Whether leased, owned or a combination of the two, a great commercial real estate portfolio accelerates business growth. However, with a mix of critical dates, projects, documents and key data to consider, managing one is anything but simple.
Here are five tips to help you minimise your risks, reduce costs and help realign your property portfolio with your business requirements and long-term objectives.
Stay acutely aware of landlord traps that can catch tenants out and lead to complications. For instance, rent review clauses often provide landlords with a relatively large window of opportunity to issue rent review notices. And this can happen before or after the review date.
That means landlords can keep a close eye on market changes and only issue notices when it will lead to the best rental outcome for them. What’s more, commercial tenants usually have a relatively small window of opportunity to respond to the new rent notice with an alternative amount. By default, if a tenant does not respond within the allocated time frame or does not respond at all, it’s taken as a ‘tacit acceptance of the landlord’s proposed rate. (This is why landlords have an annoying habit of issuing rent notices during busy periods or around public holidays).
If one of your sites has an upcoming lease expiry, give yourself enough time to canvass the market for more competitively priced spaces that you could relocate to or leverage in your negotiations.
But keep in mind that the amount of time you need for this exercise will rely heavily on the market. In a relatively tight market (e.g. industrial in Newcastle), where options are limited, you will need to act earlier than in a soft market (e.g. office in Sydney CBD).
Remember that no landlord is the same. Each will have a different portfolio, expectations and objectives.
For instance, a “mum and dad” landlord located in a regional area is likely to have a small commercial real estate portfolio. They will usually look for commercial tenants who will respect their investment and offer longevity.
These types of landlords are typically straightforward, easy to work with and more flexible. They are a stark contrast to corporate landlords in major cities, who are well versed in real estate, strong negotiators, less flexible with lease terms and looking to generate the highest amount of rent possible to maximise property value.
So, be sure to adapt your strategy according to each site and landlord.
Ensure you are on top of the finer details of every lease, not just the lease expiry and the option term. For instance, stay abreast of things like:
When it comes to managing your commercial real estate portfolio, working with a professional will support timely decision-making ahead of critical dates.
At Tenant CS, we represent commercial tenants and not landlords. We know the market like the back of our hand and offer years of experience in strategic negotiations with landlords. That means we can manage your portfolio, analysing your properties to provide you with a ‘snapshot’ of each location’s condition, operating costs, lease terms, space utilisation and risks. Whatever your business objectives, we’ll work with you to determine the best strategy for each site and strengthen your commercial real estate portfolio.