Commercial Property Management

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As most of us know, on the average leasing activity levels in the US office market have declined over the past 2 years. Nothing new here, and the only positive thing is the rates of decline have been smaller than the previous reported 3-month activity. The reasoning behind this slow activity is a result of tenant’s hesitancy to set aside capital and make a business decision. Most real estate experts believe the leasing market is nearing the bottom, thank goodness!

Some office markets were hurt more than others like Raleigh/Durham, Miami, Jacksonville, Atlanta, Austin, Houston, and I could go on, but quite a few major markets have felt the pain. Most of the leasing volume during 2009 were driven by lease expirations. With the hesitancy in the marketplace, tenants are signing shorter term leases and/or renewals further delaying their decision to make a long term commitment. Now this is not true in all cases as we have seen a number of deals where tenants have signed a 10 year lease but this is in a market (Washington, DC) not affected quite as much as some of the other markets mentioned above.

Low demand and the upward swing in sublease space have forced landlords to reduce rents in order to create some demand in their office buildings. Longer rent abatement periods and higher tenant improvement dollars has helped to create some activity but at what point does the landlord draw a line in the sand?

I don’t want to paint “doom and gloom” everywhere but vacancies will most likely continue to grow over the next 6 months. Companies with lease expirations coming up will most likely re-evaluate their business and take the opportunity to either downsize the amount of space they plan to occupy or come out with the mentality of “shop until they drop” for the best deal they can find. Competition is, and will continue to be fierce with brokers and landlords on the front line.

This is where building owners and property managers must take the initiative and make their property shine 24/7. So many times I have walked into an office building to see the metal shining and the floors waxed to a glow so sharp I could see my face in it. I turn around and walk into one of the vacant office spaces to find that the floors haven’t been vacuumed, dust building up on the window sills, trash on the floor or materials stocked in the space due to a lack of storage or someone just being lazy.

Property managers need to consider making a deal with your janitorial service and split the vacancy credit or do something to off-set the cost for regular cleaning of you vacant spaces. There is just no excuse and what do you think is going through the mind of a prospective tenant when they see a vacant space that has not been cleaned in a couple of months?

I realize keeping operating expenses down is important, especially with the current market conditions what they are. But trust me, if you lose a deal because of negative feedback from a prospective tenant, you may find yourself looking for another building to manage. This is basic property management but you can get so busy working on other projects that you overlook the basics and I can tell you from first hand experience since it has happened to me. I can also tell you that I learned my lesson and it only takes one embarrassing moment to learn the hard way.

So stick to the basics and do them well. Eventually the market will return, your building will shine and you my friend, will also. Listen to the video below and you will hear from a 3rd party, exactly what you should be doing as a manager.

Of course everyone wants things done faster and cheaper, as long as everything stays the same, correct? How many times have I heard this statement? Hurry up but let’s not change the way we do things around here. Well let me tell you, a monumental change within the industry is needed in order to make this dramatic progress a reality.

One of the changes occurring is the environment and by that I mean for a lack of better term, “Going Green”, and we are hoping like many others, that by adding Greening to this concept, maybe it might just take off. As you already know, anything about “Going Green” or “Greening” is quite popular and rightfully so.

But in order for commercial real estate management to become a green industry, we have to do more than just recycle. It will have to include creating standards, eliminating redundancy, identifying the appropriate tools and not starting from the beginning every time we are assigned a new property.

In order to make this a little clearer, let me present a few examples. For instance, tenants expect us to be at our desk all the time to answer their questions or answer the phone when they call. The building owner expects us to walk the building and property daily to ensure everything is in good condition. At the same time, we need to watch every dollar we spend and make sure we collect every dollar owed. Since we are the property manager, we are also held accountable for out team, each member of the building staff to insure our corporate office the staff is doing their job and being supervised 24/7.

Include the broker who is inquiring about space and wants answers about the property right then, and the vendor who is calling you about the money owed from a project he completed. All the while one of your tenants is standing at your office door frustrated that a car is parked in their space and has not yet been towed.

Now double or triple this for those of us who manage multiple properties and these are only a few of our daily tasks. Granted, some of my examples above may not be exactly correct but I use them in order to get my point across, and hopefully I did.

Because the industry is so bogged down with redundancy, limited standards, dysfunctional tools and wasted motion, we are one of the biggest culprits of waste and inefficiency. With all the new fangled electronic gadgetry on the market now, you would think we wouldn’t be spending time ordering office supplies such as cases of copy paper, envelopes, binders and folders, etc.

What it all boils down to is cohesiveness or cohesive systems. With cohesive systems that communicate, redundancy would be all but gone. The manual tasks would be eliminated and errors and service would improve.

There is a group tackling these types of challenges called OSCRE which is an abbreviation for Open Standards Consortium for Real Estate. OSCRE understands the key to creating standards across all companies. Every day they are studying standards and investigation how to embrace and standardize the property management industry.

By taking these standards and connecting them to your systems, everyone will be able to share data across any database no matter what type of accounting, work order listing service or lease abstract system you are using. Every aspect of managing any asset would be treated as a giant template and once in place, you would only need to change the names and fill in the blanks.

If the property management industry can start looking at standard practices, systems and procedures as a template or group of templates, we can surely be a much Greener industry and eliminate much of the waste in our own backyards. Other organizations pioneering industry wide standards are shown below the video included here. Check it out as it really gets the point across and will open your eyes to what is really happening in the industry.

Multifamily Information and Transactions Standard (MITS). Information can be found at www.mitsproject.org

Realcomm – Considered the intersection of Commercial Real Estate and Technology. Information can be found www.realcomm.com

Manager Labs – Where the concepts of the future become a reality for the industry today. Visit www.managerlabs.com

And for more information about OSCRE mentioned above, visit www.oscre.org

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