When you manage or lease a commercial property it pays to have a good filing system when it comes to the tenancy mix in every property. Every tenant should have a series of files that allow you to get to information fast and effectively. When things are happening in a tenant matter, you want to go the right file and get what you need to respond in a timely and effective way.
In properties with a lot of tenants, the filing system is highly important. That then brings me to another issue of just who looks after the files and places records and activities in the ‘right file’. If you do not file the right information, then the property management activities get difficult. When something goes wrong you simply do not know where to go, or you need a lot of time to get to an answer for the landlord or the tenant.
The trick to all of this is that you build a good property management and tenant filing system from the very start of the property management appointment.
Some may argue that you have the ability to scan documents and store them on some ‘hard drive’, and that is just fine, but the reality of the industry is that you do need some paper files to review and work with.
Here are some ideas to help you get your property management filing system up and running:
Each tenancy should have a correspondence file of current and past issues. This is where you go to look at letters and notes relating to current tenant matters. This file is also important from an historic perspective; you can go back and see what happened and how issues were agreed. This is really important where some tenants are not following the lease terms and conditions.
At the front of the tenant file, place a summary sheet of lease terms and conditions that you can quickly refer to in the case of a question or problem. This sheet should be inserted in the file at the start of any property management appointment and leasing negotiation. This information sheet should be updated as the terms of tenant occupancy change.
Any income matters of rent review, option, renewal, alterations, and rent splits should be entered into the property computer records using a standard template form of record. When this entry has been done, the form can be placed in the tenant file for future reference.
A copy of the lease and any other lease papers or licences should be held on file. Notice I said ‘copy’ and not ‘original’. It is not a good practice to keep original lease documentation in your office; if you have a fire, or if you lose the file the ramifications are not good especially if you have a lot of properties and tenants.
Any lease alterations and special billings for the tenant should be recorded on the tenants file for reference.
Good property records and tenant records will help your property management process. As your property management processes change, you can improve your systems and records.
When it comes to retail property performance, the tenant mix is a critical part of the leasing strategy. Well placed and selected tenants will help you as the property manager build the customer experience for the property. The end result is a property with:
Low vacancy factors
Good levels of customer visits
Optimised market rental
Solid enquiries from the local business community for leasing
All of this means that the landlords property can perform well in the current economic climate.
Property managers and leasing managers should make the tenant mix strategy a key part of the annual business plan for the property. Some good ideas to merge into the plan would include the following:
Base rental levels around which new leases can be created
Types of rental that allow the landlord to recover a good part of the property outgoings costs
Standard lease strategies that set targets on lease terms, options or renewals, makegood clauses, rent review processes, rent review types, etc.
Strategies of tenant occupancy that support the anchor tenant in the property
Early renewal processes for tenants that are desireable for ongoing occupancy in the property
Clustering of like type tenants so you can build off the sales activity of each tenant
Tenant optimisation is a result of a great tenant mix plan and its implementation.
Landlords, tenants, and property managers are all part of the property performance package to underpin a retail property performance.
The idea of lowering rents in a tenant mix strategy may not be a popular topic among shopping centre or shopping mall owners, but cash flow is still cash flow.
There is great value in communicating with your tenants and understanding their reality, as well as your own. Again, deal with each rental renegotiation on the specific circumstances of that lease. Know too, however, that a rental reduction, if necessary, may be recaptured in the following ways:
Percentage rent increase. If the tenant’s sales are off during a bad economy, presumably they will go up when times get better. The landlord can then recapture from a lower base rent via increased overage rent.
Deferred rent. If the tenant is having trouble, consider lowering the rent, with a deferred lump-sum payment at a specified date or on a stair-stepped basis to ultimately bring the rent back up to an acceptable level.
Term extension. As a trade-off for a reduced rent for a quality tenant, ask for a lease extension with gradual escalations. This will help assure long-term occupancy and profitability.
Advertising. Require that the tenant agree to spend a substantial percentage of any rental reduction toward advertising and promotion, in an attempt to increase sales.