Commercial unit management is one of the biggest challenges you will face as a property owner. One is tricky enough, but it becomes exponentially more difficult the more you own. You can’t do it alone and will need expert help. However, here is a quick reference to get started.
Study, Research, and Vision
The more you know, the better. Going into an investment opportunity blind is foolish. If you are sourcing properties, research them as much as you can. This helps alleviate fears and will prevent financial burdens later on. Established developers like Randy Benderson understand that research and vision are some of the biggest secrets to commercial real estate success. If a unit doesn’t feel right (after visiting it), then use your better judgment and pass.
Risk and Commercial Unit Management
Managing any kind of business comes with risk. Companies usually have a risk management plan to address policies moving forward. There are 4 types of risk that you must understand:
- Strategic: risks that can interfere with plans, such as a new competitor.
- Compliance: breaches of regulatory rules and laws.
- Financial: decreased income, such as non-paying customers.
- Operational: damaged, broken down, or stolen equipment.
You can develop key performance indicators (KPIs) to assist with risk management. You can use these and risk assessments as a guide for making decisions as you manage your units.
Tenant Satisfaction Measures
Of course, your retail units will have tenants, i.e., other entities renting the space. As with residential tenants, there are core responsibilities you must meet to satisfy commercial tenants. Mainly, this relates to meeting their needs. Tenant satisfaction measures (TSMs) aim to address what tenants want and need and how you can assist with keeping them happy. A happy tenant is a long-term tenant. And that means improved relationships and steady finances moving on.
Commercial Unit Management by Type
Knowing the type of commercial space you want to venture into can be a major advantage when starting out. Generally, there are four different types, all with their own unique challenges.
Office space
Office space is one of the most lucrative investments. There are 1.04 million office units in London alone, and the long-term return on investment of well-maintained offices is worth it.
Retail units
Retail is a little more risky given the reliance on external factors such as the economy. However, there are many opportunities, from strip malls to shopping centers and everything in between.
Industrial facilities
The world needs more stuff! China contributes 31.6% of the world’s manufacturing, and investment in industry is booming. However, industrial units require a lot of management.
Leisure spaces
Bars, restaurants, and family venues like cinemas fall under the leisure category. These can be lucrative because of niche experiences but require extra planning with things like parking.
Regular Property Inspections
As a reliable landlord, it helps to meet the specific needs of tenants set out by regulators. However, there is a bare minimum standard that most stick to. But is it not better for you and the tenant to go above and beyond? You can do this by inspecting properties on a regular basis. This means checking systems such as electrical circuits. But it also means structural integrity tests, health and safety checks, and even pest control. Happy tenants and paying tenants!
Digital Commercial Unit Management
In a digital world, there are many reasons to invest in new technologies. For management alone, your life can be made much easier. The average commercial property developer owns between 1 and 10 units. So landlord management apps are vital. Of course, digital technology extends into many other areas. For example, a digital system can manage user access control for the building, automate HVAC systems, and boost security with smart cameras and locks.
Documentation and Record Keeping
There are excellent reasons why successful companies keep accurate records. Records and data protect you when things go wrong and help everyone involved understand. For real estate owners, this includes tenancy agreements. But also financial records for the tax office! Records can be digital or physical. However, it is recommended that digital copies of documents be kept. You have a responsibility to keep both of these media secure against hackers and thieves!
Summary
Being diligent with research and study helps when starting commercial unit management. You will also have an easier time when you decide which type of unit you want to invest in. Good document keeping is a part of good business, and you must also protect these, even if digital.
