Why a Property Manager creates an Annual Budget and How Will This Help You?

Are you wondering why your chosen commercial property management company creates an annual budget? Creating this document is necessary because it shows you how much money a manager uses to run the real estate you live or rent a commercial space in. It provides you with a detailed breakdown of the costs of electricity, water, heating, cooling and others.

Why Is an Annual Budget Important to You?

An annual budget is not only important to the commercial property management company you hire, but it is also vital to you and the profitability of your real estate. It gives you insights that you could’ve missed when a manager doesn’t present you with one. It offers detailed information about the cash flow of the property and where the manager is allocating funds.

A clear presentation of where the money comes and goes will allow you to plan for future expenses and improvements. You get to set money aside for renovations such as re-paintings, re-floorings, strengthening of foundations, re-roofing and other improvements that attract new occupants and keep current ones happy.

It’s All in the Details

Keeping and attracting occupants is all about paying attention to details; the smallest things matter when it comes to managing property. With an annual budget on hand, you get to identify which parts of your real estate need more funds. This allows you to allocate more or reduce money on repairs or maintenance to keep each rented space profitable.

When you know how much money you need to spend on repairs, maintenance and renovations, and how much to set aside for emergencies, it is easier to manage property. This enables you to plan for the future of your real estate and the occupants in it.

The Best Managers are Meticulous

The best commercial property management companies are detail oriented and meticulous. They know the industry inside and out, and have insights that keep them ahead of the competition. Their managers have the experience and expertise to improve occupancies and keep your occupants happy throughout their stay. Managers who are meticulous can determine if a part of your property needs maintenance, repairs or replacements to improve them. They can see potential problems coming and find flexible solutions that turn these into opportunities for growth.

A property manager that creates an annual budget is a must for your property and tenants. This shows that they are detail oriented and have a concrete plan on how they will manage your real estate.

Elements to Manage Commercial Property Risks

When you invest, there is always risk involved. You weigh the conceivable problems and potential profitability for each decision you make. Investing in commercial property is just as risky as any other business endeavor and determining the probability of failure or success is not an exact science. Commercial property management companies all agree that there are certain strategies and elements that allow you to mitigate some of the risk you may face.

Evaluate the Neighbourhood

Commercial property management companies will tell you to avoid making an impulse purchase of real estate without evaluating its neighbourhood properly. The surrounding area will impact the value of the real estate you purchase, whether you are buying or selling.

Prospective tenants will consider the location of the property you lease. Some of the things they will look at include:

1.       Quality of schools nearby

2.       The crime rate of the neighbourhood

3.       Accessibility to the business district, shopping centers, places to see, restaurants and others

If the property is lacking with respect to meeting the needs of potential renters/occupants, you may have trouble filling vacancies.

You may have to spend more to purchase prime property that has a lot of potential and value. However, the investment you make should reward you in the future.

Look Out for Future Developments

The development of city districts, commercial centers and housing areas may positively or negatively affect the value of the property you want to purchase. These developments may attract people across several demographics. You may have bought real estate in a desirable area, but it may lose value due to the effects of an urban development project in the property’s area.

Market Knowledge

The real estate market is difficult to predict. Some people have a knack for making the right decisions, while others have to do extensive research to obtain information that will help them buy a property with good value. You must have knowledge of the market to succeed in a commercial property investment and reduce risk probabilities. It’s important to read the latest news from various sources and look out for any influx of buyers or queries about properties in the area you are interested in. Doing so will allow you to make an informed decision about buying a property.

Seek Professional Advice

To reduce some of the risk of investing, hire a commercial property management service provider. These professionals have the experience and expertise to walk you through the entire process of buying property and making the right business decision. They also go the extra mile by helping you manage the real estate you end up purchasing. They will advertise, list the property and fill vacancies for you.

By using this approach, you will reduce some of the risk that is possible when investing in commercial property. Real estate is a precarious industry. It’s best to seek and follow the advice industry experts to become successful.

Use Clauses & Exclusives – Know What They Mean

Finalizing a corporate lease in a multi-use facility such as a shopping mall or office building or complex entails more than deciding on the rent amount and length of tenancy. One area of importance to both property management people and the tenant are the ‘use clauses’ and ‘exclusive clauses’ within the lease. These clauses define the use of the space. Landlords prefer well-defined clauses whereas most tenants prefer clauses open to wide interpretation. The key to an acceptable lease is finding a balance whereby both the landlord and tenant feel their own interests are appreciated and safeguarded. 

‘Use clauses’ and ‘exclusive clauses’ set the limits for a tenant’s activities within their business rental space. The two clauses typically work together and come in many variations.

‘Use clauses’ tell a tenant what they can do, or what they can’t do. As well, these clauses can be broad in merely noting the type of business conducted, or they can be constricting in specifying the products or services allowed for sale. A permissive ‘use clause’ specifically lists what you can do, thus any services not listed are not allowed. For example, a postal outlet might want to expand its services to faxes and photocopying which seems like a logical progression. However, if those services are not listed, they’re off limits. A restrictive ‘use clause’ specifies what you cannot do. You may not be allowed to sell food in your business space. You can, however, sell books, or sportswear or anything that is not written down. In many cases you’ll find that a restrictive ‘use clause’ is connected to an exclusive ‘use clause’.

Not surprisingly, tenants prefer a broad use clause such as, ‘any lawful use’ or ‘any lawful retail use’. This openness allows them to update their business when necessary to keep up with an evolving marketplace.  

‘Exclusive use’ or ‘Exclusive’ clauses may apply to a specific geographic area and prevent a landlord from leasing to a new tenant who has the same business as an existing tenant. It can also ensure a landlord leases only to specific types of tenants. If you include an ‘exclusive clause’, make sure you also take into account reparation in case of a breach. This may include things like reduced rent, a lease term reduction, and a set amount of money for damages.

Who wants ‘exclusive clauses’? A major or ‘anchor’ tenant at a shopping mall wants to maintain exclusivity for their products or service. A group of dentists with a large practice may ask the landlord of their office complex to agree to rent only to compatible tenants like a denturist, a pharmacy, or a rental service for home care equipment.

When you’re using ‘use clauses’ or ‘exclusive clauses’, make sure that terms are clearly defined. For example, what exactly is meant by ‘groceries’? Does this just apply to food, or does this include paper products, soap, and diapers? What makes up a ‘sales area’? Is this the shelving space where products are displayed, or does it include the store aisles, and the check-out area? Taking the time to specify now, can save time and money for property management in a court case later.

Having a ‘use clause’ in a lease is no guarantee the tenant will abide by it. Businesses change - they may need to evolve or expand to keep up with changing customer demands. So it’s a good idea for property managers to regularly audit their tenants to make sure they’re compliant. A landlord during the due diligence period should review existing leases and ensure their new tenants are abiding by the terms that have been set out.

When it comes down to incorporating ‘use clause’s and ‘exclusive clauses’, commercial property management companies must consider many different issues in every lease. And to be honest, it’s not getting any easier. Today many businesses have expanded their products and services beyond the usual accepted parameters. Some grocery stores now have a pharmacy and a bank outlet as well as a wine kiosk. Corner drugstores sell coffee, food, stamps, and the latest electronics. It all lands on the shoulders of landlords and their lawyers, who must face the pressure this disturbing trend adds to the challenges of negotiating and drafting an acceptable and enforceable lease.

Unconventional Uses of Commercial Property Space

Times are tough in a lot of cities these days when it comes to keeping commercial space rented. There are vacant buildings, and blank store spaces in malls and shopping plazas, looking like so many empty promises. In every case, the emptiness impacts not only commercial property management, but also the neighborhood or shopping space these vacancies reside in – and not in a positive way.

The good news is that a lot of creative minds are finding new ways to utilize empty commercial space no matter where it is, or how big. Here are some innovative ideas on giving empty spaces new and profitable identities.

If you don’t mind putting in a bit of effort and money into renovation, building conversions are a good way to repurpose old warehouses. Section that space into separate offices or retail spaces, and rent to a number of different smaller clients, instead of one big client. One owner converted a distribution warehouse into a courthouse and parking garage. An old warehouse with refrigeration and freezer facilities is now used by a transport company which specializes in temperature-controlled time sensitive food transportation. In another case, a manufacturing plant found new life as a church and a school.

Turns out empty big box retail stores are a perfect location for expansions from community colleges or universities. The locations have good access to roads, plenty of parking, and can easily be changed into flexible classroom space.

Vocational schools fit well into shopping malls. Massage schools as well as make-up and hair dressing schools complement the shopping atmosphere. As well as paying the rent, there’s an influx of people coming in who who’ll end up frequenting the stores and food court.

Vacant mall spaces are also ideal for those not yet of school age. That’s why you’ll find daycares and preschool spaces popping up in local malls and shopping centers. Parents can pick up their children and conveniently get their shopping done in one trip.

Another trend sees government offices moving into shopping malls, mainly in the mall wings which are usually difficult spaces to rent. It’s ideal due to the availability of parking, public transportation, and the shopping space itself being a natural community focal point.

Medical clinics are finding homes in shopping centers, malls, and shopping plazas. Everything from emergency clinics to dialysis centers. Being in a retail location gives them visibility, provides easy access and they have all the parking spaces they need. If you’re considering this, make sure property management checks out the exclusion clauses of the space.

When long-term solutions are not readily available, inject some short-term marketing creativity to help pay the bills, brighten the space, and make these commercial spaces more enticing.

Pop-ups are becoming increasingly popular and are no longer limited to holiday sales. There are pop-up restaurants, and pop-up shops with every kind of product or service you can imagine. A successful online business may want a temporary tangible retail space for a special promotion –and end up as a viable tenant.

In between those short-term and long term tenants – fill that ugly gap with the help of local artists who’d love somewhere to display their art. It brightens up the space, generates interest, and may get someone thinking that this is not a bad place to locate a business! Whether or not you charge, it’s a much nicer venue for commercial property management people to show to a potential renter!

Long-term, short-term, temporary - it’s better to have someone in that retail space than to leave it bleak and empty. So, shake up those creative marketing juices of yours and try out some new ideas!

Must-Haves Every Successful Real Estate Property Owner Needs

‘Must-Haves’ in connection with commercial real estate owners usually refer to 3 things: attracting good business tenants, keeping those good business tenants, encouraging those good business tenants to stay for a long, long time – all the things a good commercial property management company does. What this translates into is making your investment in the commercial property pay off and in a relatively easy way. To enable this you need to put the pieces in place to find and keep good business tenants.

Amenities Employees Appreciate: Choose property close to amenities that workers value, such as an easy or convenient way to get to work. Buildings close to railway stations, bus routes, car parks are more attractive. If there are restaurants, stores, gyms or parks close by, it’s a major bonus. And don’t forget the amenities at the building itself that can drive satisfaction such as  parking for cars, bicycles, and e-vehicles, as well as clean, modern bathrooms and kitchens.

  

A Flexible Commercial Space: You want your space to appeal to a wide range of businesses, so the more flexible it is, the more attractive it will be to more people. If you can accommodate a segmented layout, or an open plan you can appeal to a broader market of business tenants. Don’t be afraid to ‘repurpose’ your building or parts of it. As a business tenant evolves, there’s a good chance you can rework the space to enable their changes and keep them on board for the long term you desire.

The Right Attraction Factors: What type of tenants do you want? Do you have what they want? If it’s retail, your facility must be in a high traffic area with lots of street frontage and adequate parking for employees and customers. Inside should be a supportive infrastructure including phone system, high speed internet, and data lines. On top of that should be modern amenities like energy-efficient heating and air conditioning and wall-to-wall carpeting. If your target tenants are warehouse or industrial, your property needs truck access and to be close to high capacity urban roads and/or railway freight interchanges. Inside, you’ll need high ceilings, concrete platforms for heavy loads, and suitable fire systems. Both types of tenants will also need adequate power supplies and appropriate security systems.

Good Looks – Because They Do Matter: How does your facility pan out in the looks department? When a prospective tenant stands outside the front of your building what is the first impression they receive? No business owner wants to rent a place their customers don’t want to enter. There are several things that can render a building or property unattractive to potential tenants: blotchy outer paint job, broken bricks or ugly architecture, little, if any, natural light, poor street-entry, not enough lobby space, drab, worn carpet – dirty faded walls. Change the ones you can asap!

Incorporated Mobility. More business owners ‘live’ on their phones, and you need to accommodate them. One key way to do this is with a mobile optimized website and a mobile optimized team. A ‘smart’ website can include: on-line applications with ways for potential tenants to upload documents from their phones; secure online payment options that work on mobile devices; the ability to send payments to property owners electronically, and post monthly statements to a portal to be easily accessed anywhere at any time; enable online maintenance requests – which can be immediately dispatched to the appropriate personnel and tracked online. Make your team, a ‘smart’ team, with leasing, maintenance, and property management all connected via mobile phone and tablets.

The Best Real Estate PropertyManagement Company: Let the experts handle the hard parts, the parts they’re experienced at, knowledgeable about, and effective and efficient at dealing with on a day-to-day basis. In the long run, a good commercial property management company will save you money, keep your property maintained, handle all tenant problems, and ensure your investment is paying off. You just monitor your monthly reports and bank account and enjoy your peace of mind.

Commercial properties provide a workspace rather than a living space – but this workspace involves people, who must be comfortable and productive. Whether your real estate property includes office buildings, strip malls, restaurants, warehouses or trucking companies – you must appeal to the people involved. Incorporate some or all of the ‘must-haves’ we’ve noted and you’ll go a long way toward attracting and keeping the right kind of long term business tenants you want.