I am confident the wait will be worthwhile and you should begin to see content rich and informative articles to help you better understand lease administration, physical condition related topics, and a ton of other new and improved content and resources.

The lease administration module should be open no later than August 3rd with weekly updates available. Physical Condition content should begin to post no later than Labor Day this year and will include topics on mechanical, electrical, fire/life safety as well as architectural conditions such as roof replacements, facade and garage deck restorations to name a few.

Thank you again and we look forward to providing you with up-to-date info on all office building type operations as well as commercial retail and industrial properties included.

Until then….

The International Green Construction Code (IGCC) is designed specifically to integrate and coordinate with the other international codes that are already enforced by governmental code officials at all levels.

All 50 states and more than 20k U.S. jurisdictions use the international codes developed by the ICC for safety and sustainability. The international codes also serve as the basis for construction of federal properties around the world, and as a reference for many nations outside the United States.

The AIA and ASTM have played a vital role in the development of the IGCC. The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), the U.S. Green Building Council (USGBC) and the Illuminating Engineering Society (IES) participated in the development of the IGCC.

Each organization has a strong prominence in the US strengthening the basis that will drive the Code. You can find more information about the new International Green Construction Code by visiting their website at www.iccsafe.org

The tenant looks to the landlord to operate the property in a professional manner that will allow them to operate the business without unnecessary restrictions but still within certain guidelines as stipulated in the lease agreement. The lease defines specific obligations for both the tenant and the landlord which comprises the overall operations of the property including the timely payment of rent by the tenant, Additional services include the maintenance and upkeep of the building’s mechanical equipment, electrical and plumbing, janitorial services, landscaping and other services depending on the type of tenant (retail/office) and the design of the building.

There are certain tenant obligations reflected within the lease other than the payment of rent. Some examples include insurance requirements, space improvements, signage, operating hours of the property, etc. The lease also spells out any changes or extensions to the lease such as renewals or rights of first refusal.

Ultimately it is the property manager’s responsibility to control the operating expenses of the property and enforce the rights and obligations of the landlord and tenant. The manager will administer the lease in an effort to protect the landlord’s investment. Understanding and administering every tenant’s lease agreement from the operating expense pass-throughs to the janitorial and security service requirements is a fundamental task of building management.

A good starting point for a well developed capital budget would be a complete and comprehensive physical inspection including the exterior grounds, building or structure, the interior appearance and just as important, the mechanical, electrical, plumbing and fire/life safety systems.

Prioritize your projects and identify those that should be addressed based on the order of safety and value. An example would be:

• Fire/Life Safety Concerns including fire alarm, sprinkler, fire pump, etc.

• Building Code related deficiencies

• Projects that will reduce future operating expenses or have adverse consequences if not addressed

• Projects that affect the marketability of the property

A reasonable assessment of the current conditions including the useful life expectancy of major equipment is critical and one of the least understood aspects of a capital budget. Let me say from first hand experience, a well prepared property inspection can be time consuming and tedious. It is of utmost importance  while developing a capital improvement plan to stay focused and keep a clear understanding of the owner’s objectives.

Typically a five or ten year plan is developed. However, once you start looking more than five years out, it is difficult at best to maintain the accuracy. The important thing is that you make note of these improvements and include a cost based on the best available information you can find. You might start with the manufacturers recommendations.

You can and should update your capital schedule annually at a minimum and this should help to maintain the integrity and accuracy of your schedule. Many institutional investors require a ten (10) year capital plan be included with the annual business plan and operating budget.

To help keep my sanity during this process, I separate the plan into two equal time periods of five years.  I spend a considerable amount of time on the initial five year plan for several reasons. I have a better understanding of what will be needed including the costs. The remaining five years of the capital schedule are more about identifying what will be needed and not so much the accuracy of the costs. Don’t get me wrong, you still need to do your homework, and apply your efforts consistently throughout the schedule.  However, market conditions, supply and demand, can and will affect the accuracy of your estimates. A good grasp on the useful life expectancy of the mechanical equipment as well as the construction materials is helpful.

Projects such as a roof replacement or chiller overhaul are fairly easy to determine when major costs will be incurred. As those projects get closer, a more accurate picture can be painted and re-evaluation of the cost will be necessary.

Long range capital planning should be reviewed and updated annually. Upcoming projects should be re-evaluated to determine the priority and ability of the property to absorb the costs. You can either include it in your upcoming budget or move it to the next budget year or farther into the future. If it is no longer a viable option, then scrap it.

Most reputable contractors will be happy to provide you pricing and budget numbers. I do it all the time and if you approach contractors in a friendly and honest way, you most likely will get their best effort with accurate pricing. Make sure you invite them to participate in the bid process and let them know they will have a fair chance at winning the bid as long as their prices are reasonable.

On the other hand, if you just send out an email or solicitation asking for a quote, you might get an estimate the first time, but if you are not honest and upfront by inviting their participation in the bid process, you most likely won’t get them back out to your project again.

There are many ways you can work with contractors to get accurate bids for capital projects and for those projects that are 5 or more years out, you can use industry standards initially until the project is within 18- 24 months. This is when I would concentrate a little harder on getting more accurate budget numbers.

Just remember to address deferred maintenance items and understand the scale of the issues at hand. Quantify and communicate the financial impact and develop a strategy that will make the project successful. Another words, use good common sense, and try to spread the projects throughout the year so you are not slammed in the first 2 or 3 months of the year. Share the timing with your accountant since the monthly income of the asset varies throughout the year and in most instances, you don’t want to have a capital call where the owners need to take money out of their pockets to fund a particular project unless it is absolutely necessary. It should go without saying, constant communication with your accountant will save you and the company from making a mistake.

Of course you want to start outdoor projects in the spring, summer or fall. You may find that materials and men don’t work so well in parts of the country where it is 10 degrees outside and you are attempting a façade restoration, trust me, I’ve tried it and failed several times before I learned to build in down time for inclement weather and other unknowns.

Capital planning is an ongoing exercise and one of the most important aspects of budgeting due to major costs involved. You would do well to add an evaluation of the plan on a quarterly basis to you task list. There is much to write about when discussing capital costs and which projects are warranted. Clear and consistent communication between the owner, manager and accountant are necessary to achieve a successful capital plan.

Good Luck! And Happy Budgeting!

For example, a commercial office building of 20,000 square feet that generates $20 a square foot or $400,000 annually might negotiate a management fee of 5%.

But a 300,000 square foot building that generates $50 per square foot or $15,000,000 annually might generate 2 to 3% management fees or $450k annually.  There are many things to consider and it really comes down to what the market will bear.

Property Manager Job Description

Although responsibilities vary from property to property, there are specific tasks that are general in nature to all properties, large and small. The principal duties and responsibilities of a commercial property manager includes creating a income and operating expense budget; establishing building rules, policies and procedures; estimating operating expenses on a monthly basis; hiring personnel and selecting contract services to maintain the property; handling accounts payable; lease administration duties; tenant retention programs and administration of risk management programs. The property manager may also oversee and coordinate tenant improvements, specific building improvements such as replacing the roof or repaving the parking area or performing concrete deck repairs in an underground parking garage. The property manager is generally involved in the leasing process in some form although a separate agreement is typically entered into between the property owners and leasing broker. There are many other responsibilities not listed in this article as I am only trying to reflect some of the more pertinent responsibilities.

Qualifications

Qualifications of a property manager also vary depending on the real estate market and type of property. It would be  prudent to attain a real estate management designation such as the certified property manager designation sponsored by International Real Estate Management (IREM) or Real Property Administration (RPA) sponsored by the Building Owners and Managers Association (BOMA). Some firms require a college degree and some look at each candidate and their education separately to make a determination of their employment. There are also several universities offering property management or real estate management courses and may also be available on-line. You can get more information about these designations on the internet by going to www.irem.org or www.boma.org.

Get Information Pertaining to Salaries & Wages Here.

Wages for commercial property managers very significantly depending on the location, type of property and most importantly, responsibilities. I don’t know if this holds trues in all markets but there is a difference between suburban properties and downtown urban centers in the areas I am familiar with which is the the Washington, DC and metropolitan areas including Baltimore and northern Virginia.

There you will find that an experienced commercial property manager managing one medium sized (250k SF) property with annual wages ranging from $75k-$90k.

If you were to take the same property along with the same responsibilities, and relocate them to the suburban areas outside the city, annual wages could vary by as much as 10% if not more. Also, wages vary greatly throughout the country.

At the time of this writing (Mar-2010) the economy has just come out of a recession but the real estate industry as a whole has suffered losses in asset value and lower rents. Tenants are able to get generous concessions from rent abatement to above standard tenant improvements. This along with the unemployment rate at more than 10% changes people’s mindset and most are just happy to be employed. More about the economy, property values and the real estate market will be discussed in future articles.