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Construction Project Management Mistakes to Avoid

justin@standoutresults.co (Justin Sturges) — Thu, 14 Jul 2022 20:59:13 GMT

Finding a r eliable and experienced project and commercial construction management is the only way to ensure your project’s success – which requires the highest level of expertise, attention to detail, and proven project management skills. Working with a construction project manager (PM) helps you avoid common mistakes. Below we dive into what to watch out for as work progresses.

Lack of Timeline Transparency

The initial consultation and bidding process with contractors and subcontractors will establish a time frame, but that doesn’t always mean it’s a feasible timeline to follow. Be honest about the scope of work and your capabilities as a stakeholder and client. Don’t force your construction team to beat deadlines and cut corners on quality just to save time. Your construction project manager can liaise between clients and contractors to ensure no budget numbers are lost in translation.

Lack of Communication

While other project managers might make a few phone calls to check on projects, our dependable team puts boots on the ground, walking through existing developments. We learn and analyze every aspect of the project so that we can exceed your expectations throughout the project lifecycle. You can count on us to work diligently on your behalf to plan, manage, and complete your commercial development project.

Not Using Construction Project Management Tech

Put away the pen and paper because there are much better tools to track your construction project's progress. Plenty of sophisticated software available to your team will bring processes like design/build, structural inspections, collaboration, and scheduling into the 21st century. Another benefit of using software is integrating with other tech tools you may already use to collaborate and communicate. A seasoned and digitally-savvy construction project manager will have plenty of recommendations.

Unrealistic Resource Allocation

When creating a timeline and plan of action for your construction project alongside your project manager, don’t overestimate the spectrum or volume of resources you or your contractors have available to get the job done on time. By working with the resources you know will be accessible, you’ll avoid delays that happen when you wait for them to be available.

Overlooking Minor Details

We understand the finer details like the importance of equipment showing up in the proper sequence for installation. If it doesn't show up, it shuts down the whole job. This is a prevalent challenge with today's supply chain issues. Our team thinks of it all to help you order equipment on time to keep your project moving. In addition, we can identify the potential problems in your processes and make adjustments to ensure success. This frees up your time as a business owner while also giving you peace of mind that all the little details are addressed.

Choosing a Construction Project Manager Without Experience

When we say we have the experience to manage your next construction project, we mean it and have a strong track record to prove it. We have developed over 4,000,000 square feet of commercial space. Many of our clients come to us for repeat business and refer us to others because they know we do what we say we will do. Our commitment to your commercial construction goals is second to none.

Not Choosing a Construction Project Manager That Does It All

RSolution's project and construction management services include:

Project management
New construction, remodeling, or turnkey management
Coordination of vendors and deliveries
Coordination of owner-supplied items/new restaurants.
Management of contractor bidding and selection
Value engineering
Project scheduling and cost tracking
Site survey
Pre-purchase, pre-lease, site, and area surveys
Ensure standards and compliance
site feasibility studies
Purchase/conversion of existing locations
De-Branding and store closing management
Temporary and pop-up store design and construction
Planning and design
Zoning, permitting, and regulatory compliance
Construction inspections and lien waiver documentation
National network of architects, engineers, and contractors

Working With a Commercial Property Management Team

justin@standoutresults.co (Justin Sturges) — Tue, 14 Jun 2022 15:40:31 GMT

Take it from us: Even the most seasoned commercial property experts could use a commercial property management refresher from time to time. Owning commercial property as a landlord is a great way to grow wealth. Still, the property manager is integral in ensuring a lucrative return on investment. When working to build a relationship with your commercial property management team, there are a few fundamentals you should be addressing.

Marketing and Leasing Your Commercial Property

Leasing reports correlate directly with your property’s revenue, which is another crucial number to track every week, especially when you own a commercial property with a high vacancy rate. It’s not enough for your property manager to report new leases; they need to be detailed in the rent roll report. Other stats you need to watch are comparable property rent averages, collection issues, and what’s being done to market your property and decrease vacancies.

Addressing Maintenance Concerns Quickly

Work closely with your property management team to develop a workflow for handling maintenance requests. Being proactive with these issues will go a long way toward maintaining the value of your commercial property. Consider who your tenants or employees will contact with requests and who will follow up (and when). While your property management team should have the autonomy to get bids for renovations, owners should approve any bids over a certain amount.

Streamlining Cash Flow With Experience

The right commercial property management team will have the financial expertise to offer insight on increasing income and cutting operating costs. They can suggest improvements that will raise property value, suggest vendors and service providers that will help expand profit margins, and know how to read and review vendor/provider contracts to identify opportunities for cost switching. Look for property managers with management and investment experience to contribute a multi-faceted approach.

Streamlining Accounting With Tech

There’s no shortage of property management and accounting software programs for your team, but the key here is that your team knows how to use whatever tool you choose. The software can have features that make it practically hands-off, but accurate reporting is still crucial — especially regarding accounting. As a property owner, you should have access to this reporting 24/7. Regularly check cash flow statements, balance sheets, general ledgers, and rent roll.

Ensuring Legal Compliance

Owning commercial properties is not without legal risk, as you may well know if you’re a seasoned commercial real estate investor or broker. Your property management team needs to have attorneys on hand who have worked in real estate to handle issues like evictions and inspections that are particularly fraught with complexities. Not following compliance guidelines could cost you dearly as an owner – procedures should also be in place for collections and fair housing regulations.

Understanding Rent Costs and Consistency

This is perhaps the most crucial report to understand when working closely with your commercial property manager. Check rent rolls at least bi-monthly; it should be kept up-to-date and available to owners at any time, from anywhere. It should quickly show you vacancies and collections, which impact your bottom line. Other info on rent rolls should include unit numbers, type, and square footage, tenants’ names and move-in/out dates, lease terms, rent amount, any additional fees as related to amenities, and balances due.

Concrete Exit Planning Discussions

Even if you’re not planning to sell your commercial property any time soon, it’s important to have a plan in place in case an opportunity to do so comes your way. Top-quality commercial property management teams should understand how their expertise can maintain property value so you know that you can get top dollar when a buyer comes along. A great relationship with your property manager could go a long way towards protecting your investment.

Are you dealing with a property management company that just doesn’t deliver? Unfortunately, it’s an all-too-common problem. Many of our management clients come to us because their existing company is not responding to their needs. In some cases, they have never even seen the property manager on-site!

The RSolution team understands that tenants want to be heard when they have a problem and need a solution immediately. Property and asset management done right requires a personalized touch and attentive service. From collecting the rent payments and sending out defaults to addressing property maintenance and repair emergencies, our experienced team works to meet the highest standards of excellence with every service—no matter how big, how small, or how often. Contact us today to learn more!

A Guide to Commercial Subleases

justin@standoutresults.co (Justin Sturges) — Tue, 31 May 2022 20:51:43 GMT

Commercial subleasing may be an excellent option for investors leasing commercial property who want to improve cash flow and lower vacancy rates. However, this process is anything but uncomplicated, and it helps to know what it entails before any agreements are made.

What Is a Commercial Sublease?

This type of lease is an agreement between an entity that already holds a lease (sublessors) to a commercial building and a tenant (sublessee) who wants to lease part or all of that property. Some of the most common reasons for this are reducing cost, optimizing space, or consolidating office space.

For sublessees, this is a great way to work around notoriously high commercial lease rates – a sublease is almost always cheaper than direct leasing. They have the chance to pay only for the space they need, instead of leasing a building that’s too large and out of the price range.

Subleasing is also great for sublessors’ cash flow, too. Businesses that are streamlining staff or closing down altogether may be able to sublease part or all of their business property to mitigate the closure cost. Subleasing could be much more cost-efficient than the fees associated with breaking a lease.

The Advantages of Subleasing

Traditional commercial leases between landlords and tenants are generally much longer to help ensure cash flow for the property owner. For sublessees who only need space for a short time, subleases can be much shorter in duration with far less of a commitment. Sublessors can also benefit from this arrangement, knowing that if their industry pivots and they need the space back, it would be a matter of months (not years) until the sublease ends.

Subleases are far less complicated than direct leases, and usually, the sublessees do not commit to maintaining or renovating aging facilities. They are fully-serviced leases with static (unchanging) costs and payments and could even include access to shared amenities like break rooms, meeting areas, and office equipment.

The Disadvantages of Subleasing

Although this isn’t as long as the list of pros above, some caveats come with subleasing. Sublessees could run the risk that their sublessors default on the original lease terms with the landlord, leaving all tenants locked out. Sublessors are 100% responsible for all rent and any other obligations, even if the costs are incurred in the subleased space.

Working With Professionals

Whether you’re a sublessor looking for more cash flow or a sublessee looking for flexible lease terms, subleasing can be an excellent opportunity for all parties involved. A seasoned tenant representative will save you both time and money by providing real estate expertise. Tenant representatives offer the following advantages:

Tenant representatives have a fiduciary duty to serve you – they are dedicated to the best interests of their clients.
Tenant representatives provide market knowledge – valuable information to arm you against landlords.
Tenant representatives save you time – which allows you to stay focused on your business and serving your customers.
Tenant representative's services cost nothing to the client – landlords pay commissions.

G.J. Grewe, Inc. provides complete and extensive market analysis to identify properties that can accommodate your specific needs. Our expertise in the St. Louis real estate market ensures that each client receives the most comprehensive and well-targeted property options.

We are a team of experienced commercial real estate professionals with expertise in all areas of our business. Since 1984, our company has built and managed over 4,000,000 square feet of retail, office, industrial and warehouse space. G.J. Grewe, Inc. has the knowledge and resources to help businesses, small and large, thrive, along with the surrounding community. Whether you are looking to relocate, expand, or need assistance managing your property, we are happy to assist – contact us today to get started!

Commercial Property Valuation

justin@standoutresults.co (Justin Sturges) — Sun, 10 Apr 2022 21:05:06 GMT

Getting the maximum return when investing in commercial real estate means understanding the true, quantifiable value of the property. Ultimately, buying and selling commercial property needs to be facilitated by a team of real estate professionals who understand the complexities and nuances of valuation. Still, potential and current investors need to explore their options.

Cost Approach

This valuation method starts with the cost of rebuilding the property from scratch and includes the value of the land, cost of construction materials, and any other costs associated with the construction. This is the most common valuation method for properties that don’t have many comparable properties on the current market, whether due to specialized improvements or adding significant value to the underlying land.

Income Capitalization

Income capitalization is the property valuation method that property appraisers and real estate investors use, and the cap rate is directly correlated with the risk of investing in that property. First, determine the net operating income (NOI) of a property by subtracting operating expenses from the overall gross income of the building. Then, calculate the cap rate by taking NOI and dividing it by the property’s purchasing price or current market value.

Market Approach

Also called sales comparison, this approach looks at the sales prices of comparable properties in the area that have recently sold and helps increase the chance of garnering a fair market valuation. However, this strategy is commonly used more for residential properties than for more specialized, hard-to-compare commercial properties. Still, it is a popular and common property valuation method for multifamily properties.

Gross Rent Multiplier (GRM)

This calculation starts with the commercial property’s price and dividing it by gross income. The resulting number is a key performance indicator that should be identified during several commercial real estate processes and transactions. For example, if the sales price of a commercial property is $700,000 and it generated $100,000 in rent yearly, the GRM would be 7 and would help indicate whether the property's value is too high or too low to get a return on investment.

Rentable Square Foot Cost

Rentable square footage in a commercial building includes common areas (like stairwells and elevators) along with the square footage of the space tenants actually use (like offices). Investors who know a per-square-foot rent number and need to see a certain return on their commercial property investment can multiply that rent number by rentable square footage to get the total property valuation. Compared to the asking price of a property, this can give investors a clear idea of whether it’s a smart purchase for their portfolio.

Working With Commercial Property Experts

The market changes daily, and commercial real estate experts are keeping up with trends, which means you’ll end up with the valuation numbers you need to expand your portfolio. Our team provides complete and extensive market analysis to identify properties that can accommodate your specific needs.

Beyond that, our expertise in the St. Louis real estate market assures that each client receives the most comprehensive and well-targeted property options available. Our commercial property professionals compare rentable versus usable areas, floor sizes, mechanical systems, and other factors that play a part in accurate commercial property valuation. Our research includes site selection, location, demographic profiling, site feasibility, and valuation. Contact us today to learn more!