“Look at this building. Three years old. Corner of two busy streets. Good location.
“Just the right size. Five stories. Fifty-five thousand square feet. Not too big, not too small.
“Major tenant on the ground floor–a branch of the S&L that owns the building.
“A slam dunk success, right? Even in an overbuilt market, right?
He speaks with uninterruptable force, each phrase a stepping stone leading directly to his point. There’s an edge to his voice. Perturbed. Anguished. It’s clear that unnecessary failure offends him.
“Three years of leasing and it’s still half empty. tenants up in arms. Withholding rents. Refusing to pay increases. Balance sheet ninety grand in the red. Mortgage payments are behind and the lender is threatening foreclosure.
“It never should have happened. No need! None!
“They bring us on as managers. Takes about two seconds to figure out what’s wrong and how to fix it.
“The big problem? There is none! No malfeasance. No bad construction. Just inattentive, inconsistent management. A little let up here, a little carelessness there and, boom, big trouble.
“Why the unhappy tenants? Dirty windows! Air conditioning out of whack! Can’t find a space in the parking lot! Trash in doorways! And no one returns their calls when they complain!
What do we do? Wash the windows. Monthly. Adjust the air conditioning controls. Set up routine maintenance on them. Tighten monthly parking passes. Restripe the parking lot. Mark reserved and visitors spots.
“Simple stuff! Like replacing the daytime security guard with an on-site manager. Have him police the trash from the doorways, every morning. Keep the street people out of the restrooms. Talk to the tenants! Talk to them!
“All of a sudden, tenants get happy. They pay their back rent and start paying the rent increases. They don’t mind ’cause they’re getting what they pay for.
“Bottom line? Positive cash position restored in less than 120 days.
“The owner could still lose this building. We may not be able to save it. And if we can’t, it’ll be a terrible, terrible waste.
“If we’d have just been brought in 60 days sooner. “It really gets to me. It…just…does.”
From upside down to a positive cash position in 120 days. That summarizes one of BMI’s forays into commercial office building management.
When the owner of the 55,000 square foot building in Inglewood, California asked BMI to assume management, there was a balance sheet deficit of $90,000. And matters were getting worse, fast.
The building was only 55 percent leased after three years. The vacancy factor was more than twice the market average.
Even worse, cash flow slowed to a trickle. Disgruntled tenants were either ignoring agreed upon rent increases or withholding rents entirely.
BMI moved swiftly to correct deficiencies in maintenance, security and management that had angered and frustrated tenants. Windows were washed. Malfunctioning air conditioning controls were repaired. Trash that had accumulated in doorways was removed. Parking passes were tightened and tenant reserved spaces were designated and enforced.
A daytime security guard was replaced with an on-site manager.
The manager was trained to provide better security, to adjust and repair environmental controls and to respond promptly to tenant complaints, requests and questions. Emphasis was put on prompt resolution of problems, and feedback to tenants to assure them that solutions were permanent.
The result? Back rents were promptly collected. Rent increases that had been deferred were enforced without tenant objection.
Tenants who had given notice decided instead to renew their leases. Tenants even began referring potential lessees.
Positive cash position was restored. All within 120 days.
THE POINT IS: A big problem usually consists of many small problems. The quicker you solve the little ones, the smaller you make the big one.