When it comes to managing commercial property today, there is a huge difference in the services and skills of the property managers available. Unfortunately many landlords choose property managers based on fee. Given the high value of commercial and retail property, this can be a very bad move and degrade the performance of the property over the long term.
Low fees typically mean poor management processes, lower net income, and higher vacancy factors. You get what you pay for today in management services.
Commercial Real Estate Agents that provide low fee alternatives to attract new management appointments usually do one or more of the following to compensate for the low fee:
Employ inexperienced staff to manage property that deserves better
Employ junior staff to do the job that should be done by more experience people
The agency principal has little if any idea about commercial and retail property management systems
Have not employed specialized people to take on facilities and maintenance issues
Load the property managers with far too many properties and tenants for the job to be done correctly
Do not give true and accurate service at month end, hence providing unchecked or inaccurate income, expenditure, lease, maintenance, and budget reports.
Have accounting and lease management systems that are not optimized for the special property type.
Have little in the way of emergency response systems for maintenance failure out of hours
Have little or no professional plan to optimize lease occupancy and lower the vacancy threat for the landlords that they act for
When it comes to choosing a commercial or retail property manager, the landlord should give due regard to the following:
The experience of the individual property manager with the property type concerned. Meet with the potential property manager to ascertain what experience they have with the property type.
The financial control systems of the property management office in handling income, expenditure, tenant leases, and rental negotiations. There are many computer based systems for this. Importantly the system has to match the needs of the landlord.
The knowledge and experience that the office has of the managed property type will be critical. Does the office have leasing support teams to back up the managements with a dedicated leasing service?
The history of the office and its management staff in providing proactive strategies and solutions to complex lease challenges and vacancy factors should be explored.
Experience in optimising tenant mix matters and choices should not be forgotten. The income of a property has to be protected and set to the plans of the landlord.
Managing commercial property is not an experiment. Landlords deserve the best managers providing the best service; on that basis a fair and reasonable management fee should be paid.
The best time to pick up new managements and landlords is at the time of property purchase. A proactive Commercial Property Agent can do this easily and grow the income opportunity from new managements over time.