Posted on July 19, 2012
In commercial real estate agency, it is common to be preparing a property management proposal to submit to the property owner following a sale or a lease. This is the most opportune time to seek a new management appointment.
The structure of a commercial property management proposal will be designed for the property, the landlord, and the general precinct location. Importantly the proposal should tap into the strategies and ideas that help the property owner to achieve better property performance through sensible strategies of lease performance, income, and expenditure control.
Here are some key ideas to help structure your proposal for the management of the property. You can add your specific agency recommendations around the model.
- An executive summary should always be placed at the front of the document. This allows the client to quickly grasp of the main strategies and outcomes that you can see as part of the management strategy.
- Summarise the property physically together with locational elements that impact tenancy mix or occupancy. This provides clarity as to how you see the property and how it can be managed.
- The lease and tenant mix management processes should be detailed within a section of the proposal. Care must also be taken in reviewing the tenancy schedule first to ensure that the leases are totally understood and accurately reflected in your recommendations. You should also be looking for occupancy matters that need to be immediately addressed after management handover; such as rent reviews, options, lease expiries, make good processes, and arrears.
- The daily maintenance and function of the property will require a specific management processes. The tenants, customers, and landlord each have a different relationship to the performance of the property physically; they all have needs in the management of the property. It is wise to review the special maintenance demands of the property and to make specific recommendations regards maintenance controls, plant and machinery management, and risk management that applies to property function. As part of this it may be necessary to talk to the contractors that supply specialised maintenance services to the plant and equipment.
- The property manager reporting processes to the landlord will be part of the property management service. Detail the relevant reporting systems that you can adopt and implement. The landlord may have other particular special reporting requirements to incorporate into the program.
- The financial reports to be provided to the landlord can be split into examples at the back of the document; this allows the landlord to see the comprehensive nature of your reports and controls. Normally the reports will include income analysis, expenditure analysis, budget status report, arrears report, tenancy mix strategy, tenancy schedule, and lease management report.
- The management of maintenance contractors associated with the essential services and major plant and equipment should be itemised. The major plant and equipment provides functionality to the property and tenant occupancy comfort. Any concerns that you may have here should be identified in the proposal.
- If the subject property is complex and contains a number of tenancies, it is likely that a business plan including a tenant mix strategy should be compiled. This helps the landlord to see just how you will implement controls across the tenant mix.
- Summarise the relevant personnel to be applied to the management of the property. In a large office or retail property the list is lengthy; it can include property manager, lease manager, engineer or maintenance manager, tenant services manager, and onsite management staff.
- The fees to be charged to manage the property should be itemised. In some cases they will be split into base management fee, on site management office costs, and the on-site management staff.
Within each of these main categories of your proposal, you will have recommendations and ideas regard particular things that should be immediately implemented in the property.
The property management proposal is prepared on the basis of relevance to the property and the needs of the landlord; not on the relevance of your agency to manage it (you will prove that anyway if your proposal is of high quality).
Posted on January 23, 2012
The property management handover is a base by which you as the agent or property manager can implement sound property management processes and investigations. This is quite important considering that the property has been managed by others up until the handover and mistakes may or are quite likely to have been made.
Accuracy in the handover is therefore critical to stabilizing the property for the future.
Some of the biggest problems that are seen in the handover review are:
- Inaccurate tenancy schedules and tenant detail
- Lost lease or tenancy documentation
- Poorly maintained income and expenditure history of the property
- Incomplete arrears reports and strategy
- Missing landlords reports and communications
The process of property management handover is the best time to set the foundations for new property performance. Depending on the complexity of the property, a handover process can take anywhere from a few hours to a week to complete.
All documents provided and taken as part of the handover should be checked by you as the new property manager and signed for. This fact will protect you later if disagreements occur regards the things that were provided. Any comments or commitments from others in the process should be evidenced in email or written form.
There are some key processes that can be adopted in and through the handover. They are:
- Leases should be reviewed and read so that you know they are the current documents for each tenancy
- Special rights of property use such as naming rights, car parking usage, common area licences, storage, and after hours use, should be documented.
- Maintenance contracts and contractors details should be supplied. Any current ongoing maintenance jobs should be identified.
- Essential services documentation and contracts should be sourced. Check all elements of risk management that are associated with the essential services in the property.
- Tenant contact details should be checked and referenced against all the leases.
- Tenancy schedules should be checked against all the leases and licences.
- Income and expenditure activity and history should be provided for a number of years so you know what the property has been doing financially.
- Current budget detail for the property should be sourced in case it needs to be cross referenced to tenant outgoings payments, rent invoices, and arrears to be paid.
- In the case of retail property you may need to get the turnover records of all the tenants, and the customer visitation history.
You can add to this list subject to the function and demands of the property. When the handover is correctly and efficiently handled it makes your future management processes much easier.
Posted on October 29, 2011
To be successful in commercial property management you should spend time in setting about knowing the different property types you will be managing and the ways to help them perform as an investment. Most particularly that is the differences in industrial, office, and retail property. They all have special elements of function and control. That is:
Ultimately in working in commercial property management you have to keep the tenants and the landlord happy; a fully functioning well maintained and leased investment is the way to achieve that. Make no mistake here when considering a career in commercial property management; it is perhaps the most challenging and busy part of the property industry. It is very specialised and the skill base is diverse.
So what can you do to help fast track your success and skill as a commercial property manager? This checklist will provide you with some ideas and help you on the path.
- Get to know the ways to lease premises and the documents that support the process. It will be wise to talk to experienced property managers and solicitors to research the real facts and processes.
- Know how to market lease vacancies to the local tenants. That will normally include internet, newspaper, direct marketing, personal contact and signboards.
- Understand the differences in rents both in type (gross and net) and value (per unit of area measurement) as it relates to the various property types in your local precinct.
- Review the types of income that can be achieved from a lease to a tenant. That will include rent, outgoings to be recovered, car parking rents, storage rents, signage rents, and licenced areas.
- See what services and amenities tenants require leasing premises locally. Are those services and amenities readily available in most properties locally?
- What is the supply and demand for more space to lease in the local area?
- Inspect some existing lease documents and become familiar with reading them and extracting key lease matters. That would be things such as rent payments, rent reviews, option terms, arrears actions, default provisions, and incentive payments or bonuses to tenants.
- Understand how to interpret property income and expenditure, as well as the logic behind property budgets and business plans.
- Review the methods of property income analysis as it applies to property value.
- Know how to price a property for sale using a number of different processes such as summation, capitalisation, comparable, and internal rate of return.
- Get to know the maintenance processes that would apply to running commercial properties of various types, together with tendering and contract processes to be used on plant and equipment that allow the property to function successfully.
As can be seen from the list above, commercial property management is specialised. It is not hard but it is different. Through careful study and the gaining of knowledge, your career in commercial property management can be successful.