Distress is cheap, but tough to manage

Distressed commercial properties are available practically anywhere, at discounts up to 60%. But managing those assets will be more difficult even as the economy recovers.

So says Rachel Elias Wein, principal of St. Petersburg-based WeinPlus Associates and a property management consultant. Although investors are able to easily buy loans on distressed assets, she says, managing them won't be the same as during the boom years.

“Management practices in the recession are different,” Wein (Business Review, Jan. 20) tells Coffee Talk. “The economy has evolved and asset management practices that don't evolve are likely to fail.”

Where retail asset managers used to only have to focus on collecting rent checks, they now have to take on a greater role in making sure new tenants succeed, Wein says. That includes paying closer attention to sales, helping them through the permitting process and allowing them to reduce operating expenses, she says.

Tenant renewals are also a cause for concern, she adds, since it costs less to keep them in place than having to backfill empty space. Incentives are key to maintaining and increasing portfolio value, she says.

“Property management and leasing practices will prove to be the deciding factor that determines whether a distressed asset venture succeeds or fails,” Wein says. “It's up to the owner to set the stage for their team's success.”