Small
Properties,
Big
Challenges
CIRE 's survey looks at the small side of property management.
by Sara Drummond
Investors who manage their own small
properties have only three small problems:
tenants, money, and time. And for professional third-party property managers who
handle small properties, add landlords to
that list.
Tose challenges cropped up most frequently in an informal survey of CCIM
members who are owners/managers or
third-party managers of properties under
20,000 square feet or, in the case of multifamily, fewer than 50 units. While not comprehensive, the anecdotal, self-reported survey
provides a snapshot of the landscape smallproperty owners and managers occupy in a
still-struggling economy.
The Personal Touch
Tenants are a necessary evil, but property
managers and owners work hard to f nd
good ones and keep them happy so they'll
renew. For the last few years, nonresidential
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January | February | 2013
property managers and landlords have
struggled to f ll their spaces. In some markets, ofce, retail, and industrial tenants
have a plethora of space to choose from,
and landlords have been ofering shorter
leases and concessions to keep tenants in
place to reach full occupancy. "Up to now,
I include a rent abatement period and a
tenant improvement allowance and try
to get a higher rent per square foot, an
annual increase of 3 percent to 4 percent,
and minimum terms of four years with
options," says the owner of two small retail
plazas. While the strategy has worked, it
has afected cash fow, which has not fully
recovered yet, he adds.
Nonresidential property managers also
seem to have the most difculty with local
tenants that may have limited business experience. "Especially on small properties, tenants are unsophisticated and need to be educated about HVAC systems, electrical usage,
Commercial Investment Real Estate