For most, 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. 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 (Side note: 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.
2. Account for changes in occupancy
Especially as more companies move to a hybrid work model, occupancy levels may fluctuate more than usual.
Start conversations with tenants 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 your 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.
4. Benchmark operating expenses
Data without context has limited value. To identify areas for improvement, measure your operating expenses against those of competitor portfolios.
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.
5. Stay ahead of tenant trends
Given how quickly tenant needs and priorities change, feeling one step behind is understandable.
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.
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 a better choice. These apps give you the ability to continuously communicate with tenants. You can send tenants pulse surveys to always know how satisfied tenants are, in real time.
6. Use technology to automate 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.
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.
Take control of property management budget planning
The commercial real estate industry continues to grapple with the fallout from remote and hybrid work. And 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.
A streamlined budgeting planning season is backed by building data. However, there is so much data available to property managers. Learn about the metrics that matter for modern property management in our free guide.