The management of a commercial building is a complex matter. It involves many different disciplines and systems. From a commercial real estate agency point of view, special skill sets are required to undertake the tasks involved in the job.
Invariably we find that if people are poorly chosen for the job the managed properties will suffer, as will the services provided to the landlord and the tenants. Errors in property management performance usually reflect in lower income results and the inability of the property to serve its occupants.
To manage a commercial or retail property today requires established systems and knowledge around factors that are complex and specialised. Here are some of the main ones:
It is necessary to completely understand the local property market. This involves the levels of rental, the types of rental, and the local business sentiment, the movement of businesses in and out of the area, details of competing properties, and the supply and demand of future lettable space.
The local planning approvals office will be processing new property developments and or zoning changes on a regular basis. These can have major impact on your individually managed property; on this basis the planning approvals and changes need to be monitored. New developments or redevelopments will shift the balance of property occupation and rental. They will also attract new tenants and perhaps your tenants away from your property.
The leases of a property are the basis of tenant occupation. Rental and expenditure are outlined in each lease. It is important to remember that every lease can and usually is different than any others in the same building. When a new lease commences with a new tenant in the building, it is essential to thoroughly review the lease and extract the key issues that emerge from the document. Attention also should be given to the critical dates in the leases such as rent reviews, option dates, lease expiry dates, and make good or renovation dates at the end of the lease term. Critical dates are just that, and can severely impact the property, the landlord, and tenant when overlooked.
The maintenance of the property is ongoing. An older property will create more problems and maintenance challenges. Importantly all maintenance should be budgeted at the beginning of the year so you can track the property performance.
Outgoings management is centred on the expenditure of the property. Every cost on the building and in running the property should be paid through an outgoing and expenditure payments system. Importantly the costs to run a building should be in parity with other buildings of the same type in the local area. If a building has higher outgoings, it will be harder to lease and sell when the time comes.
Lease Management involves the processing of each tenant lease and ensuring that the tenant complies with the lease conditions throughout its term. A property manager must be able to read and interpret leases, and then enforce the required terms when breaches occur. When in doubt see a good property lawyer.
Property reporting will be unique to the landlord and the property. It is up to the Property Manager to understand what is required here given the property type, the location, and the landlord targets.
So these are some of the main system requirements in managing commercial or retail property. Take time to learn the systems and take control of your managed property. The landlord and the tenants will benefit.