Commercial Property – Why It Should Be Managed By Agents and Not Property Owners

As many real estate agents know, some property investors choose to manage their own commercial property. Now this is fine if they have the ability to gather their own market information and align the property to the market, but if this is not the case then the property owner is usually doing themselves an injustice with self management. They lack the ongoing information that will help them with choices and negotiations in leases and ongoing daily management.It is very common for an experienced real estate agent to be appointed to manage a property and clean up the errors of owner self management. Commercial real estate is an asset class that is complex and specialized. Commercial property managers are skilled in the tasks required.Property owners can very well make poor lease, property management, and sale decisions without full market intelligence on:
Rental levels
Lease terms
Lease incentives
Lease types
Zoning changes
Redevelopment plans
Regional demographics
Maintenance strategies
Rental promotion and marketing
Time on market
Income and expenditure strategies
Tenant and landlord improvements
Vacancy strategies and re-letting plans
Business plans for the property
An experienced real estate agent knows these things and provides high value to the property owner as a consequence. Sure this means that the property owner pays for the agent’s service with commissions and fees however the time on market and success rate of any sale or vacancy can be seriously improved. Invariably the property owner can get a better rent or price.Another favorite of property owners when selling the property is to open list or conjunction list the property at the time of sale. Again this is generally a waste of the seller’s time given that most agents only devote significant focus to those listings that are exclusive (and rightfully so).Buyers tend to believe that a property that is open listed with many agents (and showing many signs across the frontage of the property) is likely to be a poor property that is either overpriced or not desirable. Enquiry for the property is therefore minimized by the open listing process (not optimized as the property owner would like to think). Sure certain open listed properties will eventually sell, but it usually takes a long time and is more of a matter of luck than choice.The commercial real estate market is moving ahead in various ways. As we come out of the global economic crisis the first levels of property to respond to stability and growth will most likely be industrial property. It is already happening in some cities and countries. The next property type to follow in the recovery will be office property. It should be noted that retail property is and will be separately performing as it is driven by consumer sentiment and the economy overall; that is a different cycle within each country.Every property no matter how large or small should be managed to a plan that includes:
Income strategy
Expenditure strategy
Capital expenditure strategy
Lease documents
Tenant mix
Renovation and maintenance
Lease renewal decisions and alternatives
Marketing of vacancies
A good commercial property with a good business plan will be geared to the landlord’s targets and property holding pattern. The plan will be centered on the items above giving the landlord or property owner clear alternatives to take the property forward.A property can be held for a number of years and clear decisions are made on matters that impact cash flow, net income, and occupancy. An experienced commercial real estate agent will give the property owner full and complete knowledge of the trends in the market and just how it can impact the property.

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