Staff Frustrations in Commercial Property Management Today

woman wrestling with cables
Choose the right commercial property managers

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:

  1. Manage the tenants in the property to the rules of the leases and the occupancy codes applicable to the property and the location
  2. Maximise the income for the property given the local property market, the leases, and the focus of the landlord
  3. Control the expenditure of the property given the requirements of each lease and the authorities of the landlord
  4. Maintain the property to the targets of the client, the budget and the pressures of occupancy
  5. Integrate the property into the community and the business segments that it serves.
  6. 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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Commercial Property Agents – How to Do a Lease Audit in Property Management Handovers

High rise office buildings
Always do a lease audit at property handover

When you take on a new property management listing, one of the key things that must be done very soon is a lease audit.  Without a lease audit you really do not know what you have in the tenant mix and how the property is performing with the existing tenants.  Here is an article from our bulletin for Commercial Agents.

The audit process will help you understand big and important issues including the following:

  • Tenants by name  and location
  • Rental conditions from the lease
  • Upcoming options and rent reviews
  • Arrears and current rent charges
  • Risk and Liability that can apply to each lease
  • Tenant and Landlord covenants that must be complied with
  • Special terms and conditions in the leases that could apply to the tenant or the landlord
  • Permitted use provisions of the premises, etc

So, the audit process will tell you a lot about the property and its current status.  Checking leases against the events that are applicable to the tenants now will let you know if all lease matters are up to date.

It is interesting to note that far too many property managers will accept the detail of a tenancy schedule without checking the leases for each tenant.   It is so common to find that tenancy schedules are not up to date or are incorrect.  That then is a recipe for disaster and errors with the property.

Here are some tips to do a lease audit with your new commercial or retail property management appointments.  You can add to the list so you create a checklist that can be used over and over as you bring in new properties to manage.

  1. Inspect the property so you understand what it looks like and just where everything is.
  2. Make a list of tenants as you inspect the property, so you can cross reference that information later from the leases.
  3. Get plans and drawings of the property that show you the layout of the common areas and the leased areas.
  4. Check out the boundaries of the property so you know what other businesses or property owners are adjacent.  Look for any issues of conflict in boundaries and property usage.
  5. Go through all the leases with reference to the information that you gained in your property inspection.
  6. Create your list of information from the lease review, with particular attention to rent reviews, options, end of lease dates, tenant names, locations, and rentals paid.
  7. Get an up to date list of rent payments for each tenant.
  8. Check for arrears with each tenant.
  9. Split the rent charges into rental (all rents for the premises), outgoings, recoverable charges, and any other miscellaneous charges.
  10. Look for supplementary information and documents of occupation such as naming rights, car parking, common area usage, storage, and other charges.

All of this information must be cross referenced against what you see in the property, the rent invoices today, the discussions that you have with the tenants, and the handover information that you may have been given by the previous property manager or landlord.

If you need more ideas and tips to help your commercial real estate activites, join our community right here.

Traps in Leasing Commercial Property and How to Avoid Them

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Leasing commercial property needs strategy and control.

When you lease commercial property you want things to run smoothly so you can get the tenant into the premises as soon as possible and have the rental and income flowing.  Now all that is just fine, but the leasing process is quite complex and a few unexpected problems usually arise as you proceed through the leasing stages.   Here are some tips from our bulletin for Commercial Real Estate Agents.

It is best for the property manager or landlord to develop a checklist to help lease negotiations and keep matters under control.  In a complex property the lease matters are numerous and can slow down the final agreements and access to the premises.  That being said, there are no short cuts when it comes to leasing, and the best lease agreement is one that has been well controlled from the start.  Never let a tenant have access to the premises until they have fully complied with the terms of the lease agreement and lease.

To help your checklist creation and process for the leasing of the premises here are some things to consider.

  1. Get the lease document created as quickly as possible.  The lease should reflect the essential main terms of agreement between the parties that arose in the negotiations.  The landlord’s solicitor should prepare the lease in accordance with the factors of the property and the instructions of the landlord when it comes to standard leases for the property.  Some solicitors can take an unacceptable length of time to create a lease document to be signed by the parties.  A lease document should be created and presented to the parties for signature within 48 hours of the initial lease agreement.  From that point onwards the discussions and debate between the parties can slow things down, so stay on top of all issues and pressure the parties to keep things moving.
  2. The lease document should always be signed, deposit paid, rent paid, and guarantees lodged, before any premises access is given to the tenant.  Everything from the initial lease agreement should have been satisfied and signed off before keys are given to the tenant.
  3. Fit out plans, drawings, and approvals are required before any tenant fit out works commence.  The approvals for such works should have been correctly obtained from the landlord and the local building regulatory authority.
  4. The finishes and types of materials to be used in the fit out should be approved by the landlord so that the building maintains a level of consistency in presentation.
  5. Security systems and locks on the premises should be maintained to the building master key system.  In this way the landlord and the property manager can access the premises in times of emergency or when and if a lease default occurs.
  6. The permitted use of the premises should be in accordance with the planning regulations and the lease as signed by all parties.

The process of putting a tenant into a property is complex, and every step of the process should be carefully managed.  Keep notes on any discussions and actions taken by all parties.

If you need some more tips on leasing for commercial and retail real estate agents you can get our bulletin here.

Shopping Centre Shootings Require Risk Management Controls

shopping centre people
Protect your Retail Tenants and Shoppers with a Emergency Evacuation Process or Crisis Control Plan

As recently as the last 24 hours I have read and seen reported a shopping centre shooting where two people were injured.  Fortunately both people will recover from their injuries, but the event brings into context the need for retail centre managers to have a crisis management plan for their managed properties.   Here is a note I sent out on our newsletter.

As it happens, I know the particular shopping centre in question quite well, and can relate to the problems that evolve in the event.  The shooting happened on a Saturday afternoon around 2pm when the Robina Town Shopping Centre was at its busiest.  Families and children were in close proximity to the event.  It was a wet day outside and raining spasmodically; families in the area headed to the shopping centre for ‘retail therapy’ and fun.

The Robina Shopping Centre is very large regional centre in the Gold Coast Australia with well over 200 specialty shops and 4 anchor tenants.  The retailers in the tenant mix are of high quality and the rents paid in the property are significant given the status and quality of the property. Apparently one person hit by a bullet was the target of the shooting, and another person was an innocent bystander hit by a stray bullet.

This is a Centre Managers worst nightmare.   In the property at the time there were thousands of people; tenants, customers, contractors, families, tourists, and children.  The malls were busy and it was peak shopping time. All of this brings home the key fact that a shopping centre is a challenging place to manage.  You have all types of people coming and going through the property all day long.  Security, control, and response are critical factors of shopping centre performance when something goes wrong.

If you are the property manager for a retail centre (large or small), it is up to you to control events and get the emergency authorities to the problem as soon as possible.  When the authorities arrive on site, they take control, but you and your management team are the first on the scene or are the first to be aware of the problem.  The tenants and visitors to the property look to you for help and guidance.

This problem could have happened in your retail property (large or small).  How would you have handled it?  Could you have handled it?

Here are some questions for you to consider in your managed shopping centre or retail property:

1. Do you have a crisis management plan that all tenants, and staff can implement as soon as a crisis is identified?

2. Has your insurance company checked and approved your crisis management plan?  What do they want of you when something of a risk nature happens in the property?

3. Have you involved the local emergency services in overseeing your crisis management plan?  How will you contact the emergency services?  Who will do that?

4. Exactly what happens when people are injured and how can you get a response underway to protect the public and the tenants?

5. What records of events do you have now and what is your record keeping process with shopping centre injuries, threats, robberies, death, and security issues?

6. Do tenants know what to do when emergency or risk events happen?

7. What does the landlord want you to do?  What does the landlord want to know?

8. How will you control the tenants?

9. How will you help the customers in the property?

10. Where will you be and where will you go when things happen?  Do your staff know how to find you?

Every situation has to be catered for as a potential problem within your property.  Some of the big ones that come to mind are explosions, earthquake, fire, floods, slips and falls, injury, missing people, gas, death, and emergency evacuations.  Some tenants will also bring you factors of risk that also have to be catered for (such as banks with the threat of robbery).

If you manage a retail property with customers, tenants, contractors, and interaction with the community, you have to expect major problems and unexpected events.  Preparation and process are critical factors when it comes to responses from Shopping Centre staff at the time of crisis.  There are some more ideas for commercial and retail property managers on our website

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