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Thursday, September 1, 2011

Commercial Property Management: Different Property Types: Different Approaches

By Peter Leroux (Toronto)

In speaking with a client this week, they asked me what differentiates our management approach to managing the different classes of commercial properties (retail, office and industrial). Though each asset class requires the core property management services of rent collections, physical maintenance, accounting and administration, there are definitely differences amongst the property types. Here is how we see it.

Retail Management

• Of all property types, the Landlord/Tenant relationship is very much intertwined. Each is dependent on the other to generate an ongoing market presence and mutual success. As a retail property owner, you are very much involved in your retail tenants’ business success or failure.
• Generally, a retail lease is much more complex than other commercial property types, dealing with such issues as exclusives, tenant sales and percentage rent, co-tenancy ownership with major retailers (anchors), tenant radius clauses, allocation of Common Area Maintenance (CAM) costs, etc. So our lease administration and negotiations are much more extensive and ongoing throughout a tenant’s occupancy.
• Retail management involves a detailed approach to marketing, market presence, tenant mix and services, community involvement, shoppers and their attitudes, the public’s gathering, enjoyment, comfort and security. So a Retail Manager is much more engaged with the public and has extensive personal interaction with their tenants.
• Rental collections tend to be more demanding than other commercial property types because sales can vary by month and time of year. Inevitably, it is the Landlord’s fault if sales for the month were poor.

Office Management

• Our primary focus is on tenant services and comfort, providing tenants and their staff a productive and conducive work environment.
• In our office properties we strive to create a professional business atmosphere for our tenants and their guests.
• Operationally, we maintain and operate more sophisticated machinery, equipment and building systems when compared to the other property classes.
• Environmental responsibility, sustainability and energy management are key drivers today in our approach to office management.

Industrial Management

• Our primary focus is on the maintenance of the exterior structure, grounds and parking areas.
• To ensure tenant retention and success, we are very much concerned with our tenants ease of shipping and receiving of their goods.
• From an owner’s perspective because of the nature of industrial businesses, wear and tear on their assets is greater than other property types along with Industrial owners face the greatest risk of tenants creating environmental situations

To recap, retail management is very interpersonal, office management is focused on the work environment and industrial management is geared towards structural management and risk mitigation.

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