Commercial Property Managers – What Skills Do They Need and Why?

In commercial real estate agency, the property management division is a key part of the agency performance. In real terms the successful division can bring in significant and stable income to the agency on a regular monthly basis. That being said, a good commercial or retail property manager is highly skilled and should be selected for the property management role based on key performance criteria and hands on experience.

Far too many real estate agencies have average or poor performing property managers. In real terms this is a real threat to the stability of the division income, and the quality of the service provided to the landlords. Unskilled property managers do not last in commercial or retail property; it’s that simple.

Cadets and Training Processes

There is a place for ‘cadets’ that learn the roles and the skills of complex property management. The process itself takes a couple of years during which time the person should be exposed to all property types and situations under the guidance of an experienced manager.

So what does a good commercial or retail property manager look like and what skills will they have? To a large degree they will need to bring to you as agency principal, the skills needed for the managed property type and local area.

If the property manager does not know much about managing the required property type, then do not let them manage it; the errors made can destroy your relationship with the landlord and ultimately the management appointment.

Different Skill Sets

There is a large difference in management style and skill required between retail, office, and industrial property; industrial property being the easiest to manage and retail being the most intense and difficult. The skills required in a retail property manager is diverse and deep; they are the best in the industry.

Generally speaking, retail shopping centre managers today are also the busiest in the industry. The role is very hands on and unrelenting in intensity. Here are some core skills of a well skilled and placed property manager:

  1. The ability to read and understand leases and occupancy documentation for all property types.
  2. The marketing of the property to the local community and customers will be a factor that is critical to retail property. It this way sales are encouraged for the tenants; this underpins the rental for the landlord.
  3. Sound skills in financial analysis and reconciliation so a property performance tracking process can be set up for all managed properties.
  4. Good communication skills are essential. Property managers must be accurate, confident, and decisive, in keeping with laws, legislation, and the instructions of the clients that they act for.
  5. Attention to detail is required in all property negotiations and tenancy matters. Without good records and accurate information, the ‘wheels fall off’ the division and its services. Landlords soon see through mistakes and inaccuracy.
  6. Marketing of vacancies happens all the time in larger properties; importantly the frequency of vacant space is minimised and the times without a tenant are lessened.
  7. Income optimisation and expenditure controls are at the centre of property financial performance. The manager must know what is happening and why in all managed properties, when it comes to the cash flow and reporting to the landlord.
  8. All reporting processes and communications to the landlords we act for today must be detailed and accurate. Property compliance and maintenance, energy consumption, lease and vacancy matters, tenant and landlord lease covenants, outgoings performance, and environmental matters are just some of the factors that are controlled and reported on each month.
  9. Computer technology needs are increasing in the available property performance and management systems today. The property manager must be familiar with, and comfortable learning more about all the software and computer based technology that is used in the industry.
  10. Work hard and with focus each and every day. The hours that a manager will put in the job are long and intense; however they are the experts and should recognise the value that they bring to the job.
  11. Maintenance decisions and controls are made daily and should encompass the instructions of the client and the laws of property ownership and function. The manager needs to know what is required and should competently handle the decisions and communications with contractors, tenants, landlords, and fellow employees.

So how do you find one of these highly skilled people? They are out there and should be carefully sourced. They will be an asset to your agency function and performance.

Commercial Real Estate Agent Prospecting Facts and Strategies

When you work as a commercial real estate agent or broker, it is essential that you develop and implement a prospecting program to generate new business leads. It is a personal process and it is not something that you can or should delegate.

I am amused sometimes when I hear that an agent has paid considerable money to a marketing company to ‘cold call’ their entire sales territory or market segment looking for leads and prospects to serve. Delegating the prospecting process to a marketing company or another ‘unskilled person’ is a waste of time and money. Commercial real estate is an industry built around personal relationships and trust; a marketing company or employed canvasser cannot offer that level of communication or service.

So why would a real estate agent employ such a ‘marketing firm’ to make prospecting calls? The answer in most cases is glaringly obvious; the agent doesn’t have the skill or the discipline for the prospecting process to be successful.

If you want to win the new business, then you will need to do it yourself. Yes, it takes time to get results and you will need to develop some new skills, but discipline will help you get to the results that you are seeking.

One thing should be said here; commercial real estate brokerage is tremendously rewarding for the sales people that can work hard and to a system or plan. Looking for leads and opportunities is part of the process or game. It’s a personal thing and it can’t be delegated.

Here are some way’s to find new business, better property listings, and good clients:

  • Redundant Properties – Some properties will move to a level of redundancy due to age, deterioration, change of zoning, or lack of tenants. When this happens it is time to move to the next phase of the property ‘lifecycle’. A good real estate agent can see the signs early and work closely with a property owner as they start to deal with the issue of investment change.
  • Vacant Land – As a city expands or suburbs change, vacant land will be rezoned for new development. Keep ahead of this opportunity by monitoring the planning and development applications at your local planning approvals office. Get copies of the public minutes of the planning committee meetings.
  • Old Listings – Some listings don’t sell or lease at the first attempt. What you can do here is withdraw the property from the market today and then revisit the property marketing effort a few months later in another and perhaps different marketing approach. Refreshing a listing is a valuable business process.
  • Open Listings – The best way to sell or lease a property is through an exclusive listing process. Open listings are very much a process of luck; most open listings stay on the market for a very long time and on average are far less successful when compared to the dedicated marketing efforts of an exclusive listing. Revisit old open listings to see if they can be optimised for a fresh marketing effort.
  • Larger Businesses – Local businesses are involved in property either as tenants or as owner occupiers. Business owners will need help with property from time to time. The best way to tap into that opportunity is through direct and ongoing contact. Cold call every business in your town or city and speak to them regularly about property needs and changes.
  • Surrounding Other Listings – When a competing agent puts a property on the market, you can use that listing as a reason to talk to all adjacent and nearby business and property owners. One property listing can be the catalyst to talk to others to see if they would like to compete or do something themselves.
  • Street Canvass – On a street by street basis, systematically move through your sales territory and research all property owners. Eventually you will create a good list of owners for your database. Ongoing contact will allow you to build valuable client relationships and the levels of trust that help grow commissions and listings.
  • Cold Calling – The telephone remains the most effective business tool that we have. Direct calls handled in a professional way will help you reach out to new people. Selectively researching the property owners and business people in your area will support the cold calling process.

A simple list like this will give you an abundance of property leads and opportunities. The secret to making things work for you is in doing it yourself.

Tips On Picking "Sleeper" Real Estate Property

Real estate investing is all about perception. Your perception of where the market is going, in conjunction with where it’s actually going. The aim, as always is to buy low and sell high.

You want to buy a cheap tract of dirt and sell it as a high priced piece of developed real estate, after it’s appreciated enough to turn a tidy profit. Selling the property is an art in and of itself.

Buying an initial tract of dirt lends itself to some solid, rational guidelines:

First, look at trend lines for housing prices in your area. While most housing markets are in decline (and the housing markets in Florida and California are adjusting from more than a decade of over-valuation), there are markets where the housing prices are going up. This is a decent leading indicator that there’s a market for expansion.

Second, look for job related news. Home purchases require a steady source of income. New employers moving into a city, or a government branch office opening up are a strong indicator that good, well paying jobs are likely to come up. Where well paying jobs roost, home purchases follow.

Related to this, talk to your local city planning office. Are there recent purchases of “right of ways” to lay down sewer lines? Is the local telephone cable making plans to run out fiber optic lines – a “must have” trend in new home construction. These things point to areas where home growth is immanent. Other big tip offs are school bond issues (found in your local news paper) and new parks being opened up.

Before you look at the land, check out the adjacent commercial real estate usage. Look for “family friendly” or “residential friendly” commercial properties: Houses that are close to grocery and clothes shopping tend to fetch a higher price than ones that are farther away. If there’s a movie theater nearby, or plans for an elementary or middle school, factor that into the size of the homes you build, and what their amenities will be; buyers looking for those features are looking for “mover upper” homes – with a bit more floor space, and two (or three) bedrooms for the kids. Other spots to look for are anchor stores, like Wal-Mart and Best Buy. These companies spend millions on surveys of purchasing patterns before buying a store location; if they’re buying a plot of land, you’ve got about a year to a year and a half window to look into nearby real estate for single family residential and rental residential properties.

You can even flip this on its side – if you can talk to a group of commercial real estate investors, building a shopping center as the nucleus for home development is also a viable combined strategy. This also applies to highly urban areas. Many downtown areas that have been abandoned by businesses can be converted to apartment buildings, and some of the older housing projects are being torn down for mixed-use spaces with combined commercial and residential areas. In particular, you can often get block grants to help with the financing on projects like this, and there are programs from HUD that can help out a great deal with “urban renovations”.

Another source to investigate is the demographics in your area. Look at the US Census figures (and local county figures) for median age, and median birth rate per capita. You want to invest in areas where the population is growing already. High skews in the ’40s and ’50s indicate that you’ve got a bunch of people who are going to retire soon, and retirees are highly prone to selling properties off. Places to watch carefully are most of the urban parts of California, and great swaths of the rural Midwest, where demographic trends have been changing entire towns since the 1950s as the country’s population has shifted to urban areas.

If there’s a local planning council, or urban development council, make it a point to get the minutes of all the meetings from the past year. The city council offices will have them on file as a matter of public record. Also try to get into the next range of meetings as an observer. Discuss with the city and county managers where they see housing and construction trends moving. What you’re looking for is real estate that will be desirable in two to three years; look at road planning atlases, and look for all the data you can find. Also look for real estate that will be scenic – lake front property is as close to a guaranteed bet as you can get in real estate investing, particularly if there’s a lake that’s at the “far end” of a development axis. Likewise, if there’s land that the city council is looking to acquire for parks, buying the adjacent lots now means you’ll be able to sell them later.

Lastly, talk to the professionals in your communities. Talk to architects who can tell you if they’re busy or not. Maintain professional contacts with engineers, bankers and attorneys. They will usually know about projects well before the general public. Also make a habit of reading the local newspaper’s business section. Often times, the first clue that a business may move in to your area is buried at the bottom of a column on page 8.

Using the guidelines suggested above will help you to find “sleeper” raw land properties. These “sleeper” properties are perfect for the buy low, sell high strategy used by successful commercial real estate investors.

Commercial Property Management – Tenancy Schedule Tips Tools and Tactics

The tenancy schedule is the tool of choice for a property manager or leasing manager in a commercial or retail property investment. It is the tenancy schedule that will keep the property manager up to task on forthcoming events and dates.

Often you find that the tenancy schedule is not up to date, so if anyone gives you such a document, treat it with the caution it deserves, and check it out completely before you act on the information contained therein.

So let’s say that you have a great tenancy schedule that you know is totally accurate. I get many questions about what I would want to see in a tenancy schedule. Here are my main priorities:

  • Details of the tenant name, lease, and full contact detail for emergencies
  • Tenancy identifier or suite reference that comes from the plan for the property
  • The area of the tenancy in m2 or ft2 (depending on your unit of measurement)
  • The % of the tenant area to the building net lettable area
  • The rent $’s per annum, per month, and per unit of measurement (m2 or ft2)
  • Lease start date
  • Rent start date
  • Lease end date
  • Term of lease
  • Option term of lease
  • Anniversary dates and reminders for rent reviews, options, expires, renewals, renovations, and make good obligations
  • Outgoings charges for each tenant on the basis of area and monthly charge
  • Outgoings budget for the building
  • Total outgoings recoveries for the property on a currency and % basis
  • Types of outgoings to be charged to the tenants
  • Insurance obligations of the tenant
  • Rental guarantee details or bonds held
  • Provision for critical dates relating to any important lease term or condition
  • Maintenance obligation details of the tenants

This list is not finite and you can add your own extra priorities, I would however make sure that it is totally correct and maintain it to the highest level of accuracy. When you do this you can stay on top of important upcoming events that will impact the occupancy or rental of the property.

Whilst you can buy ‘off the shelf’ software programs that display this above information, that can be quite expensive for those commercial and retail property managers that are first entering this type of property. The alternative is to create some simple spread sheet that contains the data; in saying that, it is essential that great care is taken to maintain the spread sheet that you create. Any errors in the tenancy schedule can destroy your landlord, your business, your tenant, your reputation, and the property. Accuracy is paramount.