How do you manage risk in your leasing portfolio?

1 Assess your portfolio

The first step in managing risk is to assess your portfolio and identify the sources and levels of risk you face. This may include the location, condition, and value of your properties, the quality, diversity, and stability of your tenants, the terms, duration, and flexibility of your leases, the market demand, supply, and competition for your space, as well as regulatory, environmental, and social factors that affect your operations. By conducting a thorough analysis of your portfolio, you can determine your strengths and weaknesses, identify opportunities and threats, and prioritize your actions accordingly.

2 Optimize your leases

The second step in managing risk is to optimize your leases and ensure they align with your goals and expectations. This may involve negotiating favorable rents, incentives, and escalations, as well as securing long-term leases with creditworthy tenants. It is also important to incorporate clauses that protect your rights and interests, such as sublease, termination, renewal, maintenance, and indemnity provisions. Additionally, you should adjust your lease structure and terms to suit different types of tenants and markets. Moreover, it is essential to review and update your leases regularly to reflect changes in the market or the law. By optimizing your leases in this way, you can maximize your income, reduce your vacancy, and avoid disputes and litigation.

3 Diversify your portfolio

The third step in managing risk is to diversify your portfolio and reduce your dependence on any single property, tenant, or market. This may involve acquiring or disposing of properties that fit or deviate from your strategy, expanding or contracting your portfolio to match your capacity and appetite for risk, leasing or subleasing space to different types of tenants and industries, and exploring new markets or niches that offer growth potential or competitive advantage. Through diversifying your portfolio, you can spread your risk, enhance your resilience, and open up new opportunities.

4 Monitor your performance

The fourth step in managing risk is to monitor your performance and track your progress and results. This may include measuring and reporting your key performance indicators, such as occupancy, rent, yield, and return on investment, as well as benchmarking your performance against the market and peers. Additionally, you should conduct regular inspections and audits of your properties and tenants, solicit feedback and reviews from stakeholders, and identify and resolve any issues or challenges that arise. Through monitoring your performance, you can evaluate your effectiveness, improve your efficiency, and demonstrate your value.

5 Manage your exposure

The fifth step in managing risk is to manage your exposure and limit your potential losses or damages, which may involve maintaining adequate insurance coverage, implementing preventive and corrective maintenance programs, complying with all applicable laws and regulations, developing and testing contingency and recovery plans, and seeking professional advice from experts. This way, you can protect your assets, reputation, and relationships while being prepared for any unforeseen events or circumstances.

6 Learn and adapt

The sixth and final step in managing risk is to stay up-to-date with the changing needs and expectations of your tenants and the market. This may involve keeping track of industry trends, attending training courses, networking with other landlords and professionals, experimenting with new ideas, and implementing feedback. Learning and adapting will help you increase your competitiveness, creativity, and customer satisfaction, allowing you to accomplish your leasing goals.