Wednesday, October 20
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Why Is Lease Management Important to Commercial and Retail Property Today?

Today we see tenant and occupancy pressures on most commercial and retail properties as well as the tenant mix in each. When levels of business and economic sentiment shift as they are right now, the planning for an investment property becomes more important.

Making Ends Meet?

Some tenants are struggling to make all the ends meet when it comes to the costs of occupying investment property in balance with their business operational costs. Similarly some landlords are struggling to keep income up and expenditure under control in the properties that they own. Now more than ever before, specialised commercial property management is of great importance for landlords.

Things will get better for landlords, businesses and tenants, but right now it is wise for you as the property manager to have a tenant lease management plan in place for all of the properties that you manage. The plan helps you work with the pressures coming from the tenants, the market, the landlord, and the business community.

Set the Right Strategies

As a property manager or landlord, the lease management plan will help you set the right strategies and keep to benchmarks of rent, lease structure, outgoings recovery, tenant placement, and vacancy management. In balance these factors help you with the property performance and the targets that you are trying to achieve.

So this lease management plan can help you:

  1. Negotiate rent reviews in a timely way so that the rent and lease that you achieve is in keeping with the income and expenditure expectations for the property.
  2. Build your tenant mix profile to a property plan and not just lease by lease, in this way any upcoming vacancies can be dealt with in a timely way.
  3. Decide what existing tenants are good for the future of the property. This will allow you to negotiate a new lease with them in advance of lease expiry.
  4. Decide what existing tenants are of little benefit to the property and hence give you the chance to change them within the tenant mix analysis and expected changes.
  5. Set some standards regards the lease documentation that matches the landlord plans for the property.
  6. Apply special conditions to some tenancies where factors of change apply such as make good, refurbishment, renovation, relocation, expansion or contraction.

In creating a plan like this you should give due regard to locational factors and established benchmarks. This means checking out all other similar properties in the same local area. It also means closely monitoring the supply and demand factors of lettable space in the local area. How many new property developments are planned for the precinct or under construction, and just where will they be located?