Owning a commercial property can be effective by diversifying your income and investment portfolio, as well as securing your future. However, you will need a proper commercial property management plan to truly reap these benefits. Otherwise, your real estate investments might not reach full potential or yield maximum returns.
Commercial property management and residential property management are completely different affairs. If you do not understand the commercial property and its earning potential, you might find it hard to develop a plan that can really bolster and maximize your returns and tenant satisfaction. For your convenience, our team at LBPM has compiled a list of tips and hacks as your go-to source for a commercial property management guide. This guide will offer valuable insight that you can use to manage your commercial property in the right manner and secure maximum profits.
Why Does Commercial Property Management Demand More Attention?
As stated earlier, commercial property and residential property entail different approaches and operations. Commercial property management teams are experts at helping property owners manage the daily operations and behind-the-scenes financial reporting for their real estate investment in an effective way to secure long-term tenants and steadily increase returns. Property owners are expected to take care of a plethora of tasks related to their commercial investment or delegate these tasks to a team of professionals who specialize in marketing commercial properties, ensuring compliance and liability, and more. The commercial property encompasses a wide scope of building types and uses, including but not limited to: industrial buildings, shopping centers, rental spaces, marketing, and advertising agencies, and more. If the area is large and centrally located, then you can expect a higher demand for your commercial property.
How Should You Manage Your Commercial Property?
If you are the owner of a commercial property or multiple enterprises, you will certainly want your investment to run smoothly and efficiently and yield positive results for your own portfolio as well as the businesses who lease your space. In order to craft a savvy management plan, commercial property owners will need a diverse background of information to handle everything that such an investment entails. On top of regular maintenance, property owners and managers will need to be aware of insurance and regulatory information. In addition, they should inquire about the physical and legal needs of different types of businesses in their state and local jurisdiction. Other important aspects of management include legalities, earning possibilities, and risk factors.
Whether or not you decide to manage your own commercial property or hire a professional property management company to handle any responsibilities pertaining to daily operations, maintenance, financial reporting, legal and compliance issues, advertising, marketing, and/or etc., there are plenty of opportunities and benefits to grow your market share when running and leasing your commercial real estate investment.
Below are some of the potential possibilities related to owning and managing a successful commercial property for all parties involved.
Keep in mind that you can expect more in monthly rental payments for your commercial property (compared to residential ones). If the property is located in a marketplace, an easily accessible area, or central location that attracts a high volume of foot traffic, then your tenants are going to make more profits from their business. As a result, you can charge higher rents due to the increasing value and demand for your property. If your space presents better earning possibilities for businesses, commercial property tenants will not have any difficulty paying for a higher lease in a highly desirable area. However, you should never charge too much, as this will deter potential tenants. Be sure to have your commercial property undergo an official evaluation before deciding on a monthly rental rate for your listing.
Increases the Value of Your Property
Depending on the type of lease agreement(s) you set up, one of the main benefits to owning commercial property is the potential for your tenants or business owners to make additions and improvements to your property in order to meet their specific needs for operation, which can ultimately increase the value of your property. Some businesses will need to spend a large sum on renovations, and with permission from the property owner and manager, they can make structural improvements that add to the overall marketability of the space or building in the future.
Easy Money Making
More often than not, business tenants are much more reliable when it comes to monthly rental or lease payments. Businesses who are leasing your commercial space rely on the property for daily operations and profits so any payments and fees will be factored into their budget as a top priority. Therefore, you can expect timely payments. There will be less stress in receiving monthly payments for the property, and as a property owner and/or manager, you won’t have to worry about reminders, late payments, or evictions as a general rule for these types of real estate investments!
Ways to Master Commercial Property Management
If you have a commercial property, then you will first want to develop a proper marketing plan to secure the best possible leasing tenants at an optimal rate for your portfolio. Proper maintenance of your property is also important when garnering the attention of your future tenants. If your property is not well-maintained and/or priced properly, then businesses will not see leasing your commercial space as an advantageous decision.
In order to effectively manage your commercial property, consider implementing the following tips into your protocol:
1. Be Careful with Accounting
Gone are the days when investors and businesses needed to rely on paper files and spreadsheets. Instead of using files and folders, you can centralize all of the data pertaining to your portfolio in an accessible and safe location. You can also consider CAM reconciliation. However, commercial property owners and managers ought to always ensure that their data is not accessible to others. When done properly, it will save time and enable property owners and managers to access all required information in just a few clicks.
2. Develop a Killer Maintenance Plan
The downfall of some commercial property owners is that they don’t devote enough time or resources to maintaining their commercial property. The result is obvious. Poor maintenance leads to massive revenue loss. Therefore, it is essential to maintain your property regularly to boost its value and even its overall curb appeal. Consider using online maintenance reporting and tracking to clean up the messes.
Property owners and managers ought to keep in mind that tenants will prefer a commercial space with an appealing, even inspiring, appearance. Property maintenance involves taking care of the exterior and interior of the building or space. As you know, the exterior of the building is crucial since it gives all visitors the first impression.
You might need to invest in upgrading both the interior and exterior of your commercial property to boost its curb appeal for prospective tenants and their subsequent customers or clients. For the exterior, consider improving the paint job, signage, windows, roofing, parking areas, and your landscape. When optimizing the interior appearance of the building, pay special attention to walls, light fixtures, and hallways. In addition, you might want to renovate some indispensable utilities such as bathrooms, escalators, elevators, water heaters, stairways, and air conditioning units.
3. Utilize + Install Technology To Market Your Property
You might have hired reliable and experienced brokers and marketing professionals to secure the best possible lease leads. If you want to make more profit on your commercial property investment, then you will need to integrate your strategy with the latest technologies. Now, people will certainly prefer a property that is well-equipped. You can install new technologies such as the best workstations, surveillance software, internet, and other resources now considered essential for modern life. This will give your commercial property an edge over the competition, who might not offer these added benefits.
4. Upgrade Your Property Regularly
You will have to upgrade your commercial property more often to boost its value. If you decide to stay relevant with the latest trends and designs, you will never have difficulty finding new businesses or tenants for your property. Upgrade your utilities and have a close look by means of an inspection to know which changes can benefit your property more.
5. Inspect Regularly
You should make yourself familiar with your property, which is possible if you monitor and inspect every corner of your property at least once a month. Regular monitoring will help avoid costly replacements of any faulty fixtures throughout your commercial space. You’ll be able to detect problems at an early stage and prevent further deterioration with immediate action. Also, keep in touch with your tenants to stay aware of any potential structural issues or maintenance concerns and address them immediately to create a healthy, lasting relationship.
6. Go Green
As discussed earlier, your commercial property will benefit from having developed technologies to attract and serve potential tenants. At the same time, you need to focus on environmental-friendly equipment to reduce your energy bills and your commercial property’s overall carbon footprint. You can incorporate environmental-friendly equipment into your commercial property to minimize monthly expenses, which your future tenants will surely appreciate when paying utilities.
7. Be Communicative
Good communication is the first step to the success of any business endeavor. If you can develop a solid rapport with your tenants, the likelihood of them leasing long-term will increase. As a property owner, it is important to understand the specific requirements of your tenants and act accordingly to win their trust.
Commercial property management is a bit complex and demands some specific attention. A few changes can make significant differences both in the appearance and value of your commercial property. If you want to maximize your commercial property’s overall ROI, there will be a host of factors for you to consider whether you choose to manage the property on your own or hire a savvy property management team.
Do you have any additional questions regarding how to effectively manage your commercial space and grow your investment portfolio? Contact our team of professionals at LBPM for any queries regarding property management or to learn more about our full suite of services for property owners like yourself. You can reach our Los Angeles office by calling (818) 981-1802!