For most, the arrival of summer means barbecues, baseball games, and time in the water. For commercial property managers, it means something different: property management budget planning season 

The mission is clear: Win all-important budget approval.  

But mountains of paperwork and high-stakes guesswork make this a complicated process. And given the lingering uncertainty of COVID-19, planning beyond the next few months may seem daunting. 

We can’t promise to make budget season a breeze. We can offer useful tips to help you win your organization’s limited budget dollars and get you back to the barbecue faster.  

1. Create a Property Management Budget Planning Schedule

Property management budget planning is a year-round effort. Gathering vendor proposals (Building Engines can help with that), deciding on next year’s projects, and logging expenses always takes longer than you think. Position yourself for success by creating a schedule ahead of time with fixed internal deadlines.  

Create ample cushion time to collect the materials you need and obtain the necessary approvals. If you’re delegating tasks, include the point person for each step in the process. 

Man using cellphone for property management budget planning.

2. Account for Changes in Occupancy

After a major disruption like COVID-19, occupancy levels may fluctuate more than usual. 

After identifying which tenants might be dissatisfied, start conversations early to determine what your team can do to keep them in your space, such as offer new amenities, restructure leasing terms, etc. 

Ask returning tenants if they will use space full time, on a modified schedule, or not at all, so your team can accurately allocate spending in key areas like HVAC units, and amenities needed to operate at reduced levels.  

3. Use Work Order Data

Equipment breakdowns are an unwelcome—and inevitable—surprise that require rapid adjustments to a carefully planned budget.  

Stay a step ahead of asset failures by routinely analyzing work order trends in equipment repairs. For example, how many elevator entrapments did you have last year, and what was the cost to resolve them? This can help you predict the lifespan of key equipment and factor replacement costs into your property management budget planning 

If you want more concrete timelines, use modern software tools to assign a life expectancy score (ASHRAE is typically the go-to authority). A budget that preemptively builds in these sizable expenses has a higher chance of being approved by cost-conscious executives. 

You can also use work order data to assess staffing levels. Since engineer payroll is one of the largest expenses in property management budget planning, maintaining the right headcount is crucial.  

To do so, use a software tool that provides visibility into preventive maintenance and work order data. If you know how much time your team spends on different request types, you can expand or reduce headcount as needed, using data to guide your decisions. 

Woman using laptop to work on property management budget planning.

4. Benchmark Operating Expenses

Data without context has limited value. To identify areas for improvement, measure your operating expenses against those of competitor portfolios.  

The Building Engines State of Commercial Real Estate Operations report found high-performing firms were 1.7 times more likely to benchmark operating expenses externally.  

Having a relevant point of comparison can help property managers control costs and justify certain property expenses to stay competitive.  

In this area, it’s generally considered best practice to use third-party data sources like the IREM Income/Expense Analysis 

These tools are particularly helpful for property teams dealing with pandemic-related expenses. There’s no historical data to inform spending decisions for items such as personal protective equipment for staff, or more frequent cleaning services. 

5. Stay Ahead of Tenant Trends

Given how quickly tenant needs and priorities change, feeling one step behind is understandable. For example, new fitness facilities installed pre-pandemic aren’t getting much use from tenants still concerned about disease transmission.  

To allocate limited resources where they’ll have maximum impact, stay updated on current tenant experience trends. Reading industry publications and reports is a solid first step. Pro tip: touchless experiences and flexible space layouts will be huge competitive differentiators throughout the second half of 2021.  

Go straight to the source to truly understand what tenants want. In smaller buildings, this can be achieved by sending out tenant surveys or having informal conversations. But for teams looking to standardize the feedback process, tenant experience apps are likely a better choice. 

6. Use Technology to Automate Slow Processes

Compiling the vast amounts of information needed for property management budget planning is usually a major time suck.   

Luckily, modern building operations platforms and point solutions can now house all data in one central location, empowering property teams to quickly run analytics reports. 

In a 2019 study of over 4,000 commercial real estate professionals, 80 percent reported technology made budget season easier. They cited the accessibility of information, more accurate forecasting, and better industry benchmarking.  

Rather than mining through cluttered Excel spreadsheets or paper files for information, property management software can compile data and present it in clear, visual formats that fuel informed budgets.  

Depending on the breadth of data required in the property management budget planning process, also consider designated accounting software. It tracks revenue and expenses and automates other mundane accounting workflows. 

Put an End to Property Management Budget Planning Blues

The commercial real estate industry is recovering from COVID-19. But property managers still face unprecedented pressure to contain costs while creating spaces and experiences that drive tenant loyalty. 

Although these tips will be particularly helpful during property management budget planning season, they can be leveraged throughout the year to cut costs and make your processes more efficient.  

One of the biggest threats to a successful CRE budget is unplanned capital expenditure. Learn how to predict and prepare for HVAC replacement costs—watch Building Engines’ on-demand webinar: Capital Plan and Procure Like a Pro: Master HVAC Management in Commercial Office Spaces