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

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

Owners should choose their managing agents wisely based on the experience and skill of the agents; no 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 commercial property management today are also the points that need to be closely monitored by both the owner and the real estate agent:

1. The vacancy factor within the property.
2. Well controlled construction expenses
3. Stability of the holding base
4. Well balanced holding mix
5. Rehabilitation and renovation plans to optimize the property

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

The vacancy factor in a commercial property should be minimized based on the owner’s future plans. The only time you would want a vacancy is when your property is due for renovation or remodeling.

vacancy factors

The best way to work with potential vacancies within the property is to closely monitor the existing tenant mix and existing leases. There is nothing wrong with renegotiating leases 12 months or two years before expiration or option capacity. Both the tenant and the owner will benefit in the process. A stable and well-performing tenant should be encouraged to remain in occupancy at a fair and reasonable rent. You can then eliminate the volatility of vacancy in the property’s cash flow.

Tenants today demand well controlled construction expenses as part of their cost of occupancy. Tenants expect the landlord to maintain reasonable levels of building performance but not to exceed average building operating expenses. High construction costs will drive tenants away from the property.

To achieve well-controlled construction expenses, it pays to have a construction budget and business plan that the owner approves and locks in before the start of a financial year. After the beginning of the fiscal year, the budget is checked each month for accuracy with respect to actual costs incurred.

Importantly, the expense budget is not excessive and is well timed with seasonal pressures on building performance. Well-controlled construction costs attract tenants to your property and provide stability for existing tenants in terms of mix of tenancy and occupancy.

Property Manager Role

In this current real estate market, the property manager must be very conscious of maintaining a strong and stable tenant base. Existing tenants with good performance are like gold in this market. As part of the process of working with existing tenants, the owner must consider reasonable rent levels that maintain occupancy and reduce the threat of vacancy.

Commercial property

Each multi-tenant property will have a tenancy mix that should be carefully considered. This is absolutely critical when it comes to commercial properties. The location of tenants within the tenant mix and in proximity to one another should be carefully based on the requirements of the area, the existing customer base, and the functionality of the building.

Rehabilitation and Renovation

At some point in the life cycle of the property, remodeling and renovation will become an issue. This requires planning and integration into the existing lease mix, lease expiration and owner investment plans. It is not unusual for renovation and remodeling strategies to be planned for four or five years, leading to the critical time window. This is where the experienced property manager acting on behalf of the owner can add real value to the planning process.