Commercial Property Sector Under Pressure By Michael Franze, Managing Director, Citiq Prepaid
The commercial property market is under pressure. The economic turbulence of the past few years, alongside political and policy uncertainty, has affected growth and occupancy levels across the country. The FNB Property Broker Survey 2019 found that the retail commercial property sector has seen increased vacancy rates while the Redefine Properties report showed an average rental reversion rate of negative 6%. Increases in electricity costs, high vacancy rates, poor business confidence and low growth have dampened performance and confidence. However, the outlook is not all gloomy. Shifts in investment, policy and economy will likely have a positive influence over the next six months to a year, and the commercial property sector can invest into solutions that capture market attention and create customer stickiness. The current turbulence in the market is an opportunity to commoditise value-added services that attract tenants and improve customer experiences. Ultimately, tenants are customers and customers want more for their Rands than ever before. They want value for money, relationships and solutions to the everyday problems that come with commercial property rental and expenses. For most tenants, utility management is one of the most complex and admin-intensive aspects of commercial property rental. The systems put in place by property managers, municipalities and legacy installations are often tedious and time consuming, and inaccurate. Poorly managed utilities are cause for conflict and costly disputes that affect both the property and the tenants, damaging relationships and sometimes resulting in costly litigation. There are several reasons for this – one electricity meter shared across all tenants, costs divided across all
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tenants instead of accurately allocated per usage, late and unreliable invoicing dates, complex cost analysis and assessments. One business using a lot of power or an undetected water leak, both causing massive bills, can affect tenant relationships and property reputation. Prepaid utility meters have seen solid market growth over the past few years for this very reason. They allow for improved utility administration, cost management and usage assessment, providing much-needed visibility into energy and water consumption across all tenants and properties. Prepaid meters put tenants in charge of
The current turbulence in the market is an opportunity to commoditise value-added services that attract tenants and improve customer experience. their own payment and usage, reducing admin on all sides – property managers no longer have to collect payments or deal with disputes and tenants can manage their own usage within their own budgetary constraints. The transparency offered by prepaid utility meters is a significant value-added service and has become a commodity in itself. Tenants aren’t left frustrated with vague measurements and unexpected bills and
the property can offer new tenants with reliable and accurate utility billing and management. Prepaid water meters can identify leaks upfront, saving a lot of money and hassle, while prepaid electricity meters can improve control and appliance usage. This level of control over one aspect of the business can make all the difference to the attractiveness of a property and how tenants engage with property managers. It eliminates the potential for conflict over two things that cannot be ignored when it comes to running a business – power and water. For the commercial sector, prepaid utilities can offer that extra layer of service that adds stickiness to their offering and allows for solid and sustainable growth into an uncertain 2020.