Blog - Commercial
WHAT ARE COMMERCIAL PROPERTY MANAGERS RESPONSIBLE FOR?
Whether you’re an owner of a commercial investment property or a tenant within a building, you may find yourself asking “why hire a commercial property manager?” or “what do commercial property managers do?”
On the surface, property management may seem like an additional cost for convenience. And many vendors choose to self manage their properties. But, the fact of the matter is that a good property manager will save you a lot of time and effort and will significantly improve your bottom line. Here’s why…
Why hire a commercial property manager? What does a commercial property manager do?
When you buy a commercial investment property like an office building or retail complex, your primary goal is realising a steady income from it. Income properties, however, need day-to-day management to generate revenue. Leasing the property out to commercial tenants also requires you to take on enormous responsibilities like property upkeep and maintenance, Fire and OHS compliance, ensuring optimal rents are achieved to maximise profitability, and working with third-party service providers.
As an investor, you probably have little or no inclination to carry out these duties yourself. That is where a trustworthy and reputable commercial property manager can help. Strategic management will make a significant difference to the success of your commercial property portfolio. So, finding a company with the right background to achieve your goals will strengthen your bottom line.
Commercial property managers typically oversee multiple buildings for a property management company. For larger buildings and complexes, they may work exclusively for the owner at a single location. Although their daily responsibilities may vary according to property type, below is a general overview of typical duties.
Commercial property owners and managers are legally obligated to keep the premises in a safe condition for both tenants and the public. That includes routine inspections, preventative maintenance, and carrying out any repairs needed to keep the building and its equipment in good shape.
A commercial property manager will keep the property in good condition by:
- Handling repairs and maintenance in a timely manner. Experienced managers have a network of contractors like electricians, plumbers, and glaziers that they can call on short notice, so tenants don’t have to deal with extended power loss, dangerous conditions like exposed wires, and other situations that can harm their business.
- Hiring service providers to clear public areas of debris, check for gas or plumbing leaks, remove rubbish, and exterminate pests
Additional responsibilities include:
- Periodically reviewing all service contracts to confirm that they remain cost-effective
- Creating and implementing cleaning programs to improve common areas throughout the property maximising appeal to tenants/visitors
- Overseeing all cleaning and maintenance personnel
If you purchased a commercial property that was under construction or renovation, a commercial property manager would make sure that the contractors are carrying out their duties promptly and take steps to protect the property from vandalism after hours.
Issues involving rent are one of the primary responsibilities of a commercial property manager.
Duties include, but are not limited to:
- Setting the correct rental amount to attract commercial tenants to your property. Experienced managers know what to charge based on property location and what comparable buildings in the area are charging their tenants.
- Creating optimal cash flow by collecting rent on the same date each month and imposing additional fees (interest) on late payers. These fees can motivate tenants to remit rent on a more reliable basis.
- Keeping your building profitable by increasing the rent yearly as per lease conditions. The goal is to keep your property as full as possible without incurring financial losses.
How do commercial property managers help find and keep tenants?
Tenant management is another fundamental responsibility of a commercial property manager.
Duties in this area include:
- Filling building vacancies by finding new tenants. They know what type of tenant is most compatible with your property and will advertise space availability in a way designed to attract these parties. Professional property managers have considerable marketing and advertising expertise in both print and digital channels.
- Screening applicants using a universal and consistent process like credit checks and proof of business income. An experienced property manager has dealt with hundreds (if not thousands) of tenants and generally know how to select applicants who will pay the rent on time and cause fewer problems.
- Dealing with regular and emergency maintenance requests. They will have a contact list available for handling these situations. Good commercial property managers make themselves available to tenants when needed and address problems quickly and efficiently to enhance the value of the tenancy.
- Overseeing make goods. When a commercial tenant leaves, the property manager will inspect the tenancy, check for damages, and calculate how much of the security deposit to return to the tenant. They will also arrange for any repairs and for the space to be cleaned.
- Notice and evictions. If a tenant does not pay the rent or uses the property for a purpose not authorised by the lease agreement, the property manager will take the necessary steps to put them on notice and, if necessary, evict them and find a new tenant.
Leases are complicated documents, but an experienced commercial property manager knows how to create and manage an agreement that protects you, your tenants, and the property.
- Preparing new lease agreement documentation for a solicitor to execute
- Reviewing existing leases to ensure that the documents safeguard your interests while remaining compliant with current laws and regulations
- Enforcing commercial contracts in accordance with their terms and notifying you of any defaults
Managing and reporting property finances
Commercial property managers can submit monthly reports detailing the financial performance of the property. These reports include but are not limited to:
- Monthly rent collections
- Maintaining records like signed leases, tenant sales information, bank statements, bank reconciliation reports, repair and maintenance invoices, and insurance bills.
- Paying taxes, improvement assessments, and amounts due under service contracts
They will also assist you with the preparation of the annual operating budget, which allocates specific amounts for utilities, repair costs, and other operating expenses related to the property.
Can commercial property managers advise on legal and regulatory matters?
Commercial real estate involves a lot of legal regulations that can be time-consuming and stressful for property investors. When you hire a commercial property manager, it reduces the risk of costly errors. That is because a good manager will make sure that the property is current and compliant with all applicable regulations.
Managing vendor relationships
Commercial property managers have an extensive network of vendors, suppliers, contractors, and other trades professionals that the most dedicated, hands-on property owner would find impossible to duplicate. They will use their connections to get you the best work for a competitive price and oversee any necessary building maintenance.
Using a commercial property manager to supervise building employees
Larger commercial properties may have concierge staff, cleaning crews, and security personnel. If you purchased this type of investment property, the property manager would ensure that these employees are carrying out their duties as required. They may also hire, pay, and even terminate these employees.
TGC Commercial Property Management, Sydney
Great commercial property managers do more than just manage your property. Even while carrying out their daily duties, they are always looking for ways to:
- Communicate the value of the property by enhancing its appearance
- Maximise rental income while minimising expenses
- Improve tenant retention by building better and stronger relationships with tenants
- Look at new income streams that could apply to your property (advertising/telecommunication or ATM contracts, storage space etc).
A property manager who understands your investment goals will always be on the lookout for ways to increase the property’s value. You will enjoy peace of mind as you grow your investment portfolio, knowing that your properties are in good hands.
TGC is a boutique commercial real estate agency that offers full-service property management for commercial properties in Sydney. We focus all of our resources on providing comprehensive solutions to commercial investors and property owners. Get in touch with us today to see how we can help you.