ADVANTAGES OF AN AGENT AS A LANDLORD
Mainstreets and Retail committee
The pandemic over the last 18 months has only reinforced the need for commercial property owners to engage professional real estate agencies to manage their property assets for them. Here is what we refer to as the 5 R’s for commercial property and how having an agent will improve your bottom line returns.
Professional agents stay in touch with market trends and developing changes in the market place meaning their market intelligence will increase revenue. Ensuring your tenant is paying the right amount of affordable rental means you maximise your returns without putting your tenant in to hardship ensuring continuity of cash flow by minimising any vacancy periods.
Professional agents specialise in the sale, leasing and management of a large volume of commercial property in the normal course of business. By engaging a professional agent you have a huge amount of resources at your disposal regarding rent, rent reviews, sale yields and emerging trends that you can use to your advantage.
As well many tenants used their personal relationship to leverage their landlords to get a better deal for themselves which if the property was managed by an agent this wouldn’t have happened. Having that barrier of separation between tenant and landlord is a very valuable buffer to preserve long standing landlord / tenant relations
All agencies also have an inhouse research function that can provide you a cost effective avenue to market research to inform your decision making regarding your existing or potential property.
Having a professional agent work on your behalf when you are negotiating a market rent review or a lease renewal is invaluable to ensure that the correct comparable data is used and that your tenant is treated with respect using fact based market evidence to ensure the best outcome is achieved.
In addition in these unusual times as we saw during the initial lockdown of Australia due to COVID-19, as well with subsequent lockdowns, there was a myriad of incentives available to tenants and landlords along with legislated changes that commercial agents kept up with. Many owner manager groups struggled to keep abreast of important changes and gave greater subsidies than the government mandated at the request of their tenant. Working with agents to deal with these complex and time consuming negotiations provides excellent support for owners.
Agents have legal and fiduciary responsibilities to manage commercial property on behalf of their landlord. It is their responsibility to keep up to date with the multiple different pieces of legislation that govern how the commercial property market functions and then subsequently ensure that all properties under their care and control comply.
Commercial property managers carry professional indemnity and public liability insurance and account for the property finances through a trust account system. So if there did happen to be an issue with non-compliance that exposed the landlord to financial, legal or insurance risk then their property manager would be the person ultimately responsible.
Agencies that manage property on behalf of owners are responsible for the compliance factor of ownership such as fire, legionnaires, OH&S and DDA compliance. By employing a professional manager who specialises in this field the appropriate facilities managers can be engaged to ensure the landlord can mitigate their risk accordingly.
Commercial agents on the committee regularly see when they take on management appointments of properties from owner’s who have self-managed their commercial assets that they are regularly under rented, have not had rent reviews applied, lease documentation has expired, significant rental arrears and many areas of non-compliance with lease terms by tenants. So when the cost of management is generally a recoverable outgoing expense from the tenant meaning the net cost to the landlord is zero it makes perfect sense to engaging an agent by a commercial landlord.