Buying a strip center, office park, or warehouse facility is a huge investment. When you own commercial real estate, you become responsible for the complex network of tenant needs, daily building operations, and structural upkeep. If you leave an asset to run on autopilot, mismanagement can fester, and profit margins slowly decline while administrative headaches grow. 

Leveraging every dollar you invest in your real estate requires a structural commitment to operational excellence. Profitable growth is only achievable if you approach your physical asset like a business intended to produce strong recurring revenue. Professional commercial real estate management raises the bar for sustainable financial appreciation.

What is the Importance of Property Management?

Any commercial real estate asset you own is a business within itself. While the physical building offers square footage, a sound operational foundation is what truly drives value. Day-to-day business operations have a large direct correlation to your property value. If your asset is mismanaged, tenants will leave, the building falls into disrepair, and you risk pricing yourself out of the market.

Professional property management can have a significant impact on your Net Operating Income, better known as NOI. Commercial buildings are purchased and sold based on the income they produce compared to their operating expenses. By increasing revenue and decreasing expenses, your overall property value goes up. Commercial property management helps you focus on both.

How does property management increase tenant retention and reduce vacancy rates?

Commercial Property increases occupancy rates by keeping your tenants happy and engaged. Better communication, through professionally curated tenant portals, ensures your occupants never have to worry about slow response times or misplaced paperwork. Additionally, by fixing problems quickly, you prevent small annoyances from becoming major sources of frustration. Long-term businesses are also more likely to sign extended lease agreements if they are happy with their current space. When you own the building, these types of leases secure your cash flow and grant you precious stability.

Properly managing tenant relationships can drastically reduce vacancy rates. Vacancy is the number one enemy of property value. If a unit in your building is unrented, you aren’t collecting money, but you are still paying bills. When tenants move out, you are forced to pay expensive broker fees, marketing expenses, and lease build-outs. Keeping long-term tenants allows you to maintain stable operations and avoid these churn costs. Higher tenant retention directly benefits your profit margins.

Maintain Your Assets to Maintain Value

Neglecting the condition of your property is a surefire way to lose money. Everything from a dripping faucet to a faulty fire sprinkler system can drastically reduce your property value if left unchecked.

Implement Routine Maintenance

Successful commercial properties run on preventative maintenance. Always be proactive with your assets because it’s better to catch an issue during your monthly building inspections rather than after a problem has escalated. From HVAC services, to roofing reports, to asphalt preservation- keeping your physical building in great condition extends the life of your asset.

Avoid Costly Breakdowns

Property maintenance isn’t just about keeping your building shiny, though that certainly helps. By using a professional property management company, you can identify problems before they become expensive. Maybe that blinking light on the thermostat isn’t an issue right now, but it likely will be during peak cooling season. Taking care of your assets early allows you to plan large expenditures months, if not years, in advance. Having that kind of visibility into your operating budget can seriously improve your property’s performance down the road.

Walkthrough

Take a minute to walk around your property and inspect these areas:

• Parking Lot Conditions
• HVAC System Function
• Entryway Details
• Building Layout

Score your property out of 10 in each category. If your total score doesn’t reach 40, something needs to change. Your building is your largest investment, often costing you millions of dollars. By ensuring that you have a handle on your day-to-day maintenance, you can protect your asset against the headaches of unexpected breakdowns and repair costs.

Streamline Your Budget and Spending

Your building can rent for top dollar, but if your overhead continues to bleed money, you won’t ever see a strong return on your investment. Protecting your profit margin is about more than just maintaining your physical building.

Create a Detailed Budget

Every successful property manager knows the ins and outs of their budget. Not only should you know this year’s expenses, you should be able to predict next year’s. Having a detailed budget allows you to allocate funds for future expenses and build a large enough reserve fund to cover expensive replacements without needing to pull money from your bank account.

Cut Vendor Expenses

Commercial buildings can’t run without outside vendors. From landscapers to janitors to security teams, you have to manage a complex web of external services. Property managers cut expenses by aggressively negotiating contracts on your behalf. Because we work with so many vendors, we have the market advantage and can often get your property preferred pricing. Our ongoing vendor communications also allow us to evaluate the quality of their work and ensure your property is only spending money on contractors that deliver what they promise.

Build Value With Curb Appeal

Your building makes a statement to the world before tenants even set foot on the property. Curb appeal sets the tone for your brand and can vastly improve your rental rates.

Pressure washing walkways and keeping your landscaping green are simple tasks that demonstrate to tenants your building is well taken care of. One of the most important aspects of curb appeal is an organized and aesthetically pleasing common area. Cleaning your lobby and painting your elevator doors might seem like minor improvements, but they pay huge dividends.

Small Details Matter

Investing in your property shows tenants you care about providing a world-class experience. From upgraded garage lighting to new keypad door entry systems. First impressions are everything, and surprising your tenants with nice touches can encourage them to stay… and pay more rent.

Safety Driven Asset Protection

Did you know that commercial buildings are just as susceptible to liability claims as residential complexes? There are a few different layers to risk management when it comes to your property.

Stay Up-to-Date on Compliance

Commercial property management companies understand local market regulations inside and out. From fire code requirements to ensuring your building passes all state safety inspections, we take pride in keeping your building compliant.

Minimize Liability

Accidents will happen. It’s your job as the owner to limit large exposure by having detailed records of every maintenance call, safety inspection, and repair. Once again, a good property manager mitigates your risk by conducting regular property inspections and documenting any potential problems. Catching these issues early can be the difference between getting sued and having a tenant leave a negative review.

Enhance Decision Making Through Powerful Reporting

At the end of the day, commercial real estate is nothing more than a numbers game. Property managers keep detailed monthly financial reports that allow owners to see exactly how much money they made or lost each month. These reports offer high-level overviews of rental income, expenditures, billable services, and everything in between.

Going even deeper, property managers utilize modern software to track real-time occupancy trends and strategize around potential vacancies. By overlaying your property’s data with regional market conditions, you are given unprecedented visibility into how your asset compares.

When is the Right Time to Hire a Property Management Company?

You don’t need to hire a property manager right away. Most owners try to self-manage at least once during their investment journey. Property management should come into play when you feel like you can’t keep up with the day-to-day operations of your building. If you’re experiencing any of the following problems, it’s time to hire a professional property management company.

• Increasing Vacancies – Do you feel like your property is struggling to attract new tenants or keep existing occupants? Rising vacancy can be a sign that either your rental rates are too high or your tenant’s needs are not being met.
• Visible Maintenance Needs – Peek around your property. Is there paint missing from the exterior walls? Is your asphalt cracking? Maybe your building is renting well, but it’s just time for an HVAC replacement. Large maintenance projects are often what sways owners to hire a property manager.
• Rising Expenses – If your operating expenses are steadily rising it may be a sign that you’ve lost control of your vendors. Experienced property managers tightly manage vendor contracts and regularly monitor utility usage to squeeze additional savings from your operating budget.
• Missing Deadlines – Rent collection is critical to your bottom line. If you’re struggling to keep up with rent notices or missed administrative deadlines, it may be time to outsource to professionals.

Increase your Property Value Tomorrow

The benefits of property management compound over time. Every month your building operates without professional management, you’re leaving money on the table.

Keep Your Tenants

Retaining your tenants keeps your rental income consistent. Even if your property is rented to its full potential, high churn costs will eat away at your profits.

Protect Your Investment with Preventive Maintenance

As we discussed earlier, maintaining your building will protect your asset from expensive surprises. Proper management ensures you know when the parking lot needs to be repaved, or it’s time to start saving for a new roof.

Professional property management is an investment in the long-term productivity of your asset. Goodwin & Company has refined our commercial property management services over two decades of market experience. Focused on major urban markets in Texas and Colorado, we’ve developed proprietary methodologies that maximize investment return. Contact our team today and see what we can do for you!

Supercharge your property performance with a team that believes in earning your business one month at a time.

Frequently Asked Questions

Q. How does commercial property management increase property value?

Commercial property management increases value by streamlining operating expenses and ensuring your property remains in high demand. Increasing revenue while decreasing expenses directly impacts your Net Operating Income (NOI). The higher your NOI, the more valuable your property is perceived to be.

Q. How do property managers manage my property?

Property managers can take care of anything you need, from maintenance requests to renewing leases to detailed financial reporting. Really, the sky is the limit when you have professionals managing your property every day.

Q. Will property management improve my tenant retention?

Yes! One of the biggest benefits of professional property management is how well they communicate with your tenants. Giving tenants a centralized location to make maintenance requests and renew their leases improves tenant satisfaction. Happy tenants are more likely to renew their lease, and you maintain another stable unit.

Q. Does maintenance increase commercial property value?

Keeping your building well-maintained cannot only increase rental income, but it also saves you money. By taking care of your building today, you will have time to plan for large maintenance expenditures. Deferred maintenance is sure to devalue your property.