“Things To Keep In Mind When Managing A Commercial Space For Lease” written by Mike Marko.
Are you concerned that you don’t manage your commercial space for lease efficiently? (or correctly?)
Your job as the property manager of a commercial space for lease is not just about selecting the best tenants and collecting their monthly rent… there are a lot more tasks, duties, and responsibilities that you need to also do.
Being a property manager is a big responsibility. That’s why you should manage your time and business efficiently.
Now, you’re probably thinking that being the property manager seems to be stressful. However… do you know that there are ways to make things easier for you?
Don’t let the stress of your workload bring you down because I’m here to help you. Let’s talk about the things you should keep in mind when managing a commercial space for lease.
Managing A Commercial Space For Lease
A key to effectively managing a commercial property would be to develop a way or a system to make sure you’re aware of your responsibilities and duties to the property while it is being rented by commercial businesses.
The best way to detail your responsibilities regarding managing a commercial space for rent is to detail these responsibilities in the commercial lease agreement. In this article we will help you develop a list to address in contracts that will help you in managing your commercial space for lease.
Before we address any of that, let’s talk about what is a commercial space for lease first.
What Is A Commercial Space For Lease
A commercial space for lease is a type of real estate property that is used for business activity that can be rented for use by a commercial business. Any kind of commercially designated property can be used as a commercial establishment as long as it’s deemed a commercial use space and not a residential property.
Most commercial spaces are rented by a commercial business to turn into a workplace while others are turned into stores, malls, office buildings, or industrial parks. As a property manager it’s important to keep in mind that the commercial space for lease is used solely for business purposes.
Additionally it is important that you have knowledge about the different task and duties of running a commercial property. You can check the different responsibilities of commercial property managers in managing commercial spaces on the next section.
Responsibilities In Managing Commercial Spaces
Managing a commercial space for lease is almost the same as managing a residential property but because you are dealing with businesses in commercial leases there are a lot of difference between the two.
To help to avoid confusion when detailing your responsibilities in managing a commercial space we have listed the different responsibilities that you should be aware of.
Common Property Manager Duties
Here are some common duties of a commercial property manager regarding leasing and marketing the commercial space for lease:
- Property manager is in charged in marketing the vacant spaces
- Property manager needs to work closely with the marketing team to fill the offices
- Property manager needs to meet potential clients before showing them the commercial space
- Property manager is in charge of executing the contracts
- Property manager also needs to conduct background and credit checks on prospective tenants
- Property manager is responsible for doing the recording and filing of contracts
The property manager has maintenance duties when managing a commercial space for rent such as:
- overseeing all the maintenance in the building
- responding to tenant’s request for services and repairs
- supervising the full-time cleaning and the maintenance crews
- hiring out the work to subcontractors who report to you
- overseeing the interiors and exteriors of the commercial spaces
- overseeing the landscaping and painting, electrical and plumbing systems, windows, doors, elevators, and floors
- inspecting the property on a regular basis
- making recommendations to the owners for repairs and upgrades
The property manager also has accounting duties when managing a commercial building or space and they include:
- collecting rent
- maintaining the books for the building
- meeting budgets that include salaries to the maintenance crews and payments to outside contractors
- monitoring the accounts that pertain to the running of the building
- being responsible in instituting collection procedures on late-paying tenants
- collecting bids from contractors and negotiating those contracts
The property manager is responsible for taking care of the commercial space for lease including its marketing, advertising and background checks regarding finding new tenants for the building. Since the property manager is the one who’s in charge of a lot of aspects of managing the commercial property it makes sense that they are also responsible for finding the right tenants.
In order to succeed in the rental property business the property manager should develop a background checking system that only choose the right tenant for the commercial space for lease.
Here are some of the ways to find or attract the best qualified tenants for your commercial space rentals.
Currently the trend for using the internet to advertise your commercial vacancies is very popular. A lot of people are using internet and most of them have social media accounts which allows many types of businesses to use current online trends as an opportunity to promote or advertise their product or services.
Commercial property managers are also using the internet as an advertising tool in promoting their property. You could find almost anything on the internet including commercial office space rentals.
Having the internet advertising is a great advantage for property managers because they can interact quickly and easily through emails and online chat with their possible tenants. Also, having an internet presence could help property managers to answer the inquiries of their possible tenants faster.
Putting up an eye-catching signage outside the commercial property could help you attract tenants. In managing your commercial buildings you must be aware of any city ordinances or requirements of signs and make sure these are listed in the commercial lease agreement.
However, the usual “For Rent” or “For Lease” signs are still amazingly effective and inexpensive when advertising vacant space in your commercial rentals. Aside from simple rental signs, there are banners, lawn signs, and photo boards that can also attract tenants when you have vacancies in your commercial properties.
Just like other businesses referrals coming from tenants and past tenants for new commercial tenants can be very helpful.
To make sure that your tenant would refer your commercial property to other businesses in the area it’s advisable to give incentives to them. You can do this by providing a discount on the rent to the tenants that referred the property to their fellow business owners.
Print media is perhaps the most expensive way to advertise a commercial property for lease but is not necessarily the most effective method.
Advertising through flyers and poster went out of style or became less relevant with the popularity of the internet, but many businesses are still utilizing print media for vacant commercial space rentals. Also, advertisement on a local newspaper is still an effective way to expose the commercial space for lease to possible tenants.
Professional Advertising Agency
Often property managers can not afford long term vacancies in commercial buildings so it might be a good idea to find and attract possible tenants by hiring a professional advertising agency to do the advertising of the commercial property.
Since costs can be higher in this type of advertising, it is advisable that you consider the financial situation of thecommercial space for lease first. The services offered by an advertising agency is expensive, so make sure that you have enough capital and it makes financial sense for the building to find new tenants using a professional advertising agency.
However, even if the services of the advertising agency is more expensive than other types of advertising the success rate of getting a new tenant is normally higher than the usual methods. If your business has a tight budget it is best to just do the advertising by yourself because it will save you a lot of money.
Using Basic Business Systems
Any successful business has a system in order to keep things organized. When making your property management company successful you should consider implementing a successful software that allows you to run all basic office responsibilities effectively and efficiently. It is advisable to develop a business system to ensure that your commercial property business runs smoothly.
Let’s take a look at the basic business systems that you could use in managing your commercial property business.
A solid accounting system would assist you with handling the incoming and outgoing revenue. Money is important to all kinds of business and that’s why it is important that money in a commercial property is accounted for everyday and not just once a month.
Sales And Marketing System
Think like a salesman when talking to your prospective tenants to ensure that they would rent your property. It would be better to have a sales and marketing system in your commercial property. Most especially if you are taking care of a lot of tenants.
If an effective sales and marketing system is already installed in your property it should help to make sure to track and study the following.
- Ways of advertising the commercial property
- The effectiveness of your advertising
- The training of staff to show prospective tenants the property
- Market studies about competition
An operations system is also a system that you should have in your commercial space for lease to help you in monitoring the commercial buildings or properties for damages or maintenance. Most operating monitoring systems are automated and can connect to Maintenance systems so the adding one to your properties is almost a no brainer
Part of following through and keeping up on the legal requirements for maintenance and repairs at your commercial properties is key to making Government officials and tenants happy. When you are able to keep track of all the legal requirements of operating a commercial property the building can run effortlessly with minimal amount of maintenance.
Failing to comply to the legal requirements could result in a lawsuit or seizure of operations or suspension of occupancy which would result in lost rents for your business…
Here are the examples of the legal requirements:
- Enforcement of leases
- Building codes and staying updated on new requirements
- Local ordinances
- Building security
- Hiring and managing contractors and vendors
- Tracking lease renewals
As the property manager it is your responsibility to take care of the property while keeping your tenants satisfied. This may seem to be a difficult task but you could do this easily with the help of a maintenance system.
Monitoring of maintenance systems in a commercial building is common. Additionally many of the maintenance operating systems available for use are automated and monitor maintenance systems with alarms and other notifications of problems arising.
Having a comprehensive maintenance monitoring system helps you respond quickly and efficiently to any buildings maintenance alarms or to your tenant’s reports about maintenance issues.
To keep the commercial space for lease in good condition you should have a maintenance plan for every moving part on the property such as:
- Air conditioners
Reminders In Managing A Commercial Space For Lease
The responsibilities of a property manager don’t end in keeping the property’s physical interior and exterior form in good condition. As a commercial property manager you also have to keep good open communications with tenants and be able to meet the ongoing needs to keep your tenants happy and satisfied with the commercial property they are renting.
The need to focus on all areas of operations and having good customer service to tenant request you will build an excellent reputation in the commercial property management field.
To help you stay on top of your commercial properties here are some suggestions or reminders you might want to implement while managing a commercial space for lease.
Allow Peaceful Enjoyment Of The Premises
Just like residential properties the tenants of a commercial property also need a peaceful or quiet work area and an ongoing professional and clean appearance for their commercial space. Allowing loud noises, loud parties and rowdy gatherings is not good for your tenant’s businesses. When negotiating commercial leases is the best time to determine what is allowed on the commercial premises and what should be limited or eliminated.
With that in mind, you should have a strict guideline on…
- Limit what noises aren’t permitted
- Determine when certain noises can take place
- Development of schedules for common areas
- Limit uses for common areas, board rooms, conference rooms, lunch rooms
- Establish building hours
Implement A System To Report Maintenance Issues
Having an efficient and good way to report maintenance issues at your commercial property is required to keep tenants happy with their rental space. Any system, automated or manually reported needs to make sure to Inform your tenant on how to report any maintenance or repair issues.
A maintenance system should be implemented and it should contain a very simple and convenient method of reporting maintenance issues for tenants and landlords. You may also consider providing access to an emergency maintenance service available 24/7 for late at night, weekend, and holidays.
Here’s what your maintenance system should focus on:
- Curb appeal
- Daily and routine maintenance
- Capital improvements
- Needed repairs
- Overcoming any tenant complaints
Run Routine Physical Inspections
To keep your tenants happy it is highly suggested that you have physical routine inspections of the property scheduled regularly: semi-annually or annually. This will give you an opportunity to check if any property abuses are occurring to address it with the tenant right away. Routine maintenance inspections will also help to determine replacement times for aging equipment and possible upgrades for the commercial property.
However, keep in mind that you must give the tenants a notice before conducting an inspections to allow tenants to prepare for the inspections and make any work areas available for inspections when needed.
Keep The Order Within The Property
Part of keeping commercial tenants happy and satisfied with renting of your commercial property is to maintain order and functions so their businesses will not suffer any closures or embarrassments due to the commercial properties condition. All of your tenants wants order and consistency and that’s why you need to make sure that every aspect of your commercial space for lease is clean and organized.
In addition to cleaning and organizing the commercial property you should also make sure that any posted notices should be in good shape and up to date. The landscape should also be regularly maintained and building operations and rules followed regularly. Keeping the commercial space for rent professional and consistent is a key goal for any commercial property manager…
Present Written Tenant Policies And Procedures
The best way to avoid any misinformation or misunderstandings it is recommended that you provide tenants a list of policies and procedures that will help you to keep the property in good condition.
After developing a list of policies and procedures you should have meetings with tenants to make sure that every one of them reads, acknowledges, and signs your policy and procedures form as part of their lease package. You could include this on your rental or lease agreement. It is very important to remember when developing policies and procedures to specifically outline responsibilities for yourself and tenants so there is no misunderstandings when implementing these policies…
Use A Property Management Software
Managing large commercial buildings or multiple commercial properties can be very labor intensive and take many employees that have different specialties like accounting and marketing to name a few. To streamline your property management business you should consider adding a detailed and effective property management system to help in organizing and running of your commercial properties.
Being a property manager can be a stressful and tiring job requiring meeting schedules and following through with maintenance, repairs and marketing. A proper property management software allows you to easily stay on top of the needs of your commercial property.
Using a property management software will allow you to easily keep track of
- tenant information,
- tenant payments
- lease rates and renewals
- maintenance records
- vendor information
- policies and procedures
- scheduled maintenance and repairs
- Accounting for property
- marketing of commercial space for rent
A property management software can help lessen your workload. Many rental property businesses are already using software like this because it gives them an advantage against their competitors. A property management software is a wise investment and may open the possibility of expanding your business.
Use An Accounting Software
Often an accounting software is a part of a property management software but if the software doesn’t include this, it is advisable to acquire this also. An accounting software will help you to keep track of your property’s finances, taxes, and process payments efficiently.
Know The Best Contractors
To avoid the costly expenses of repairing the commercial property constantly, it is advisable to hire skilled contractors or to even retain them on an as needed basis for your commercial properties repairs and maintenance.
When choosing a contractor, make sure that they have experiences in maintaining the following:
If you don’t know any contractors with reliable experience it is recommended to ask for referrals from a fellow commercial property managers. This will give a chance to find the best contractors. If you have doubts about the referred contractors it is advisable to ask for any examples of the contractor’s work. It may take time to find the right team of contractors to service your commercial properties but when you do the benefits are great in keeping the property in the best shape for commercial tenants…
Have An On-Site Maintenance
Often it is more efficient to have on-site maintenance to cover minor repairs and make sure the commercial property is kept clean and in good working order. You can’t avoid sudden failures of utilities or other common maintenance issues so that is often a good reason why having on site maintenance or an onsite handymen available in every commercial property.
The on-site maintenance will be responsible for routine and preventative maintenance and small repairs around or on the property.
Seek Professional Legal Assistance
As the property manager you should also have a reliable commercial real estate lawyer that understands rental law and other commercial property needs. It is important to have a professional legal assistant whenever you’re doing an eviction or if any kind of tenant disputes.
To avoid wasting your time and resources in performing your property management duties it is best to hire a conveyancer (real estate attorney, or a solicitor) to handle tenant-landlord matters especially the more complex matters.
Conduct A Market Survey
To maintain and often increase profitability for your commercial properties you should regularly do surveys of the commercial rental market in your area. Knowing what the market will bare in negotiations for commercial rental space will help you in negotiations of leases and inform you when you could increase the rent of your tenant.
Conducting a market surveys is the easiest way to know if you can increase your rent and to find out if your commercial properties are competitively priced with other properties in your area.. Aside from that market surveys also help you determine if your rate is lower compared to neighboring properties.
Keep in mind that doing a rent- and lease-rate survey could help you plan your business strategies to gain an advantage against other commercial properties.
Increase Property Value
Properties are primarily valued on the amount of net operating income it generates. Other than that, your property’s value can increase by raising your rent, properly budgeting the expenses, renovating the property, and changing the property’s use. Regularly evaluating what improvements are needed will help you to maximize rents and profitability for your commercial properties…
Raise The Rents
Raising the rent of your tenants is the easiest way to increase the value of the commercial property.
However when raising rents you should have a market survey to detail the need for rent increases and negotiate with your present tenants to allow them consideration regarding their commercial business. It is advisable to do a quick survey first before increasing the rent to avoid over charging.
Always prepare yourself with a valid and logical reason for the increase of an improvement on the property.
Budget The Expenses
Proper allocation of your commercial property’s budget will increase the net operating income.
As the property manager you should be reviewing all the needs for your commercial properties and the expenses in great detail to save money and to look for unnecessary expenses. It is important to make sure to review any expenses carefully and remove unnecessary expenses. your review of expenses could lead to removal of staff, contractors or re determining job responsibilities for your commercial properties operations…
Renovate The Property
Depending on age of your commercial properties you may consider renovation or updates to the property to stay competitive in the commercial rental markets. The newer a building appearance is the more a commercial business will pay for rents and desire the building as a location for their business.
Additionally, the property’s value could also be increased by making improvements or renovation.
Here are some of the changes or improvements that would increase the value of your property:
- Giving the shopping centre a new façade
- Repaving the parking lot
- A good makeover, paint, tile, carpeting etc.
- Image enhancement
- Upgrading the interior of the unit with new appliances, paint, accents
- Giving the landscaping a makeover
Change The Property’s Use
Aside from making improvements, changing the commercial property’s use could significantly increase the value of the property.
A commercial space for lease could be turned into the following.
- Multi-level car park
- Apartment complex
- Shopping centre
- Or expansion of the surrounding developments such as offices, warehouses, or storage spaces
Final Thoughts On Managing A Commercial Space For Lease
Managing a commercial space for lease is tough. That’s why you need to be properly prepared. In this article, I talked about the different task of a property manager.
Although there are a lot of tasks and duties, they can be easily done with the help of using different business systems. The systems would definitely keep things in order and it would make managing the property simpler.
I know you’re now ready to manage a commercial space for lease effectively but keep in mind that your duty as the property manager doesn’t end in just keeping the property’s physical form in good condition. You should also keep an eye to your property’s reputation. Above all else, keep your tenants satisfied so they stay longer in the property.
If you have questions about managing a commercial space for lease, feel free to comment them below.
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