Essential Tips for Successful Commercial Property Management in Canada

Property management is a complex business whether you manage one or a portfolio of commercial real estate properties consisting of multifamily apartment units, offices, retail or warehouse space. Typical Property Management Duties The typical responsibilities of a property manager (PM) include: Pricing rent Facilitating and conducting timely maintenance and repairs Preparing and marketing vacant spaces Screening and approving tenants Drafting and enforcing lease agreements Handling tenant issues and complaints Increasing tenant satisfaction scores Collecting and adjusting rent as necessary Supervising on-site employees Processing tenant move-ins and move-outs Ensuring the property is legally compliant with municipal zoning and other bylaws Ensuring taxes are filed on time Keeping records and creating reports Keeping up to date with industry trends and information Finding ways to realize efficiencies and increase profit Essential Commercial Property Management Tips for Your Investments and Assets Elevated property management is a crucial factor determining commercial real estate success. It helps attract and retain tenants and maintain a property’s value and regulatory compliance while generating profits that guarantee long-term business gains. Below are three ways you can raise your commercial property management game: Hire Licensed or Certified Professionals One look at the long list of typical PM responsibilities will tell you that the person or team you hire will need to possess both soft and hard skills – including excellent communication, time management and organizational competencies – along with having substantial experience in the industry. Although not every province in Canada requires licensing, licensed professionals or those who have completed the Real Estate Institute of Canada’s globally recognized Certified Property Manager (CPM®) Course will have both the analytical and leadership skills needed to enhance the short- and long-term values of commercial real estate portfolios. Although the curriculum will vary between programs, you can expect successful graduates to have expertise in: Corporate ethics Asset analysis Budgeting, cash flow and reporting Marketing and leasing strategies to attract and retain tenants and create optimal tenant mixes Property management team leadership Managing maintenance operations and property risks Financing and loan analysis (e.g., in the event of capital improvements, to reduce operating expenses and increase net income, etc.) Performance and valuation of investment real estate assets And because candidates for the CPM® program must have at least three years of experience on the job before they can apply, you can feel confident that they’ll be able to hit the ground running when it comes to managing your property or portfolio. Embrace Technology No matter how skilled your property management team is now; you can rev up their performance by embracing technology designed to assist PMs with practically every aspect of their job. Today’s cloud-based software as service (SaaS) systems allow project managers to up their efficiency by streamlining complex processes, automating time-consuming recurring tasks, improving scheduling and coordination and allowing real-time access to data of all types. Property management software also provides: An audit trail for compliance and legal purposes Robust communication tools for all stakeholders Comprehensive reporting and analytics Owning the software is critical for landlords who want to retain control of proprietary information about their properties, including financial performance and contractor contacts, and who want to set and monitor key performance indicators (KPIs) for their PM teams. Property management systems can vary widely in functionality, but features commonly include: Tenant screening, credit and background checks Tenant portals Lease creation, versioning, documentation and signoff Online payments for tenant rent and other purchases Maintenance task management Vendor and supplier management, invoicing, payment Property inspection management and signoff Marketing automation and lead management analysis Real-time Accounting Bank reconciliation Cheque printing Individual or full portfolio asset management Workflow creation with text or email reminders Communications storage and management Document, photo and video storage management Compliance assistance Integration with other systems Set, Monitor and Reward Success with Key Performance Indicators (KPIs) Property owners and managers need to set and track key KPIs so they can identify areas in need of improvement. Key KPIs to measure include: Net Operating Income Rate Financial KPIs measure a property’s fiscal health, revenue, profit growth and performance relative to budget targets. If there’s a notable difference between what was budgeted and where you are on a month-by-month basis, the culprit could be increased maintenance costs, tenant acquisition costs, rent arrears or even rent levels that haven’t kept pace with inflation. Or maybe you had to take on a significant, one-time cost at a property, such as repairing a leaky roof or doing a green retrofit. Occupancy + Vacancy Rates If your building space is sitting vacant, you incur costs without offsetting them with leasing income from tenants. Occupancy rates are affected by several KPIs, including rental rates, tenant acquisition and retention strategies and tenant satisfaction scores. Because they’re in the market, looking at properties day in, day out and talking with landlords and their real estate peers, your commercial real estate agent will have some of the most current information on occupancy rates in your local area. You can also review Canadian market trends reports or utilize data providers to get the information you need. If your occupancy rate is much higher than the market average, there might be an opportunity to raise rental rates. If you’re much lower, you need to find out why. Rental Rates Regularly comparing your average per-square-foot rental rate with local market rates is essential to increasing occupancy rates and driving profit. Tenant Acquisition Costs Marketing commercial real estate in today’s fractured media landscape can be challenging. Your commercial real estate agent’s marketing team will do most of the heavy lifting, but your property management software may be able to help as well by allowing you to post your space on various online portals and classified websites. Average Lease Time Attracting the right tenants can be challenging, but so can signing them. If you use property management software, it determines the average lease time as part of its leasing workflow. Property managers dealing with first-time lessees may need to do more handholding and explain commercial real estate terms or even the differences between a net lease vs. a gross lease. The lease process for commercial real estate is almost always a time-consuming task. Anticipating recurring pain points and understanding where you might need to add more flexibility within your leasing process is also key to decreasing lease times. Maintenance + Repair Costs Maintenance and repairs represent a major component of most property management budgets, making it another cost-saving KPI to monitor. Property management software makes scheduling proactive maintenance tasks easy so you can stave off costly repairs later. It can also help you discover assets with repeat issues and identify vendors and contractors that consistently give lower bids to help you save money. Maintenance Request Response Time Quicker maintenance response times stop escalating issues and make commercial real estate tenants happier. Again, because it fosters ease of communication between all maintenance stakeholders, allows you to keep a database of preferred vendors and contracts at your fingertips, and expedites the quoting process for problems, look to your property management software for help in this area as well. Tenant Satisfaction Rating One of the most important KPIs to track and dissect, as it can influence tenant renewal rates. Tenant Renewal Rates Tenant retention reduces marketing costs and increases occupancy rates and commercial real estate profits. Look for connections between tenant satisfaction, rental rates and maintenance response time KPIs to increase tenant renewal rates. Average Arrears COVID-19, inflation and high interest rates have caused many otherwise stable businesses to go into arrears and have been especially hard on small retailers and the commercial office sector. Tracking this KPI will help owners and PMs understand if their rental relief, negotiation or other strategies for getting tenants to honour their lease obligations are working. Property Management Fees Property management fees should also be monitored, tracked and scrutinized when they increase without notice or rationale. Typical commercial property management fees range from four to 12 per cent of the total tenant rent for a commercial property. Additional factors that can raise this figure up or down include: The services expected The number, type and quality of tenants The location, size and condition of the property The average property management rates for that area Implement Our Commercial Property Management Tips to Save Time and Money Managing a commercial property is a complex endeavour. Hiring licensed or certified professionals, utilizing property management software and tracking key performance indicators can make it easier and help your property realize its full profit potential.

Post a Comment