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What to know when hiring a commercial property management team
Commercial real estate property owners who have a facilities team on staff may think there is no value in hiring an external property management team. However, there are many benefits to hiring an external team that can look at an asset from an independent point of view.
Here are a few key reasons why outsourcing can add value and reduce costs over the long term.
When considering a third-party property management team, the first step is to find out if the company has a proven process for delivering results. One way to measure this is to find out if their management strategy is built on a philosophy of managing the building as if it were their own. These aren’t just words that are spoken; rather, they must be accompanied by a detailed process and plan that begins with the property owner’s core objectives. From there, the property management team must be able to outline in detail how it can help meet those objectives and goals. In addition, working with a partner that brings a “value-add mindset” to the conversation is critical because services beyond facilities maintenance such as lease administration, tax consulting, commercial brokerage, accounting, or capital expense forecasting also can have a significant impact over the long-term.
Focus on revenue
Focusing on increasing top-line revenue through recovery, proper lease administration and efficiency is the next thing to consider when hiring a property management team. Hiring a firm with skilled maintenance technicians is the first step toward increasing top-line revenue as this enables property owners to reduce hourly rates charged by third-party HVAC, plumbing and electrical contractors. Another way that these goals are met is by ensuring the right tenants and lease structures are in place to yield positive, net-effective rents and are in alignment with current market conditions. In most cases, one size does not fit all, so it is important to look for a firm that can offer an “a la carte” approach and put a personalized proposal of services together that is good for both the tenants and the property owner. Regularly auditing and benchmarking current operating expenses for reduction opportunities is necessary to maintain the lowest possible property costs without diminishing the value of the property or sacrificing tenant satisfaction.
Offset the risk
One of the most significant benefits companies receive when outsourcing their property management services is the ability to hire a single point of contact to support all of their tenant and property maintenance needs. Whether it’s for a retail, office, industrial, mixed-use, multi-family residential property or all five, if a tenant has an issue, the property management company gets the call. Moreover, when it comes to hiring independent contractors to replace windows, plow the snow, or upgrade HVAC systems, the property manager takes on the liability through its own insurance policy, which will allow the property owner to have an increased peace of mind and reduced risk in the event an unfortunate incident occurs.
Hiring an external property management team may initially seem like an added monthly expense. However, if an experienced team comprised of experts is selected to manage the property, the property can begin to increase in value, and decrease in unnecessary expenses. All of this will result in fewer headaches for the owner and overall property peace of mind knowing the asset is resting in the hands of dedicated professionals.