5 Things You Need to Know to Manage Effectively
Reviewing your management plan that recognizes the property's unique features and the owner's investment goals.
April 1, 2009
1. Most important management task
Office Properties: Developing a management plan that recognizes the property’s unique features and the owner’s investment goals. Review your progress frequently to show what you’ve accomplished. Don’t assume that because a property isn’t generating a lot of cash, the owner doesn’t want to spend for improvements.
Retail Properties: Making the property conducive to a good shopping experience, both in terms of safety and physical appearance. A customer who trips on a pothole in the parking lot probably won’t be eager to visit again.
Multifamily Properties: The ability to lead and to make sure that all necessary work is being handled by someone on your team. You must motivate the entire property team to meet high standards across the board.
2. Most critical quality to look for in a tenant
Office Properties: Financial solvency. Look for tenants with a good financial asset-to-liability ratio. Liquid assets (cash), which can be tapped to pay for rent, are key. Be careful if a company spends more than 40 percent of its income on overhead costs.
Retail Properties: Even before financial strength, look for a retail tenant with merchandising ability, the ability to present a product in a way to appeal to consumers.
Multifamily Properties: A good rental history. Prompt payments in the past and good credit are the best predictors of a good rental future.
3. Biggest ongoing maintenance challenge
Office Properties: Reducing utility consumption in tenant space. Even small reductions, such as adding compact fluorescent light bulbs to common areas, can lower common area maintenance (CAM) charges and make property more leasable.
Retail Properties: Big flat surfaces! Retail centers are all parking lots and roofs, so keeping those two expanses in top shape is critical.
Multifamily Properties: Getting tenants to tell you about their repair needs. Some don’t care, and others don’t want to bother you. Be proactive.
4. Biggest tip for boosting income
Office Properties: Audit CAM charges to uncover errors in how costs were charged to tenants. Having good lease abstracts (summaries) in place makes this job easier.
Retail Properties: Focus on temporary tenants for extra income. Put up tents in the parking lot for special sales, add kiosks for smaller merchandisers, and lease vacant stores to seasonal retailers.
Multifamily Properties: Look for sources of ancillary income. For example, you can give one cable or telephone provider the exclusive right to market to the property’s residents.
5. Top tenant retention strategy
Office Properties: Make sure service quality doesn’t decline when you cut costs. Poor maintenance, whether it’s a broken elevator button light or trash in the parking area, can have a very negative effect on how a tenant feels about a property.
Retail Properties: Make retention a priority from day one, even before the lease is signed. Don’t wait until a few months before the lease expires to discuss future plans with your tenants.
Multifamily Properties: Follow up and follow through. Providing good service is basic, but it’s surprising how often people don’t do it consistently.
Sources: Institute of Real Estate Management instructors Enis Hartz, CPM®, Exton, Penn. (office); Joseph Greenblatt, CPM®, president of Sunrise Management Co., San Diego (multifamily); and Richard F. Muhlebach, CPM®, CRE (retail).