The current economic situation being experienced in South Africa and around the world has improved, but there is still great pressure on commercial and retail property owners, who have experienced a decline in property values.
Statistics show that rentals are down and vacancies are up, which has major implications for rental growth, the main driver of optimistic valuations of commercial property.
Certain retail centres are feeling the pressure with consumers keeping their belts tightened, to the point that some retailers have shut up shop or moved to cheaper premises - leaving rental vacancies that landlords can ill afford.
Marc Edwards, managing director of Spire Property Management, says landlords need to make tenant retention in retail, commercial and industrial property their number one priority.
“The biggest threat to property owners is that tenants will (as a result of higher market vacancies) be offered better deals elsewhere so they won’t renew their lease agreements. This has a negative effect on property values, given the likely vacancy a tenant’s departure will create.
“With vacancies and having to source new tenants, come the costs of increased commission payable to property brokers as well as high installation costs. Effective discussion with the existing tenants, listening to their wants and needs and accommodating those where possible are generally far more cost effective and prudent,” says Edwards.
“Professional property managers act as conduits between landlords and tenants - remaining close to the tenants at all times, knowing what is going on in their businesses and understanding their problems.
“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 tenants and their clients.”
Edwards says professional management teams need to maintain the value of the building on behalf of owners by ensuring that the facilities are regularly maintained and that preventative maintenance is undertaken to address future problems.
“Slower economic times may actually prove the perfect time to undertake needed maintenance work to properties, as building and maintenance costs tend to reduce because of the lack of work for contractors and increased competition.”