Properties constitute the majority of assets held by most corporations; skilled property management teams can produce profits or at the very least to operate in the black during severe economic downturns when tenancy rates drop dangerously low in office buildings and malls. This article discusses the role of the commercial property manager in securing the profitable operation of the property.

Investors by definition are suppliers of finance capital and not experienced professionals in each of the investment vehicles residing in their portfolios; they have neither the time nor any potential hands-on effectiveness at management. In the commercial properties industry the landlords might be any type of investors, whether individuals, corporations, partnerships, banks, trusts, or mutual funds and properties can change owners frequently.

Because of this there needs to be a buffer between the landlords and the tenants, a stabilizing factor that remains constant in the day-to-day operations and long-term relationships that will make the property come alive as a measured quantity. The property owner wants to be as distant as possible from the tenant and hire a professional property management company that can set and collect rents, take care of evictions, do the legal work, see to the maintenance, tenant relations, bookkeeping, and the thousands of routine matters that lie in the realm of the property management firm.

Going into the second decade of the twenty-first century there are signs of a continuing severe downturn in the economy since the real estate bubble burst. Both residential and commercial properties have been experiencing brutal 17.4% office vacancy rates in the U.S. but the Canadian commercial vacancy rate is at a fairly traditional 9.9%, indicating that Canadian companies are planning to keep hiring and U.S. companies have no such plans. In one recent example the American federal government raided long-established manufacturer Gibson Guitars in August 2011, notifying them that some of their wood was now declared endangered in the U.S. and they should move their business to Madagascar – resulting in more potentially unemployed Americans to join the approximately 22% of the country without jobs of any substance.

The property management company proposes the amount of the rents charged and operate the building or mall efficiently. Some creativity may be called for when a bad tenant makes waves or can’t pay the rent. A judgment call must be made to assess if a tenant is worth keeping, and if so the managers have motivation to bend with the wind until business picks up so they can retain a straight-up quality tenant. It is sometimes necessary to evict tenants when they violate a lease: the court appearances must be attended by a representative from the property management firm.

The fees of rental property management companies are normally structured as a percentage of the rents collected and they must pay the expenses in such a way that they will come out in the black. There are unpredictable expenses when running a commercial property or shopping mall of course so a property manager should develop strategies that cut maintenance, operations and energy costs. You can ask cooperation from your tenants in using standard operating procedures that lower energy use, especially in unmonitored common areas.

Seeing that a high level of tenant service is maintained is critical to keeping them from packing up and moving to a cheaper space. A little pampering can ensure that they stay on as quality tenants. Some office buildings are starting to offer lease-purchase options as a way to get cash flow moving, and giving the tenants a workable environment with top service may entice a long-term commitment from good tenants.

Such an option has been taken further in several European malls and a planned mall in Toronto, where a group of investors is offering mall units by purchased only. They will function much like trade booths but remain open year-round. The Toronto project is for companies related to home improvement only, hoping to capitalize on the themed aspect of the goods and services that will be of interest to all the shoppers. The concept is experimental and a potential nightmare if all 450 spaces fail to sell. Retail space is traditionally rented; any asset management company would avoid a super-mall of unknowns and stick to the proven formula, even if the profits were modest.