant for fit out works to commence. As part of that, the landlord should be approached to obtain the approvals of the new fit out construction and configuration.
So there are a lot of things to do here. Be well prepared and use a checklist to the process. Your leases will then be more effective in both negotiation and completion.
When it comes to managing commercial and retail property, it is very important to optimise the income for the landlord. The income for the property should be looked at both individually with separate leases, and across the entire property and the tenancy mix.
At the beginning of every financial year, there should be some form of budget created for the tenancy mix and the potential property income. All of the leases currently existing will have rental strategies and rental increases to merge into the income budget. This income budget can be incorporated into the business plan for the property for the upcoming year. The best time to do the budget is in the months of April and May, just prior to the beginning of the financial year.
Here are some tips relating to income optimisation in commercial or retail property management:
Always allow for some measure and method of adjustment given that the property market is always changing in your local area. When you set a property income budget, it should be reviewed on a monthly and quarterly basis. Any established trends in the local area should be tracked and then be used as a form of rental adjustment for the landlord if those trends are firm and established.
The vacancy factor in your local area will change based on the supply and demand of available property. To monitor this process, you should track down the changes to the property development plan in the region. Look for any new developments that could have an impact on your property. Those new developments will have a timeline of construction and occupancy; it is likely that those developers will also have an allowance for rental incentive to attract tenants into their property. That incentive will have an impact on your property leasing strategies.
Market rentals will change from time to time. They do not always go upwards, and more commonly will stagnate or slightly reduce when the property market slows. To help you with the levels of market rental, you will need to understand the impact of incentive in the market rental structure as it exists today. If an incentive exists in any market rental negotiation, it creates what is called a face rental. That face rental will be discounted by any property valuer back to a level that is truly aligned to the effective rental and the market. Incentives create a false level of rental.
Business sentiment will change from time to time based on the local and regional economy. Some business segments and business types will be more active and successful than others. Track those business segments and monitor the needs for property change or occupancy. Some of those tenants could be relocated to your property if the opportunity arises.
Existing tenants in the property should be categorised into long-term tenants and short-term occupants. Some tenants will be more attractive to the landlord and the performance of the property over time. They may have a tenancy profile or business identity that encourages other tenants to the property. Reviewing the tenancy mix is called tenant retention. You can create a tenant retention plan as part of your business planning model.
Pressures of expansion and contraction will change from time to time with all other tenants in your tenancy mix. Look for those changes, and keep close to those issues through the business year to identify any pressures of change that may need to be accommodated in the building. It is better to have a tenant in your property that you understand and appreciate, than find a new one that is unproven and costly in occupancy changeover and leasing costs.
The income for a commercial or retail property can be enhanced when you fully understand all of the above factors and adjust the property accordingly. It is not unusual to adjust the business plan or for a property three or four times during the financial year.