In trying economic times, it is vital for landlords to avoid property vacancies
The current economic situation in South Africa is putting pressure on commercial and retail property owners who are seeing a decline in commercial property values.
Statistics show rents are down and vacancies are up, which has implications for rental growth, the main driver of optimistic valuations of commercial property.
Some retail centres are feeling the pressure, to the point that some retailers have shut up shop or moved to cheaper premises – leaving rental vacancies that landlords can ill afford.
This means landlords need to make tenant retention their number one priority, says Gregg Huntingford, chief executive of Spire Property Management.
“The biggest threat to property owners is that as a result of higher market vacancies, tenants will be offered a better deal elsewhere and not renew their lease agreement.
“With having to source a new tenant comes the cost of increased commission payable to property brokers as well as high installation costs.
“An effective discussion with the existing tenants, listening to their wants and needs and accommodating them where possible is generally a far more cost effective and prudent approach.”
Using professional property managers can be beneficial as they act as a conduit between landlords and tenants – remaining close to the tenants, knowing what is going on in their businesses and understanding their problems.
Huntingford says property operating costs need to be carefully monitored to ensure that the most competitive price is being paid for the best possible service.
“Property managers should ensure that service levels of soft service suppliers are carefully evaluated and managed to ensure the highest possible service level is provided to the tenant and their clients.”
Furthermore, he advises that professional management teams are used to maintain the value of the building on behalf of the owner by ensuring that the facilities are properly looked after and that preventative maintenance is undertaken.
“Slower economic periods may actually prove the perfect time to undertake needed maintenance work on properties, as building and maintenance costs tend to reduce due to the lack of work for contractors and increased price competition in the sector as a result.”