If you’re the owner of a commercial property and you’re not getting the results you want from your property management company, it may be because they don’t have the right skill set to optimize your asset.
Look at it this way. If you have heart disease, you wouldn’t go to an oncologist to treat it. It’s the same with different asset types – the right specialist can have a big impact on your results. Many owners think that all property managers have the same skills and training, and as a result those owners are underserved.
For example, property management companies will often assign strata managers to their rental portfolios. But the thinking required to optimize a commercial rental property – or an apartment building – is quite different from strata management. Typically, strata managers are strong administrators who are good at advising strata councils on how to follow guidelines.
Good commercial managers, however, are proactive, entrepreneurial thinkers who are skilled at helping a landlord run a business. They see properties as investments with growth potential, understand the full impact of leases, and have specific industry training. Those differences in mindset and skills are why we at Transpacific don’t assign strata managers to our commercial accounts, even though they may be very good at what they do.
Management with a business mindset
The focus of a commercial property manager is to drive the asset and revenues. When problems arise, an experienced manager will approach the issues with a business mindset.
As an example, at Transpacific we have had struggling retail tenants approach the landlord for a rent reduction, and our first step as managers has been to hire a consultant to review the store’s product mix, placement and turnover, and their financial statements. We see if we can help the tenant fix their business first, before asking the owner to reduce the rent.
Unbiased leasing advice
A commercial property manager is also able to analyse the impact of a proposed lease on your building. What you need is an unbiased, second opinion about your lease, by an expert who can review the financial and non-financial terms to project what they might mean for your future.
What looks like a good deal up front, isn’t always a good deal down the road. A good manager will advise on issues like the risk/return ratio of leasing to a local business for a higher rent, versus leasing to an established chain that will grind the landlord for fees and operating costs, but who is a skilled survivor in the market.
At lease renewal time, you need expert advice on what to include in your negotiations with specific tenants to avoid future problems, and where you can negotiate to their advantage. It’s information that your broker is unlikely to have, but an expert property manager should be able to provide.
Insight into opportunities and risk
Commercial managers receive training that keeps them up-to-date with industry thinking and trends. They attend events like the International Council of Shopping Centres (ICSC) conference to get industry insight into major retail players and their leasing requirements.
Some property management companies such as Transpacific will have a Certified Commercial Investment Member (CCIM) on staff – meaning that they have extra training in financial, market, and investment analysis to help their clients minimize risk and make more informed decisions.
Review your property manager’s experience
The property management industry is changing. Many residential strata managers are migrating into commercial property management due to the high burnout rate in their field. If you’re interested in maximizing your investment, it’s more important than ever to review your property manager’s background.
Every company will have a different approach, but at Transpacific, we serve our clients best by being specialists.
Transpacific Realty Advisors is a property management and real estate consulting company based in Burnaby, B.C. To learn more about Transpacific’s client-focused, specialist approach, visit www.transpacificrealty.com