Lessees of commercial property don't have to be told: Next to payroll, the largest cost associated with doing business will be for their workspace.
According to Grubb & Ellis|BRE brokers Scott Diggs, Ryan Jessee and Jennifer Gallivan, what more than a few potential lessees fail to keep in mind is how important good property management is to their ultimate workspace expenditures.
"An important part of a commercial real estate broker's responsibilities as a senior consultant is to be sure the prospective tenant considers all aspects of a site and facility," Diggs said. "Concentrating solely on a particular address, specific square footage, parking ratios and the economics of a deal can result in a disservice to prospective tenant and landlord, alike.
"It's in the best interest of both the landlord and the tenant that the tenant be educated on the style of management of the building they are considering. Likewise, it is incumbent on the ownership of the facility to insist on the most responsible and responsive property management practices, whether that entails providing those services in-house or through a third party property management company."
Jessee noted that in the midst of evaluating all of the aspects and factors in a commercial real estate lease transaction, it is easy for the potential lessee to postpone consideration of long-term issues such as the professionalism, experience, strength and stability of the management in place.
"Property management should be a major consideration up front," Jessee said. "The lease negotiation process is only a snapshot in time of a tenant's occupancy at their new site. ... if the property management is substandard, a tenant will most likely waste valuable time taking care of issues that are the responsibility of the property manager. There's no question that good property management does affect the tenant's bottom line."
Thus Grubb & Ellis|BRE Commercial brokers make it a point to understand property managers and management practices as well as they do the physical site and the objectives of the client -- whether tenant or landlord.
"The major attributes of sound property management are not hard to identify," Gallivan said. "They are timeliness, responsiveness, knowledge, understanding and that most tangible of 'intangibles' -- caring. What distinguishes commercial property operations is the degree to which the management institutionalizes these attributes."
One company whose property management demonstrates these attributes is The Irvine Co., which entered the downtown San Diego market in March of 2003 with their acquisition of the Symphony Towers Building and selection of Grubb & Ellis|BRE Commercial as their exclusive leasing agent. Over the past two years, only one tenant has relocated from Symphony Towers.
"The most effective professional property management demands areas of expertise and skill sets that are virtually identical to those needed for the most effective brokerage," Gallivan said. "These areas of expertise include the disciplines of real estate brokerage, construction, accounting, architecture, facilities engineering and psychology. Ultimately the best managers, like the best brokers, understand the due diligence processes; construction coordination/ supervision; accounting; budgeting; lease administration; CAM or DOE billings and reconciliations; coordination and supervision of both capital and tenant improvements."
For more information about Grubb & Ellis|BRE Commercial, please visit www.brecommercial.com.
Submitted by Grubb & Ellis|BRE Commercial