9 Helpful Tips for Commercial and Retail Property Management.
Category Services
In commercial and retail property management, there are plenty of things to look for and monitor in the local area. Recent property transactions will give indicators that impact property performance and investment.
Trends and patterns locally will help you see the changes in property returns and investment performance that will require adjustments. Strategies then come into play. The best managers of property understand the concepts of strategy and planning as part of the professional service that they provide to landlords.
Adjustments are required in property management
Property managers should adjust their business plans for all assets under management based on known trends and identified facts from a region, a property type, and a precinct. Forward thinking is important in providing a commercial and retail property management service.
So, what happens here with this idea? Adjustments within a managed property allow the investment to be positioned with optimized rents, returns, tenants, and renovation strategies.
Communication is also an important part of this process. Asset and property managers should regularly tell their clients (the landlords and investors) what is happening with leading investment indicators across the relevant property segments and the location; information is valuable as part of the professional property management service for landlords. That information can be merged into the monthly asset report and investment update.
Look for trends with leases and tenants
What can you look for? There are issues and indicators to watch with tenant requirements, property maintenance plans and costs, occupancy costs, vacancies, and leasing.
Here are the most important trends and patterns, and what you can do about them:
- Vacancy rates - trends with vacancies will change with a location or within a town or city. That is because of local economic sentiment in the business community, customer and population growth, and available finance sources. Watch the vacancy rates for the location and chart the trends. Older properties will suffer vacancies more than the newer properties and renovation requirements in the older properties may help in the planning process with vacancies.
- Retail sales - if you manage retail properties and particularly shopping centres in your town or city, watch for the quarterly release of retail sales figures. Read the newspapers as they predict sales and retail shopping trends. Sales in the retail sector relate back to tenant types, shopping center types or sizes and locations; sales will also ultimately impact the rents and occupancy costs that a tenant can pay. As the internet changes the shopping habits of customers, certain retailers are seeing big changes in sales. Some retail segments are slowing, and others are strengthening. Leasing and property managers should be open to those changes and refine shopping center tenant mix activities and strategies accordingly.
- Leasing enquiries - understand what tenants are looking for and what they are prepared to pay by way of rent and occupancy costs for quality premises in good locations. Drill down on the vacancy factors locally so you can see what the 'competition' factors may be doing to the different property types and the existing or upcoming vacancies.
- New property developments - the newer properties will shift the rents and the vacancy factors in a region. Look for the upcoming developments and predict how they could attract or change the tenant movement in the region.
- Tenant feedback - you will learn so much from talking to tenants locally. Merge the tenants and business owners in a building or a region into your 'feedback' tracking channels. Ask questions about business and occupancy requirements in zones, buildings, and precincts. That information will help with 'conditioning' landlords to current market conditions.
- Maintenance costs - there are two types of maintenance to watch and allow for in a managed property. That will be the maintenance that is 'planned' and 'unplanned'. Regular property maintenance and a capital works program will help with maintenance planning in the budget and business plan for the asset. Contractors and maintenance companies can be approached annually for their comments and predictions with property performance factors.
- Occupancy costs - tenants today are very aware of the gross occupancy costs as part of moving into a building with their business. They know about rent and the outgoings or property operational costs that evolve from a lease and a property. Importantly as a property manager in control, those costs should be average for a region and the property type. They should not be 'excessive', which would then deter any tenants from leasing vacancies, or drive existing tenants away from a property.
- Rental rates and lease types - local properties in a zone or precinct will have 'averages' that apply to rental and lease types. Know what they are and consider them in introducing a new tenant into a property and a vacancy.
- Business sentiment - the commercial and retail property market is driven largely by business sentiment, corporate success and or sales, and the local population stability and growth. The relationships are linked, so look for changes and trends in those indicators. Connect with business owners regularly and ask questions. Watch the local media to determine what local businesses are thinking, saying, and doing. Predict how it could change.
These are some of the most important trends and patterns to watch in commercial and retail property management.
Author: John Highman
