By Chris Noble, Director of Professional Services & Registered Valuer
For every commercial property portfolio owner, proactive, efficient and timely management of leases is essential to maximise their return on investment – yet it is a crucial element of commercial property management that many landlords can often overlook.
It is all too easy to become fixated on buying properties, finding tenants, getting them signed up and ensuring their rent comes in as and when it is meant to.
However, without specialist lease management advice, those investments may not manage to meet their full potential, and opportunities to maximise income can be missed.
Putting a focus on lease expiry dates
In our work at Garness Jones, lease negotiations, renewals, restructures and rent reviews are part and parcel of our daily routine on behalf of our clients, whether for those for whom we manage large portfolios of properties across the region, or for those with a single investment asset.
I work closely with our Commercial Property Management team, led by director Simon Preston, which has its eye across this at all times.
A recent investment in more advanced systems, capable of highlighting issues such as forthcoming lease expiry dates and rent review dates well in advance, has helped strengthen our work in this area.
The proactive approach adopted by the Garness Jones team to the management of these areas allows for time to properly assess the situation and then comprehensively advise our clients on their best options, given the market conditions at that time.
Reviewing leases continually ensures we can ensure that properties (and overall portfolios) experience enhanced values.
Our team makes it a priority to highlight such situations to clients, and, where landlords have a reliable tenant relationship, take the opportunity to discuss lease renewals early and amend and/or extend their agreements, to the mutual advantage of both the client and the tenant.
Equally, our agency team, led by director Paul White, who advise landlords on valuations of properties they intend to sell or lease, often advise them to resolve any potential lease issues prior to going to market, to maximise value.
If there is potential to extend the current tenant’s lease, it can make a much more attractive proposition for potential investors.
Rent reviews offer opportunities to increase income
Rent review negotiations, which are usually every three or five years, are also an important aspect which should not be overlooked.
We have known landlords underestimate the importance of this important element of commercial property management.However, to overlook such an issue, particularly if a landlord has a number of properties across a portfolio, could prove costly, with values rising between the date of the initial agreement and the review date.
This is something we have seen in particular with regards to industrial space in Hull and the East Riding, which is in short supply and high demand, and is, consequently, witnessing a significantly higher rental value than just a few years ago.
By consulting specialists such as our team at Garness Jones, landlords benefit from detailed assessments of the market trends, rental values and market analysis and benchmarking data which can ensure their lease terms remain competitive and in line with prevailing market conditions, and that investment values are maintained or enhanced, where re-gearing of refinaning is proposed..
In need of advice to help better manage your commercial property portfolio? Contact our team today on 01482 564564
