How to Successfully Manage your Leased Commercial Property in Auckland
Effective Property Management is essential for the performance of your Commercial Property
The management of your property impacts everything from presentation, operation, compliance, attracting the right tenants, and ultimately the returns and growth of your asset. In this article we discuss effective property management strategies for your commercial portfolio in Auckland.
What is effective property management?
There are many ways to manage your commercial portfolio. You can engage a management company or self-manage your assets. Commercial Property Professionals (CPP) are property experts based in Auckland and they offer an option for landlords to manage their own assets with the support of an experienced professional property manager.
These are the most important aspects of effective commercial property management;
Take good care of your tenants - The most important aspect of your commercial portfolio are your tenants. Without them you have no cashflow and your asset value plummets. In a previous role, my company specialised in purchasing neglected properties with low occupancy rates and used effective management to turn the properties around. Regardless of the fact that tenants are so essential to the performance of your commercial assets, many property managers do not prioritise building relationships with those tenants. My blog on Tenant Retention goes into more detail on how to take care of your existing tenants.
Have careful leasing strategies - While some tenants stay at a property for 20 years or more, there will always be turnover. Managing this turnover with careful leasing strategies and a pro-active approach with your existing tenants can minimise your vacancy time. It can also maximise the opportunity of bringing new businesses to your property. My blog on vacancies gives more information on how to manage vacancies and implement good leasing strategies.
High levels of Maintenance and Presentation - Effective property management ensures a high level of presentation while keeping outgoings costs at a reasonable level. Attracting the right tenants to your property depends on the standards of presentation your manager maintains. My blog on how property management companies help investors attract quality tenants provides more information on this important aspect of property management.
Pro-Active Lease Management - One of the biggest management issues I have found during my career is in commercial properties where lease dates have been allowed to lapse. Landlords may think they are being kind to tenants by ignoring rent reviews however this usually backfires when they try to carry out a review after 4 or 6 years have passed. The large jump in the rent is normally puts pressure on the tenants cashflow and this can also adversely affect your relationship with your tenants. If your tenant requests a rent holiday or reduction, or would like some work done to their unit, it is also important to check their lease and discuss an early renewal or extension if that benefits your strategy for the property.
CP Pro Tip: Commercial Properties with a high level of vacancy can be a great investment if you use effective property management to help turn the property around.
Strong Management is attractive to quality tenants
Tips for Successful Commercial Property Management in Auckland
Successful property management is not actually any more difficult than poor or ineffective property management. If your property manager does not manage your property well, they create more issues and actually make more work for themselves. Here are my top tips for successful property management.
Be Pro-Active
Be pro-active with everything. Maintenance, lease dates, rental arrears, parking and anything else that effects your property. Visit the property often and talk to your tenants. You will be surprised what you will learn. Be aware of any council or Auckland Transport plans that might affect your property and get involved with consultation if your property will be adversely effected by their plans. Join your local business association so you can stay abreast of issues effecting your area.
Have a Strategy for each Commercial Property in your Portfolio
Plan ahead. Know what direction you are taking the property and work towards it. Have a solid leasing strategy so that you can attract the right tenants to your property. Manage your WALTS to support your strategy and line up lease dates if you have development in mind. If you are planning on selling the property, keep an eye on the market and ensure you maximise your leases to achieve the best value possible when you do decide to sell.
Fail to Plan, Plan to Fail.
Don’t Ignore Rental Arrears
Collecting rent payments is often neglected by property managers, but the more you neglect your rental arrears, the bigger the problem gets. These strategies have worked well for me when managing rental arrears.
Don’t just rely on your system generated arrears emails. Some people respond better to a phone call or visit rather than an email or text. Try different strategies until you find what is most effective for each tenant.
Track arrears closely. You should be looking at arrears reports weekly, not just at the end of the month.
Talk to the tenants who are paying late and find out what the problem is. Having rental arrears is your first warning sign that something is wrong with your tenants business. If you want to get ahead of any potential business failures or problems, this is the best place to start.
When collecting rent, always keep it professional. You want your tenants to feel like they are able to talk to you when their business is struggling, not hide from you.
View missed or late rent or outgoings payments as an opportunity to contact your tenants and see how their business is going and you will find that your arrears levels stay low and you are more aware of what is happening in your tenants business.
Screen your Prospective Tenants Carefully
You are better to wait for a good tenant than to lease to the first tenant that comes along. Many property managers do not carefully screen their tenants and this can lead to serious problems down the track. Check prospective tenants financials, previous experience and any other specific relevant details before offering them a lease.
CP Pro Tip: Property Managers should always meet with the tenant in person before approving lease assignments or new leases. This helps establish rapport and offers an opportunity to discuss any questions they may have.
Build Strong Relationships
Having strong relationships with your tenants and contractors makes a property managers job so much easier. Take every opportunity to meet with your tenants. Visit your sites often, and be available and responsive. Having great relationships with your contractors and paying them on time means that they will prioritise your jobs when you need them to. It will also make your property management role much more enjoyable.
Be the friendly face of your property
I hope these tips help enhance the management of your commercial portfolio. If you are interested in hearing how CPP’s Property Management service can help you implements some of these strategies, email me today. My initial consultation is always free.
Regards,
Kirstin
