otherwise) to your owner. Many owners have chosen to
postpone projects until 2010. Investors in private and
public REITs are overly focused on their returns. If postponing a project is not a detriment to the property, it may
be a wise decision. Ask yourself, “Can this wait?”
It is important to establish good working relationships
with brokers to promptly pursue new tenant deals.
Brokers are typically self-reliant by nature and have been
known to keep details of prospects to themselves as they
fear someone else might “take” their deal. On our team
in my office, we have found the opposite to be true. The
closer we work with the brokers on projects, the faster and
more accurately the deals are completed. This benefits the
brokers as they make more commissions, and benefits the
manager when they receive a happier tenant and more
accurate lease document. The days of working in silos
(brokerage, management, etc.) are gone. A team approach
is here to stay.
Real estate is inherently a people business. Experts say we
spend more time at work than we do with our families. A
happy work environment is critical to your team’s success.
IreM professionals know from time spent in finance
classes that capitalization rates are a gauge of return on
investment (rOI). These rates in all forms of investment
have been sliding over the past several months. Midwest
midmarket office cap rates have slid from 7. 5-8.0 percent in mid-2007 to 8. 5-9.0 percent now. Industrial cap
rates for multi-tenant buildings were 8.0-8.5 percent
in mid-2007 and are pegged at 9.0-10.0 percent today
with few buyers, fewer offers and more problems as the
risk factors increase due to limited debt options. New
construction has slowed significantly, due to financing constraints and increasing costs of construction
that often price buildings out of the competitive market.
Vacancies are on the rise too.
Hire new employees slowly and carefully, but take care of
sub-par performance issues quickly. A weak link in a team
brings the entire team’s performance down.
Finding a coworker on your level that you can confide
in will make your team stronger. Partner a less tenured
employee with a more senior member of the office to
create a mentor/mentee relationship in which the junior
member feels comfortable asking questions. Doing so
will improve the team performance while freeing valuable time for the department managers to attend to more
Developing alternate and innovative ways to manage effectively is also an excellent way to involve newer
coworkers. After years in the business, we tend to become
comfortable with our routines. Be sure to listen to new
or younger members of your staff for innovative ways to
manage effectively. They can often amaze you with well-thought-out ideas.
A happy employee will be a well performing employee,
so look for innovative ways to build loyalty, team work
and happiness. Recently, my management team met at
a local dinner preparation franchise ( www.socialsuppers.
com or www.letsdish.com are two examples). Once at the
store, we split into teams and worked together to prepare
meals. Junior members were encouraged to take a senior
role at this event. Completed meals were donated to the
local Ronald McDonald House. The half-day event not
only allowed the entire team to give back to the community, but it also allowed the team to get to know each other
a little better.
re TaINING TeNaNTs
Your relationship to your tenants is also very important,
especially during hard times. Retaining a tenant is far less
expensive than finding a new one. Experienced colleagues
have reminded me it is pennywise and pound-foolish to
lose a tenant. The lease document governs the services we
provide for a tenant, but we must also think outside the
box from time to time. Even if the lease says the tenant is
responsible to change a ceiling tile, it may be wise to change
a tile or two for them. This simple gesture of goodwill
may keep them from moving down the street. Vacancy is
expensive. Tenant improvements are expensive. Keeping
tenants happy and renewing is good practice.
Holiday gifts such as a tin of popcorn may seem cliché,
but a simple inexpensive gesture allows a manager valu-