The Importance of a Commercial Property Management Contract

Imagine you’ve just purchased an old brewing plant and produced your first successful barrel of beer. Then you decide to expand the plant, only to learn your competition has the same idea, wants to use the same property and is willing to pay much more for it. Adds another expense!

It’s not quite that simple, but when you own a brewery, you want to make sure all the parts remain in place so you can enjoy all of those full barrels. You also want to protect your investment, and you do that when you take every precaution necessary to keep your brewery running smoothly.

One strategy many businesses like yours are using these days to help secure their future is a comprehensive commercial property management agreements. Here’s why this kind of contract may be vital to your long-term success.

Your brewery may be expanding into new territories and producing new recipes, but the control of how much you pay for land and equipment shouldn’t be an issue. When other companies are vying for the same properties you have your eyes on, your land and water supply costs can fly through the roof. A commercial property management contract gives you the upper hand.

A commercial property management contract is signed by you and your property manager and stipulates exactly how you plan to rearrange your property after an expansion and what third-party contractors will be responsible for. It may seem like extra paperwork now, but in the long run, it creates a path everyone can follow. This translates to lower costs in things like energy use and material procurement, since your investment stays on track.

There are certain components any property management contract must have to be legally binding. You need to outline your responsibilities, insurance obligations, and where your expansion begins and ends on your property. If you’ve gone over your initial property inspection and other crucial details with your property manager, it should all be documented so the two of you can refer back to it whenever needed.

You want more money coming in, not going out. The benefits far outweigh the costs when it comes to a commercial property management contract. Without this document, you run the risk of losing more than you expected, such as the price you paid for your property, which could have been higher if you and a competing brewery tried to share the same space. Without a contract, it could also be harder to stay within your expansion costs.

Case Study: How a Commercial Property Management Contract Worked

Purity Dairies is a Southeast US in-plant processing company that needed to expand to meet increasing demand. After purchasing an abandoned brewery, it decided to enter into a property management contract that outlined everything, even where the remaining grains were going to be stored. Within three months of being up and running, the company was able to turn over $2 million in revenue while keeping its promotional launch expenses down.

Setting down the law in advance of your next big expansion can set up a clear path that can take you to victory. If you’re stuck choosing between a piece of land that remains too small or ending up paying too much for property, think about how a commercial property management contract can pay off. With all the strict guidelines in writing, you can choose the option that’s best for your bottom line, and put your hard-earned investment in the right place.

Your proprietary brewing process helps you meet international quality standards, and you don’t want anything to take your business away from you. When you sign a commercial property management contract, you’ll know that everyone is on the same team when it comes to meeting those high standards. Without strict documentation, how can you be confident that your plans for improvements are going to work out?

When it comes to making a decision about whether to sign a contract, you need to weigh both the costs and the benefits. Here are a few to think about before you make an agreement:

• A commercial property management contract may not be worth the paper it’s written on if you don’t review it for all the key elements you need to make it stick. Here’s a checklist to help you read it:

If you don’t have a commercial property management contract in place, you can easily wind up facing financial consequences. Transportation companies have a vested interest in your expansion, since breweries like yours need to get their beers out, but you could end up paying more if pricing isn’t documented in writing. The cost of a lawsuit to collect unfair prices could be far more than you ever hoped to spend.

Knowing which property management firm to sign a commercial property management contract with will help you avoid bad decisions that end up costing you later. Here are several tips for finding a property management firm:

Picking the right commercial property management firm can be the key to winning contracts, staying ahead of your competition, and reaping the benefits of best in brewing practices for your products.