|Lease management builds market share.|
In a commercial and retail property agency, it is important that a lease management procedure be established for all property management clients. In this way the agency can match their actions to the targets of each client and their property investment. Here are some tips for Commercial Leasing Agents from our bulletin.
Differences with Clients and Properties
There are differences in the plans of each client when it comes to property function, retention, and disposal. The agency and the dedicated property or lease managers should seek to understand the plans of each property investor that they act for.
Lease management forms a key component of the client services provided to property management clients. Lease terms and conditions, property changes and the tenancy mix strategy of each particular property can be complex and unique.
The agency personal undertaking lease management should have local area experience and knowledge when it comes to property performance. That will then help them with recommendations and decisions for the client.
Here are some of the key factors that apply to a lease management process today in a commercial, industrial, or retail property.
- Property performance centres on the optimisation of net income for the landlord. That focus would normally involve the rent reviews for each particular lease when they fall due. In a complex property with a number of tenants, this can be quite a detailed process requiring good attention to detail. An accurate tenancy schedule and property management software program will help the process.
- At any time a number of leases in the property may have options to renew coming up. That being the case, the individual leases will have lead times and critical dates relating to the exercise of the options. It pays to work well in advance with the tenants and the landlord when it comes to option negotiation; most option negotiations involve setting new market rent reviews and that process can be protracted.
- All leases within a property will come to an end at some stage, but that should be in a controlled fashion. The expiry of the lease should be a well managed process between the tenant, the landlord, and the property manager. Approximately 12 months from the end of the lease the tenant should be approached to identify their occupancy intentions in case a new lease can be negotiated. If the tenant intends to vacate you can start preparing or prospecting for a new tenant.
- All leases will have terms and conditions that relate to premises and fitout make good. Some of those clauses will be quite specific as to the works that are required of the tenant at lease end. Given that all make good works should have occurred prior to lease expiry, it is essential that the property manager or landlord commence early discussions with the tenants regards lease compliance to the make good provisions.
- Most tenants will have some other charges to pay in addition to their base rental. Those extra charges will be detailed in the lease documentation. In many cases the tenants will be paying for a percentage of property outgoings on a regular monthly basis. Lease management procedures will closely monitor the payments, notices, and reconciliation requirements of outgoings charges for each tenancy.
- Every lease within a property should be regarded as potentially different and unique. On that basis the lease should be comprehensively reviewed for specific terms and conditions to be complied with, together with critical dates. A lease will place obligations on the tenant and the landlord to undertake particular things during the duration of occupancy. The property manager should administer and monitor these facts as part of lease management.
- Risk management today is quite a significant challenge in property performance and operations. Risk can be many things including that which applies to personal injury, property integrity, property compliance, tenant occupancy, and landlord actions. Review each lease for the factors of risk that need to be administered.
These and other issues of importance occur in each lease and in each managed property. Take the time to implement a professional lease management program in your agency on behalf of the clients that you act for.
Need some more ideas to build your commercial property leasing strategy? Try our bulletin right here.