When you manage an older commercial or retail property there are some serious issues to monitor closely. They have different challenges when it comes to property performance and those challenges should be balanced as best possible given the prevailing market conditions. Failure to do so will hasten the redundancy factor and escalate vacancies when the asset can least afford to be exposed to such pressure.
When a new property development comes into the market it will threaten the financial performance and the tenancy mix of the older assets locally. For this reason an experienced property manager is required.
Many tenants will seek the best value and the most modern premises they can afford when it comes to leasing and occupancy. Many new assets and buildings will have lease incentives to draw tenants in from the surrounding business community.
All of this raises problems and challenges for the owners of older assets. This is where the property manager requires special skills and focus to maintain the older property and keep it competitive from an investment and leasing point of view.
Here are some key points of focus that can be applied in leasing and managing an older commercial or retail asset.
- Lease expiry dates should be watched closely. The existing tenants in the property are of high value to the landlord. Moving premises to another property will always be an inconvenience to those tenants from a business point of view. That being said, they will still want a competitive lease package to remain in occupancy beyond their current lease expiry.
- Outgoings recovery will be a real issue in older properties. The age of the property is likely to put pressure on repairs and maintenance and that will feed through to the income raised. Care should be exercised with net and gross rents to ensure that the landlord gets a reasonable recovery of outgoings.
- Capital expenditure will rise with the age of the asset. The capital expenditure spent in the property will be a cost to the property owner. It is wise to establish a budget to keep capital expenditure under some control as the property ages.
- Tenant mix and the tenant mix strategy can be of real importance to a retail property. It is largely the reason people will visit the building. Choose the right tenants that suit the customers and the adjacent tenants.
- Services and amenities should be maintained for the tenants and visitors to the property. If this fails to occur, it is likely to drive people from the property. Therefore lifting the vacancy factor and lowering the income for the landlord.
- Maintenance in older properties should be kept up to scratch for the tenants and suitable for safe and compliant property performance.
If you manage an older property, develop the right systems to keep income up and the tenants in occupancy. Plan your property management systems with the landlord.