Building a Realistic Budget Projection for Your Commercial Properties

A Note on COVID-19

The Clarity Commercial team is watching the COVID-19 pandemic closely and is following all guidelines from the CDC and the State of Minnesota. Our team is stepping up hand hygiene and practicing social distancing to help slow down the spread of the virus and ensure we are healthy and able to serve you and your properties through the pandemic.

You have a portfolio of properties, but do you have a sense of the income you generate from these properties over the course of a month or a year? How about your expenses? If an unforeseen expense pops up at your property, can your budget handle it? A budget projection answers all of these questions and helps you maintain a healthy and successful commercial property portfolio.

How Budget Projections Help You Manage Your Commercial Properties

Creating a budget projection for your portfolio of properties will help you work toward your financial goals. Most property owners have a sense of the revenue their properties bring in as well as the monthly cost to manage those properties. A budget projection puts concrete numbers to every income stream and expense over a 12-month period. Not only does this give you a more accurate understanding of the health of your portfolio, it provides milestones for you to hit as you work toward your financial goals.

Budget projections help you anticipate and mitigate problems that may arise later in the year. You can use the data from current and past months to manage loss of income or extra expenses down the road. Your budget projection may help you identify the best time to complete a building improvement or step up your marketing.

Use a Current Year or Rolling 12-Month Budget Projection

Budget projections should cover a 12-month period. Some property owners choose to project over a calendar or fiscal year (January to December or July to June, for example), while others choose to use a rolling 12-month model. Use your leasing calendar to decide which model will work best for you. Whatever model you choose, update the data monthly so you have a clear idea of the health of your portfolio and your projections stay accurate and realistic.

Include a Cash Forecast

A cash forecast is one element of a budget projection. Rather than income, a cash forecast projects your portfolio’s cash flow. Cash forecasts are extremely helpful in budgeting for maintenance, improvements, and unforeseen expenses. Some property owners break down cash forecasts weekly rather than monthly for an accurate look at cash flow for a particular month.

Consider Adding a 3- to 5-Year Outlook

While budget projections are most useful if they look at 12-month period, it can be helpful to use your budget projections to forecast a three- to five-year outlook. While you can’t predict the future, you can take an educated guess at your portfolio’s outlook based on past performance, market trends, and the strength of the economy. Thinking three to five years ahead can help you plan strategically and develop long-term financial goals for your portfolio.

Budget projections are an essential part of managing a successful commercial property portfolio. Clarity Commercial can help you put together a projection that helps you understand your revenue streams, expenses, and make a plan for future growth.

For help creating a budget projection for your portfolio, contact Clarity Commercial today.

 

5 Tips for Negotiating Commercial Lease Renewals

Much can be found online to help tenants negotiate favorable leases. But fewer resources exist for landlords when it is time for them to negotiate a commercial lease renewal. Clarity Commercial works with property owners to help them secure lease renewals from their tenants. Here are a few of our team’s tips for making sure your interests are protected in the process.

1. Standardize Your Lease Forms

Standardizing your lease forms has several benefits. First, it saves you a lot of time that you might otherwise spend recreating lease agreements. Work with your attorney to create one or two lease agreements with standardized language and terms. Then, when it is time for a tenant to renew their lease, you can simply provide them your standardized form and trust that you have the details and contingencies covered.

2. Offer Long Lease Terms

Longer lease terms can save you time and money. They guarantee that you will have steady monthly income coming in from your properties over three to ten years without having to continually fill space with new tenants, which can be costly. Longer lease terms also benefit tenants who wish to maximize their investment in renovations and other tenant improvements.

3. Consider Relocation Rights

If you own a commercial property with multiple suites, a relocation rights clause can help you make sure you are managing that property in the most efficient way possible. Sometimes, it is necessary to ask a tenant to move spaces to accommodate another tenant who wishes to expand or downsize their space. Adding a relocation rights clause to your lease agreements can give you the right as a landlord to ask tenants to relocate to another suite in your property.

4. Offer a Triple Net Lease to Cover Common Area Maintenance

Determining maintenance costs should not cause headaches when it is time for you to renew a lease. We encourage many property owners to offer triple net leases to tenants, which offers a better return to landlords than the flat fees included in modified gross leases. However, calculating maintenance costs for a triple net lease can be difficult, so work with an experienced property management company like Clarity Commercial to maximize your ROI.

5. Protect Your Interests When Offering Tenant Improvement Allowances

It is common for landlords to negotiate improvement allowances with tenants to help them cover the costs of renovations. Offering allowances for tenant improvements can help you attract and retain long-term tenants. To protect your investment in tenant improvements, you can choose to stipulate that you will own any permanent fixtures and improvements your tenants make if and when they move out of their space. Or, you can ask tenants to use contractors you trust to perform the work.

Commercial lease renewals do not have to be time-consuming or cumbersome. Let Clarity Commercial take care of the legwork for you. For help managing your commercial leasing, contact our team today

Join Us for These IREM Minnesota Events This Winter

The winter season is an excellent time to brush up on professional development. For commercial property managers, the Institute of Real Estate Management (IREM) is the best place to pursue continuing education. IREM Minnesota hosts events throughout the year for managers to hone their skills, pursue certification, and give back to their communities.

Here’s a look at the events coming up this winter at IREM Minnesota.

Ethics for the Real Estate Manager Course – January 29

IREM Minnesota starts the year off on a high gear with Ethics for the Real Estate Manager (ETH800), a course required for the ACoM, CPM, ARM, and AMO certifications. It’s taught by our very own Mel Schultz.

The day-long course will cover IREM’s code of ethics and give participants a chance to study real-world ethics cases and the implications they have on commercial property managers and their clients. The course will also cover strategies for overcoming ethical dilemmas and avoiding conflicts of interest.

Ethics for the Real Estate Manager also qualifies for 4 hours of continuing education for property managers. To register, visit iremmn.org.

Volunteering at People Serving People – February 10

IREM Minnesota members volunteer at People Serving People the second Monday of every month. People Serving People is a family-focused shelter that helps break the cycle of homelessness for families. The volunteers serve meals to the shelter’s residents.

This event is open to members and their colleagues, friends, and family members. To register, visit iremmn.org.

Northland Mechanical and IREM Minnesota Present Celebrate IREM! – February 21

Celebrate IREM! is the organization’s opportunity to reflect on the past year and celebrate successes. Attendees will enjoy cocktails, a plated dinner, awards presentation, volunteer recognition, gaming tables, and live music.

IREM members, partners, plus ones, and non-IREM property managers are all welcome. To register or sponsor a gaming table, visit iremmn.org.

Roundtable: Fenestration Field Testing – March 18

Terracon Consultants representatives Allen Witt and Ryan Nierengarten will hold a roundtable discussion on fenestration field testing this March. The discussion will cover ASTM methods for field testing and the differences between ASTM standards and AAMA standards.

By the end of the roundtable, participants will be able to identify different fenestration testing standards and determine when each are appropriate to use. To register, visit iremmn.org.

Virtual CPM Capstone – March 23–March 27

This virtual event allows participants to complete their CPM capstone projects without spending time in a physical classroom. The course is designed for CPM candidates who still need to complete their management plans and the CPM Certification Exams. It offers participants the chance to take the Management Plan Skills Assessment as an alternative to submitting an independent management plan. On the last day, CPM candidates take the CPM Certification Exam.

To register for the virtual CPM capstone, visit iremmn.org.

Clarity Commercial a proud, active member of IREM Minnesota. Our founder Mel Schultz serves as a senior vice president of the Minnesota IREM chapter. For more information on IREM or commercial property management, contact the Clarity team.

Commercial Property Snow and Ice Care

The holiday season is here, and Mother Nature has already provided the perfect snowy backdrop for our holiday gatherings. And while we may appreciate the lovely look of fresh snow, its arrival can cause headaches at our commercial properties. Here are a few things to keep in mind when preparing your property for winter weather.

Contract with a Dependable Snow Removal Company

If you are a customer of Clarity Commercial, then your snow removal is already covered. We partner with the best snow removal companies in the area to keep our customers’ parking lots and walkways clear and safe.

Whomever you decide to work with for your snow removal needs, here’s what to expect. Your snow removal crew may stop by before a storm hits to pretreat your driveway, parking lot, and walkways. Then, they will clear your parking lots and walkways as soon as the snow stops falling. A follow-up crew will stop by to treat your surfaces with deicer to prevent your employees and visitors from slipping and sliding as they come and go from your building.

Keep Icy Surfaces Clear and Safe

Winter storms can leave icy messes behind. So can fluctuating temperatures that cause snow to melt and then refreeze. Staying on top of ice ensures that you keep your parking lots and walkways safe throughout the winter.

Clarity Commercial’s trusted partners have the equipment and trained staff to pretreat and remove ice buildup from your parking lot and walkways all season long. You may see your crew out before a forecasted storm to pretreat your outdoor surfaces. They will likely stop by afterwards to treat any lingering icy areas, too. Expect to see them back after a January thaw to make sure melting snow hasn’t created unsafe conditions at your property.

Snow and ice are part of a Minnesota winter, but they don’t have to put your visitors and employees at risk of slipping and falling. Clarity Commercial can help you keep your property safe this winter. Contact us today to get started on your snow removal and maintenance plan.

 

Don’t Miss These IREM Minnesota Events This Fall

Clarity Commercial is an active member of IREM Minnesota. Our local chapter of the Institute of Real Estate Management hosts events throughout the year to help real estate managers hone their skills. Mark your calendars for these informative fall events.

October 9: YRU Here? A Search for Positivity in Property Management at the Golden Valley Country Club

Property managers are in the problem-solving business. Sometimes, the problems you encounter every day can be overwhelming, which can put even the most positive of people in a foul mood. The October 9 YRU Here? event will give you tips, tricks, and the inspiration to bring your positive attitude to every problem so you can find creative ways to solve it.

October 15: Roundtable on Customer Lighting Control & Building Interface at The Harrington Company

With the days getting shorter, energy-efficient lighting is a priority for Minnesota property owners. Kurt Johnson from the Egan Company will lead the October 15 roundtable on innovative lighting and lighting control options that help facilities save energy and improve building amenities.

November 5: Roundtable on the IREM Certified Sustainable Property (CSP) Program at The Harrington Company

Sustainability is more than a buzzword—it’s an integral part of commercial property management. At the November 5 Roundtable, join Stephen Todd of the Energy Guy to learn about IREM’s CSP program and get ideas from your peers on how to help your properties waste less and save more.

November 11–15: Asset Management Track Course at Atria Corporate Center

In mid-November, IREM Minnesota will host the Asset Management Track courses on financing and loan analysis (ASM603), performance and valuation (ASM604), and asset analysis (ASM605) for CPM certified property managers. Register for this valuable training on the IREM website.

December 10: Roundtable on Fenestration Field Testing at The Harrington Company

The last IREM roundtable of the year will cover field testing of fenestration products with Allan Witt of Terracon Consultants. December 10 is your chance to learn all about the ASTM and AAMA standards and methods that govern field testing.

End 2019 on a strong, positive note. Register for an upcoming IREM event today to make the most of the rest of 2019 and 2020. Clarity Commercial is looking forward to seeing you at the next IREM event!

 

3 Ways to Keep Your Commercial Tenants Happy (and Paying Their Rent On-Time)

Property owners, especially those who manage their properties themselves, often struggle with tenant turnover. Managing and maintaining one or more commercial properties is a full-time job that leaves little time for doing the things that keep current tenants happy and attract new ones. Here are three ways you can keep your current tenants happy so they’re more likely to renew their lease with you.

  1. Build a Professional Relationship with Your Tenants

If your tenants only see you when their rent is due, it’s difficult to build a positive relationship with them. Take the time to learn about their business and their needs for their space within your building. Take their calls and give them a heads up when you need to access their location for maintenance and repairs.

Simply listening to what they love about your property and what could work better for them goes a long way toward building a good relationship with your tenants. Better yet, make some of the improvements they suggest. Investing a little in them makes it more likely that they’ll be loyal tenants for years to come.

  1. Maintain and Improve Your Property

Maintenance and improvements should be part of your annual budget for every one of your properties. All buildings require ongoing care to operate efficiently and reliably. Show tenants that you’re dedicated to keeping your property safe, functional, and attractive for them and their visitors.

If it’s been a few years since you’ve updated the common spaces in your office building or if the landscaping around your property is looking a little rundown or overgrown, invest in some upgrades. Not only will this help your tenants attract new business, you’ll likely attract a few new tenants yourself.

  1. Hire a Professional Property Management Company

If you’re a busy property owner managing multiple locations and dozens of tenants, partnering with a professional property management company is a necessity. A property management company such as Clarity Commercial can help you build and manage your tenant relationships, from finding new tenants and responding to their maintenance requests to lease renewals.

When it comes down to it, a happy tenant is a lease-paying tenant. Clarity Commercial can help you find great tenants, build professional relationships, and maintain your property to keep your tenants happy for years to come. Contact us today to discover if partnering with us would be a good fit for your property.

 

Upcoming IREM Minnesota Events to Fill Your 2019 Calendar

Clarity Commercial is an active member of IREM Minnesota. Our local chapter of the Institute of Real Estate Management hosts events throughout the year to help real estate managers hone their skills (and have a little fun). Mark your calendars for these upcoming IREM events.

June 7: Property Management Summit at Golden Valley Country Club

On June 7, IREM Minnesota will host the Property Management Summit at Golden Valley Country Club. Real estate managers can earn four hours of CE credit for participating in the summit. The event will give an overview of the state of the real estate management industry, then offer four one-hour sessions that will cover business development, asset management, marketing, leasing, maintenance, and tenant improvements.

June 10: IREM 2019 Golf Tournament at Minnesota Valley Country Club

IREM members work hard, and they play hard, too! Register today for the IREM 2019 Golf Tournament in Minnesota Valley Country Club in Bloomington. Put together a foursome, win the beanbag tournament and best-dressed (and worst-dressed!) competition, and take a shot at $5,000 in the long putt contest. Look forward to seeing you on the course!

September 24: Roundtable on Construction Management & Tenant Improvement at The Harrington Company

The next IREM roundtable will cover construction management and tenant improvements. The members-only event will be held at the IREM Minnesota chapter office in Minneapolis on September 24. Participants will learn how to oversee tenant improvement and construction projects on smaller residential buildings and earn one hour of CE.

November 11–15: Asset Management Track Courses at Atria Corporate Center

IREM Minnesota will offer the Asset Management Track of courses November 11–15. Participants will complete three courses: Financing and Loan Analysis for Investment Real Estate, Performance and Valuation of Investment Real Estate, and Asset Analysis of Investment Real Estate. The Asset Management Track meets CPM program requirements.

This track of courses will build participants’ knowledge of financing as well as the valuation of real estate assets. IREM recommends that participants complete Budgeting, Cash Flow, and Reporting for Investment Real Estate before embarking on the Asset Management Track.

Clarity Commercial never takes time off from professional development. IREM events help us stay on top of changes in the real estate management industry so we can provide you with the best property management service possible. To learn more about how we can serve you, contact the Clarity Commercial team today.

Spring Cleanup and Maintenance for Commercial Properties

The snow is melting rapidly and potholes are cropping up across the metro area—it’s early spring in Minneapolis, Minnesota. It may not quite be time to put up the ice melt and gas up the lawn mower, but it is time to put together your spring-cleaning checklist. Commercial properties require seasonal maintenance just like homes do. Here are five of the items Clarity Commercial will be taking care of for our clients in the next 60 days.

  1. Patching Up Parking Lot Potholes

The snow is on the way out and leaving massive potholes in its wake. It seems like new craters appear every hour. For commercial property managers, March is the season of cold-patch asphalt and power sweepers. While your parking lot snow mountain may persist through May, March is when you need to fill potholes and sweep your parking lot to remove salt and sand. We partner with reputable asphalt and paving companies to keep our clients’ parking lots clear and safe.

  1. Inspecting Roofs for Damage

Several roof collapses made the news this February after nearly 40 inches fell across the state. All that snow strains the integrity of commercial roofs. If you were lucky enough to avoid a cave-in, it still pays to have your roof inspected now that the snow’s melted. Clarity Commercial hires professional commercial roofing companies to perform roof inspections at the properties we manage. If we uncover damage, we work with our clients to have it repaired to keep tenants safe.

  1. Cleaning Out the Gutters

Gutters on commercial buildings can become blocked with leaves and other debris over the winter. A commercial roofer can inspect your gutters while they’re looking at your roof. Or, you can hire a gutter specialist to give your gutters a thorough cleanout. We have resources for both.

  1. Scheduling Window Cleaning for March

The busy season for window cleaners runs April through September. We like to stay ahead of the curve and have the windows of our properties cleaned in March after most of the snow has melted. That way, our buildings look their best while their neighbors are waiting for their spring refresh. Clean windows also let the warm spring sunlight to brighten offices and atriums.

  1. Maintaining HVAC Systems

While the heat will be on in most commercial buildings for another month or so, it’s a good time to schedule your HVAC maintenance appointment to clean your ducts and get your air conditioning ready for the warmer months.

Patio weather is right around the corner. Get your commercial property ready for sunny days with a little spring cleaning. Clarity Commercial is here to help. Contact us today for help with regular commercial property maintenance.

Should You Upgrade to a Cloud-Based Security System?

Everyone on the Clarity Commercial team hopes to become a trusted partner and resource for our clients. We’ve helped property owners with all sorts of questions, from how to grow a profitable commercial real estate portfolio to how to supervise on-site workers. One question we’re often asked is how to best secure a commercial property.

There are as many ways to secure a property as there are properties themselves. A warehouse in Burnsville, Minnesota, has very different security and safety needs from an apartment building in downtown Minneapolis. This month, we wanted to focus on one of the newer technologies in commercial security: cloud-based security systems.

Cloud-Based Security Is a Hot Trend

Cloud-based security systems have become very popular options for commercial properties. Cloud-based systems can integrate several different layers of security, from alarm and access control systems to security cameras and CCTV. It’s easy and affordable to add sensors and other security equipment to a cloud-based system, which makes them a great option for a growing business or for landlords with average to high tenant turnover.

In a cloud-based system, property managers and owners manage who has access to their buildings through an online dashboard. They can assign and revoke access to all or parts of their property and review who’s entered and exited the building. Cloud-based storage of video makes it easy and affordable to keep and review footage from security cameras anytime, anywhere.

Cloud-Based Access Control for Tenants

For a property with multiple tenants, a cloud-based security system is a great option. Many newer systems are operated via a smartphone app, which means owners do not have to invest in hundreds of key cards that can get lost or stolen. Instead, tenants download the app, the property owner or manager authorizes them as users, and the app automatically unlocks doors for them via the phone’s Bluetooth capability. Since it’s cloud-based, access can be assigned or revoked instantly, and records of who is entering and leaving the building are immediately available.

If you’re considering adding or upgrading a security system on your commercial property, Clarity Commercial is here to help. Our property managers have years of experience advising property owners on how to find the security system that keeps their property secure without breaking the bank. Contact us today for help.

 

 

Winter Maintenance Tips from Clarity Commercial

So far, January has been a relatively mild month in Minnesota. We haven’t had a run of frigid temperatures or a major snowstorm. But anyone who’s lived through a winter here knows there is a high likelihood that the other shoe will drop. Are you prepared to keep your parking lot and walkways safe and clear for your guests and employees?

Keeping Parking Lots and Walkways Clear of Snow

Mild temperatures in early January melted away most of the snow in Twin Cities, but chances are we’ll get a few more snowstorms before winter’s done with us. Have you contracted with a snow removal company yet?

If not, Clarity Commercial can help. We partner with the best snow removal companies in the area to help our customers keep their parking lots and walkways clear and safe. If snow’s in the forecast, the crew will stop by before the storm hits to pretreat your surfaces. Then, they will clear your parking lots and walkways as soon as the snow stops falling. Once they’ve cleared the snow away, they can treat your lot and walkways with deicer to keep them safe for your guests and employees.

Keeping Parking Lots and Walkways Clear of Ice

Remember the slop storm we got around Christmas? The rain/ice/snow mix left quite the icy mess. If our winter continues to be mild, we may get another one of these messy storms before spring. Keeping parking lots and walkways safe after an ice storm is a tough job.

Clarity Commercial’s trusted partners have the equipment and trained staff to pretreat and remove ice buildup from your parking lot and walkways. They’ll lay down deicer before the storm hits, so the ice cannot build up on your property. After the storm moves through, they’ll come back to plow and shovel, if needed, and retreat any slick areas.

Snow and ice are part of a Minnesota winter, but they don’t have to put your guests and employees at risk of slipping and falling. Clarity Commercial can help you keep your property safe this winter. Contact us today to get started on your snow removal and maintenance plan.