In this section we discuss some of the benefits of appointing a qualified property manager for the administration of a commercial building or retail complex rather than the owner endeavouring to handle this function.
- Distance. The first and most obvious benefit of a managing agent is the ability of the landlord to distance himself from the issues that will arise with the tenants, and thereby free himself to focus on his own business. It can become quite time consuming if there is no intermediary, and this is even more critical if the landlord is himself a tenant of the property.
- Finances. Competent financial planning and control is paramount in order for the landlord to realize the full potential of such an investment, and many investors are not specialists in this field. This fact can result in disappointing returns. Accurate budgeting and adherence to such will permit the property to meet financial expectations.
- Leasing Structure. A professional managing agent can assist in assessing the best leasing arrangement for your unique circumstances. One increasingly common leasing structure is a triple net lease where the lessee pays rent to the lessor, as well as all taxes, insurance, and maintenance expenses that arise from the use of the property (CAM charges). Although rents are usually lower in triple net leases than other forms of lease agreements, this form of lease agreement is more desirable for real estate investors, since the expenses incurred by the investor are dramatically decreased due to the transfer of financial responsibilities on the property from the investor/lessor to the lessee. The CAM is adjusted annually based on the actual expenditure of the previous year, and projected expenses for the coming year.
- Maintenance. There is sometimes a misunderstanding on the part of the landlord as to the immediate and ongoing service/ maintenance requirements of new equipment. This leads to poor up-keep, major repairs within a few years and potential early replacement. The constant breakdown of equipment will also act as a catalyst for avoidance by both potential tenants and customers. A qualified property manager will be aware of the maintenance schedule required for all plant and equipment, in order to be pro-active rather than re-active in maintaining the property as a whole.
- Communication. Tenants require that they have easy access to the building manager in order to report any problems that they may be experiencing. Depending on the age and complexity of the building, and the number of tenants, this in itself is a time consuming task. Equally, the manager needs to keep the tenants informed of all matters that will in any way affect their operations, or cause a change in the normal course of business. A property manager can facilitate this two-way communication, making for a successful property with satisfied tenants
- Security. A property manager is experienced in identifying the relevant security needs of a commercial property. In today’s world, the security of an office building and its tenants is acknowledged as a high priority on the part of potential lessees. Buildings should be constructed in such a way as to prevent access without the permission of the security guard. This is not the case in many local office structures, and although to date this has not caused any major threats, this fact should be given high priority in the design of the reception area. In a retail complex, the security and emergency responses are substantially more difficult and dangerous to administer. There is a higher level of potential theft on a daily basis. Tenants will demand that security personnel with whom they have a high level of confidence adequately staff the facility. Failure in this area will result in loss of tenants, and this will have a domino effect throughout the complex.
- Emergency. The property manager needs to be familiar with, and have in place, fire and emergency drills for vacating the building, and there should be an annual practice of such an event. Many tenants resent the interruption of their workday for a practice run, but this should not deter the manager, as in a real scenario, the knowledge of the drill may make the difference in saving lives. In an emergency situation in retail complexes, there is less order, and greater potential for loss and injury as this involves more of the public who are unaware of the emergency procedures. The property manager has to provide updated information regularly to all tenants, so that the staff is aware of the procedures in event of an emergency.
Commercial property management encompasses serious attention to financial management, in addition to the both the physical oversight and maintenance of the plant and equipment, and interaction with, and response to the tenants’ needs. A professional property manager will be competent in all these areas, and able to competently juggle the tasks that are required.
Jan Brown Director – Property Management, Terra Caribbean The Red Book 2009