The rapidly changing property market has brought about a fresh emphasis on effective commercial property management according to Greg Hunt from Jones Lang LaSalle
The role of a commercial property manager could historically have been described as ‘collecting rents ’ however today’s property management surveyor carries out a far more complex and comprehensive range of services.
Our property management team in Birmingham provides strategic asset management advice to our landlord clients, be it private individuals, owner occupiers or corporate/institutional investors, as well as handling the day-to-day management of their building or property portfolio.
This includes revenue collection and minimising arrears, procurement and facilities management, which incorporates all service charge contracts such as on-site personnel, safety and security.
Reflecting the needs of clients in a rapidly changing property market is key to managing buildings successfully and a high level of service can often make the difference between a tenant renewing their existing lease or relocating to alternative premises.
The coming year will continue to present many additional challenges to the owners of commercial buildings, as growing numbers of occupiers are forced to manage their own falling head counts and cash flow which, is in turn, increasing the amount of empty space and putting more pressure on rents.
Consequently, a property manager must work harder than ever to deliver the highest level of service, at a competitive cost level, and also provide innovative strategies which aim to keep occupancy levels high and help property owners reduce their operating overheads whilst enhancing property values. To ensure their buildings stay ahead of the competition, landlords have to offer personal attention to their tenants.
Our advice to landlords would first and foremost be to pro-actively communicate with their tenants well in advance of upcoming lease events (lease expiries, rent reviews and break options). Whilst the managing agent has traditionally occupied the role of intermediary in this relationship, the best management surveyor now works tirelessly with the tenant and landlord to ensure a seamless and comprehensive service.
It remains fundamental for the managing agent to concentrate on the basics. Collect rents quickly; ensure that any rent arrears are acted upon immediately and complete service charge budgets and reconciliations on time.
With the current climate forcing an increasing number of businesses into administration/liquidation any potential property issues should be discussed immediately with tenants so that monthly rent requests, payment plans, service charge queries can be agreed or rejected with clear reasons being given for the decision.
Managing agents should also look to procure services to provide cost savings and ensure value for money for all parties.
This can include general asset enhancement initiatives such as service charge, refurbishment of a building’s common areas, new signage, exterior redecoration and planned maintenance programmes to spread expenditure.
Not only will such initiatives ensure the building is maintained in accordance with the terms of the tenant’s lease, and thus uphold the value for the landlord, but a properly managed property with all costs budgeted for will mean a managed spread of expenditure for all tenants.
Substantial job losses, which have already been seen across a wide range of UK business sectors, are having a negative impact on the amount of vacant space across all asset types.
This trend is proving problematic to both landlords, as they incur empty rate liabilities, and can also create a negative impression to existing occupiers as the empty space is viewed as being detrimental to the overall asset
Driven by a need for income generation, landlords are exploring marketing opportunities to maximise cost recovery from empty units for example, turning the glass windows of empty shops into state of-the-art digital advertising screens or negotiating shorter-term lettings/licenses to other tenants.
The re-use of this empty space not only helps to cover landlord’s liabilities but maintains occupancy levels so helping the overall appearance of the asset and enhancing the customer/existing tenant’s experience.
The managing agent should also establish a ready for sale position by anticipating Energy Performance Certificates and Display Energy Performance Certificates, relevant asbestos surveys, fire risk assessments and utility surveys.
For any proactive managing agent, this will cement a strong position with their client and ensure that the property is as fluid an asset as possible in an investor’s property portfolio.
It is also beneficial to devise new or maximise existing income streams which might not just involve the routine management of tenancies.
There are often way leaves, third party licences and neighbouring developments (being aware of rights to lights issues, car parking, and disturbance) where additional value can also be created. Consideration must therefore be given to any proposals outside of the existing lease arrangements which can increase income flow.
It is vital for a managing agent to do exactly what their job title suggests; to oversee the landlord’s property to its fullest extent and to be the conduit for all communication relevant to the property, to be accessible and accountable by both landlord and tenant.
Clearly, there are a number of initiatives that can be adopted to proactively manage every property class but in today’s market where the tenant is a valued customer, one constant remains: landlords must work hard to make their buildings attractive to a smaller pool of occupiers.
By focusing on the fundamental areas of property management, property managers can effectively help to both protect existing values and ‘beat existing benchmarks such as the Investment Property Forum UK total return for both the landlord and investors alike.