Archive for category Refurbishment and Renovation

The Pros and Cons of a Career in Commercial or Retail Property Management

There is no doubt that the career of commercial or retail property management is extremely rewarding or challenging. The diversity of the job however requires a certain type of person; it is very much a career that is quite specialised and can take you to great heights in portfolio management. Success in the industry is a commitment to excellence in all that you do.

On the pro side, a career can bring you some of the following:

  1. Recognition as a specialist in managing property of a particular type. The best property managers focus on either office, industrial, or retail property. They develop systems to optimise the property performance in each case.
  2. As the success of the manager grows, landlord recognition and interaction becomes greater. The property manager is of high value to the landlord when they can bring strategic comments and plans to the future of the property.
  3. Corporate tenants like to deal with experienced and qualified property managers. These tenants tend to be very demanding from and occupancy point of view and can stretch the bounds of the terms of a lease. This is where the property manager provides expert opinion and controls. They take action when something is being incorrectly done or could expose the landlord to greater levels of risk and volatility.
  4. When a property manager brings significant skill to their job, it is quite common for the buildings that they manage to be ever more complex and valuable.

These four points would indicate that significant successes are possible for a property manager should they choose to specialise and improve their skill. Make no mistake, the industry is very demanding and excellence is in short supply when it comes to property managers. Choose to be the best in the industry, and the landlords will find you.

On the cons side, there are a few hurdles to be aware of and prevent:

  1. The management of property can be stressful and time intense. You will work long hours. This says that the managers should take extreme care in controlling the working day so that the key issues are well under control and handled in a timely way.
  2. There is a large and significant variation in skills required to do the job successfully. They will include financial, building maintenance, lease documentation, tenant negotiation, marketing, building structure, financial analysis, computer skills, engineering, just to name a few. This can be a scary list, so when expertise is in short supply it pays to approach other experts who can help you.
  3. Levels of documentary controls are high given that you work with many leases, occupancy situations, maintenance activity, tenant negotiations, and landlord instructions. Diligence in documentation is the only way to keep this under control. Read the rest of this entry »

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Pain Points in Managing Commercial Property

In this current property market, the management of commercial property is becoming more significant and important than ever before. When a property is well managed, the impact of property pain on the landlord becomes less.

In most circumstances a well selected real estate agent that is experienced in the type of commercial property to be managed, is best placed to balance the trends of the local property market into the management and leasing requirements of the property.

Landlords should choose their managing agents well based on the agents experience and skill; not low management fees. A poorly chosen property manager can destroy the financial and physical performance of a property in a very short period of time.

The pain points in managing commercial property today are also the points that need to be closely monitored by both the landlord and the real estate agent:

  1. The vacancy factor within the property
  2. Well controlled building outgoings
  3. Stability of tenancy base
  4. Well balanced tenancy mix
  5. Refurbishment and renovation plans to optimise the property

In dealing with these issues, the following should be said.

The vacancy factor in a commercial property has to be minimised based on the future plans of the landlord. The only time you would want a vacancy, is when their property is due for renovation or redevelopment.

Vacancy Factors

The best way to work with potential vacancies within the property is to closely monitor the existing tenant mix and the existing leases. There is nothing wrong with renegotiating leases 12 months or two years out from the expiry or option capability. Both the tenant and the landlord will benefit in the process. A stable and well performing tenant should be encouraged to remain in occupancy at a fair and reasonable rental. You can then remove the volatility of the vacancy on the property cash flow.

Well controlled building outgoings are demanded by tenants today as part of their occupancy cost. Tenants expect the landlord to maintain sensible levels of building performance yet not exceeding the averages of building operational expenditure. High building outgoings will drive tenants away from the property. Read the rest of this entry »

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