Many commercial property investors often miss opportunities to optimise their portfolios by overlooking some very basic asset management fundamentals.
Anyone with financial capacity can become a commercial property investor, but few have the expertise or the time to adequately manage their assets, or alternatively find an experienced and knowledgeable commercial property management team that will deliver superior returns.
There are some simple things that can help boost commercial property returns, yet they’re often missed by do-it-yourself investors.
For the DIY investor, there is generally a reliance on the Property Manager to control the outgoings and billings to tenants. A good Property Manager should be capable of handling this efficiently, but sadly not all leases are interpreted correctly to ensure all outgoings are recovered.
Most commercial leases are prescriptive on the recovery of outgoings, and in certain property sectors legislation also dictates what is recoverable; however, they can often be open to interpretation and this needs to be properly considered. Experience goes a long way in interpreting the outgoings clause and detailed list of expenses you are able to charge.
Additionally, your Property Manager should have the right contacts to challenge the cost of service providers, to ensure you benefit from access to reduced rates negotiated by the size of the portfolio they manage. Part of the value brought in by the property management company is its relationships with contractors for things like maintenance and other building services. This relationship can ensure things like quality of work, reliability, and preferred pricing that saves money.
Options and Renewals
In a tenant’s market, you need to ensure the tenant is happy and wants to renew their tenancy or exercise their option. When approaching a lease expiry, it’s prudent to ensure that repairs and issues are resolved even faster and more efficiently than ever in order for the property to remain appealing.
Additionally, in a competitive market, agents and other owners could easily reach out to your tenants and offer alternative premises, particularly if those agents/owners are aware that a lease expiry is approaching.
It’s important to always be on the front foot and make contact with existing tenants at least six months prior to an option or lease expiry, and even more time is required if it falls under the Retail Shop Leases Act.
The Value of Quality Property Management
Effective property management companies actively monitor commercial markets and adjust rental rates and terms accordingly. An experienced property management team can also increase the operational efficiency of commercial property, increasing its overall profitability.
Ray White Commercial Bayside’s Property Management team currently handles the largest locally-based commercial management portfolio, with 225 properties and 600 tenancies throughout the Bayside and Redlands Coast. We encourage you to contact our award-winning team if you have any property management queries, or would like to discuss how we can assist with managing your commercial asset.