Owning a commercial investment property can provide good ongoing returns and long-term capital gains, yet for many owners or potential owners, not having a clear understanding of the requirements of commercial property can be daunting.
By engaging an expert to manage your property and tenants, investing in commercial property really can be a hands-off exercise, meaning it need not be time-consuming or stressful.
While this is the primary reason many investors engage a commercial property expert, there are many other reasons why having a commercial property manager makes sense.
Your rent should be as close as possible to market, but a commercial property manager will seek to achieve an even better result. This enables the landlord to step back from the negotiation process. It is a fine art to achieve maximum market rent – while keeping the tenants happy.
Management Fee Recoverability
The base management fee is a recoverable expense which commercial tenants should contribute to under recoverable outgoings in their leases. Your property manager should always seek to achieve full recovery of the management fee over time.
Achieve & Maintain 100% Occupancy
A commercial property manager works to maintain a good working relationship with the tenant and will often be aware of a change of circumstances with the tenant sooner than what the landlord may have been. This can provide longer lead times when finding a new tenant is required.
Obviously, your net income is directly affected by how much you can recover from operating expenses. All recoverable outgoings should be recovered monthly, and a wash up should occur annually.
A property manager will tend to have a trusted and efficient group of maintenance contractors they can call on for work, urgent and otherwise.
A property manager will be able to give you advice on what insurance you need. It should include protection from material damage, business interruption, public liability and statutory liability. A commercial property manager will often work with specialist commercial insurance advisers and may be able to achieve a significant reduction in costs due to the buying power of their management portfolio.
A property manager will eliminate the risk to owners by ensuring they all comply with current legislation and fulfil their obligations under the Building Act and other legislation. This can involve setting up and monitoring the required service contracts to ensure compliance.
Commercial property managers provide a wide range of services including:
- Strategic planning for your property
- Compliance with all regulatory requirements
- Lease management
- Rent reviews and renewals
- Tenant liaison
- All repairs and maintenance
- Annual budgets
- Rent collection and debtor control
- Property Inspections
- Management, monitoring and negotiating service contracts
- Property accounting services
- Body corporate management
Something that is often overlooked is the relationship between the property owner and the tenant. For example, it is often easier for the tenant to bring a maintenance issue to the attention of a property manager than an owner. And in many situations, the owner is more likely to have the matter taken care of when advised by the property manager. It is far easier for the owner if the issue is overseen by the property manager when it is the responsibility of the tenant.
Fundamentally, a commercial property manager’s role is to maximise the benefits of ownership while at the same time minimising the issues.
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As NAI Harcourts’ flagship portfolio, Key Assets features the latest in industry thinking and a range of the latest exciting properties being marketed by NAI Harcourts all over New Zealand as well as further connects our listings with NAI Harcourts global network across 6500 brokers in 35 countries.
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