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:
- The vacancy factor within the property
- Well controlled building outgoings
- Stability of tenancy base
- Well balanced tenancy mix
- 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 »