Investopedia defines property management as: “the administration of residential, commercial and/or industrial real estate.”
Commercial property management is not just managing leases and maintenance issues. It’s about maximizing your profits and minimizing your expenses.
Here are the major areas of focus in commercial property management.
Finding the right tenants is a crucial element of success for your commercial property. The DC area is one of the most expensive—and competitive—real estate markets in the country.
It’s critical that you find and retain the right tenants for your building. A commercial property manager has the marketing skills and industry connections necessary to get your units rented. They also know how to retain the best tenants and replace the ones that aren’t working out.
Online marketing is an important part of any commercial property marketing plan. Creating a website is only the beginning. Property managers have access to online marketing professionals that will leverage your existing site or create a new one to get the highest ROI for your marketing efforts.
While the majority of the interior maintenance is the responsibility of the individual tenants, there are some circumstances in which you’ll be required to foot the bill for the repairs. Commercial property managers have a deep list of contractors to pull on in order to get the job done on time and under budget.
Every jurisdiction has its own building codes and local rules. It’s important to be sure you and your tenants comply with all local laws, or else you will be liable for hefty fines.
Property management companies in DC are not required to be real estate brokers, as long as they are not negotiating the sale or purchase of real estate. Commercial property managers in the District are required to have a property manager’s license.
Virginia requires all property management companies to be licensed real estate brokers as well.
Taxes and Budgeting
It’s estimated that 90% of all commercial property owners are overpaying their taxes. It’s important to have a local expert on the ground who knows what exemptions and abatements are available to you, as well as how to ask for them. Their local knowledge and market experience means they already have a relationship with a local tax assessor.
A good relationship with the local taxing authority is advantageous if you find any discrepancies on your tax bills.
In addition to managing your taxes and appealing them when errors are found, commercial property managers will also keep a close eye on both the income and expenses for your building.
Property managers are shrewd negotiators who will work hard to lower expenses as much as possible to keep your income high.
Lowering expenses in the DC area is a challenge, because area tenants have high expectations for commercial properties and may become frustrated if amenities are sacrificed in the name of budgeting.
In addition, legislation passed in 2015 completely changed the way taxes are assessed on commercial properties in the District of Columbia. Commercial property owners pay more than before, and the trend of rising taxes is not expected to change in the future.
In addition to finding tenants and negotiating lease agreements, commercial property managers collect rents and work with tenants that are not meeting their contractual obligations.
This may include evictions, safety inspections, and a variety of other items necessary to keep the property in good working order and lower your liability.
Strong tenant relationships mean less turnover for your individual units, saving money in the long run.
Commercial property management involves much more than just collecting rent. Between marketing, maintenance, financial management and tenant relations, you may find taking care of your building to be a lot more difficult than you think. If you find it too much to handle alone, contact a property management company for help.