Concise Guide to Commercial Property Management
Commercial property management can be quite different from managing residential properties. Commercial property can be buildings that are rented out for industrial or business purposes, and can include offices, warehouses, restaurants, retail stores, and so on. Managing such properties has its challenges, but an effective strategy will help to appreciate the property value and keep tenants happy.
Details and More Details
The main difference in managing commercial property as compared to residential properties is the legality involved in the lease agreements. Commercial leasing has different set of rules and regulations, and they can vary between states. It is also important to understand the responsibilities regarding taxation, and insurance premiums. Sometimes these responsibilities can be shared with the tenants, or can be totally borne by the parties leasing the units.
Maintenance costs of commercial property will also be quite high depending on the activities carried out by the tenants. If there is a manufacturing unit or restaurants, there will be question of waste disposal, maintaining cleanliness of the area, providing adequate lighting and so on. The question of sharing maintenance costs or including a fixed amount in the rentals will depend on the type of activity and the situation.
Maintenance is a major element in commercial property management and all aspects have to be considered apart from the cost. Everything from electrical units, to HVAC, to lift systems has to operate effectively without a hitch. If things do not function properly then the commercial tenants can lose a great deal in their business, and this can lead to costly lawsuits, where the property owner can be required to pay the damages.
A Well-Oiled Machine
Hence, figuring out the best allocation of expenses and responsibilities in the lease agreement is quite important to maintain a worthwhile ROI. In addition, the lease agreement should also be without any loopholes, to avoid any misunderstanding and legal suits with the tenants. Ultimately, all expenses will have to be considered in terms of available budget and maintaining a consistent and decent cash flow. An effective operating budget has to be in place to avoid any cash crunches, and there should be adequate cushioning to accommodate unforeseen expenses in maintenance.
Apart from that, commercial property management also involves leading and overseeing a team of housekeeping personnel, maintenance professionals, accountants, and clerks. The common areas have to be kept clean and well maintained. This can be accomplished by employing competent housekeeping personnel, and training them for particular tasks. Overseeing the maintenance team will usually take priority, as many things will have to be serviced on the property to keep them running efficiently.
No Day is an Off Day
Any laxity on the part of maintenance will spell disaster in a commercial establishment. Ongoing checks and servicing of important systems in the building like lifts, HVAC, and electrical grids have to be done on a daily basis. Overseeing a team of maintenance professionals can be quite challenging. However, the task can be made easy by adopting a proper reporting system, and allocating specific responsibilities to the team members.
Commercial property management involves many aspects that are best left in the capable hands of competent experts in the field.