Harold Samuel, when asked what the three things were that mattered in property, replied “location, location, location”. The right location will make a huge difference to the business looking to tenant the property. From access to arterial transport routes to brand visibility and foot traffic, almost every commercial building has a tenant that considers it the perfect location for their business. But there are a few key considerations to make when choosing how to manage a commercial property, especially because it is quite a different process than managing a residential property.
The responsibilities of a commercial property manager can be a lot to understand and include legal, financial, budgeting and maintenance tasks that take up a lot of time. It’s important to know what these obligations are so that you don’t get caught out with legal action or any large fines. That’s why we’ve written this article to help you understand exactly what commercial or industrial property management is and how to do it well.
Legal differences between commercial and residential property
Residential properties are the main living space for tenants and their management is primarily determined by the Residential Tenancies Act 1986, as well as The Building Act 2004, The Building Code, Housing Improvements Regulations 1947, and the recent Healthy Homes standards which can all be found here.
On the other hand, commercial properties are governed by the Property Law Act 2007, and leases are based on a Deed of Lease. Often in these cases, a lawyer is involved to assist both the owner and tenant. Generally, business leases are for a longer period and the deed recognises the tenant has exclusive rights to possession of the premises. Due to the nature of housing, most residential leases are renewed annually, but for commercial leases, it’s not uncommon for them to last decades.
In these long-term leases, the property owner cannot reoccupy the property without certain legal agreements with the existing tenant, all of which are determined by The Property Law Act 2007.
Managing a commercial or industrial property
Managing a commercial property involves a range of complicated tasks which means you’ll require a thorough understanding of the law, accounting, budgeting, property maintenance, and more. The most important things to remember are as follows:
- You are responsible for renewing the lease and ensuring it is done according to relevant legal standards.
- For accounting purposes, you need to keep a comprehensive record of all expenses and income.
- You need to be on hand to facilitate necessary maintenance. This includes finding maintenance professionals to complete the work promptly.
- You are required to be financially prepared for any property-related expenses. This means you need to budget effectively and keep a close eye on invoicing.
- You are responsible for collecting rent, resolving tenant issues, and completing regular inspections as required.
- You need to find and attract tenants — this is much easier with an established network of viable businesses.
Managing a commercial property comes with added responsibilities as the disruption to a tenant business can be incredibly costly. Any time that a business needs to slow down or cease operations, they lose money, and if the property itself causes this disruption, then you may be directly responsible. As you can see, managing a commercial property is an around-the-clock commitment, and requires a significant amount of industry knowledge. If you are interested in managing your commercial property, you’ll need to invest a considerable amount of time and resources into the process.
Managing multiple business tenants
Many commercial properties feature spaces for more than one tenant, which can also be a lot to juggle. With more than one business using your commercial space, there are likely to be several differing priorities, preferences, and expectations for you to keep track of so it can be difficult to maintain the status quo. If your commercial property is used by more than one business, you might want to consider enlisting a professional business property manager to ensure all interested parties are kept happy, without you having to worry about the logistics.
Resolving issues immediately
A commercial property manager is obligated to resolve problems quickly and effectively so that businesses can continue to operate with as little disruption as possible. Especially in cases of repairs, issues that arise have the potential to cause major complications for your tenants, so it’s critical to be prompt when fixing them.
Since these issues could affect their bottom line, tenants are likely to have high expectations and not take kindly to long delays.
Attracting the right commercial tenants
Another key part of managing a commercial property is finding tenants to lease it who are a good fit. This can be a challenge if you don’t have an existing network of prospective businesses but with an experienced property manager, it can be fast and painless. Professional property managers are constantly making connections and establishing contacts with the right people so that when required, they already have a list of viable candidates to join a lease. For example, the owners of a local hotel enlisted McDonald Real Estate to manage their commercial space as they live overseas and when new tenants were needed, there was a quick turnaround and the rent kept coming in with little delay.
Benefits of hiring a property manager for your commercial space
So should you enlist the help of a business property manager for your commercial property? If you’re uncertain, here are some key advantages to consider:
- It reduces the stress and responsibilities on your shoulders so you’ll have more time and energy to invest in other ventures or simply relax.
- They know the local market and can ensure you are getting the best possible rate from your tenants.
- They have access to innovative technology for organising files, finances, and other complicated paperwork.
- They have a thorough knowledge of commercial property law and experience in representing commercial property landlords.
- They have a comprehensive network of reliable tradespeople ready for maintenance and repairs.
- They handle day-to-day tasks with professionalism and efficiency.
- They can attract credible tenants quickly as needed to minimise downtime between leases.
- They share responsibility for the effective management of your commercial property.
If you have a commercial property and are wanting to find out exactly what is involved in managing it, we recommend speaking to some local experts in the industry to save you both time and money. With McDonald Real Estate you can get a free, no-obligation appraisal for your commercial property to be informed and prepared for the next steps.
Whether you manage it yourself or decide to enlist the help of an expert, it’s crucial to know precisely what your space is valued at and what prospective tenants are likely to expect. So talk to the friendly team today for advice on keeping your tenants happy and guaranteeing a regular flow of revenue.
