Managing Commercial Property as an Investment

4 Oct

Property management keeps the building working. Asset management asks whether the capital invested in it is working hard enough.

By Doug Parker, Montbart
First published 4th October 2026

A great conversation in London recently started with a seemingly simple question: “So what is it you actually do?” Like many property professionals, I initially answered it with a bit too much detail. I talked about asset management, lease events, occupiers, investment performance and the various ways commercial property can be improved.

Then I stopped myself, and just reduced it to something much simpler: “I manage commercial property, as an investment asset”.

The more I thought about it afterwards, the more I realised this probably explains what I do far better than most of the longer descriptions I’ve used in the past (do we still use elevator pitches?).

Commercial property can be managed really well from an operational perspective. Tenants can be dealt with efficiently, contractors supervised, rent collected, service charges managed, repairs completed and all necessary compliance monitored and recorded. This of course, matters greatly. Good property management is a professional discipline in its own right, and if it’s not done well, can quickly undermine an otherwise great investment.

Managing a property as an investment though, introduces a slightly different set of questions.

The building is only part of the investment

An asset manager still needs to understand what’s happening inside the building. There are times when the investment problem turns out to be a leaking roof, an unhappy tenant or an unbudgeted and large electricity bill. The underlying question is different though. Instead of asking if the building is being managed properly, I’m interested in what the building is doing for the capital invested in it.

Is the income as secure as it can possibly be? Are the leases structured well? Is the rent truly sustainable? Are important lease events approaching? Is capex being deployed well? Is the asset becoming more or less attractive to occupiers or hypothetical new owners?

And also, what happens next? A building might be fully occupied and still have a weak investment profile. What if several leases are due to expire within a concentrated period? Maybe a very important occupier has a lease break approaching. Perhaps substantial capex is needed just before refinancing. Or maybe the rents seem strong but are ‘too ahead’ of the market (and therefore vulnerable at the next lease event)?

Of course, none of the above means the property is a poor investment BUT they do change the way it should be managed.

Property management and asset management overlap

I don’t see property management and asset management as a hierarchy in which one is somehow more sophisticated than the other. To me, they’re just different disciplines with slightly different objectives.

A good property manager can create enormous value for an owner. Strong tenant relationships, good contractor management, accurate service-charge administration and good overall building maintenance all support the investment. Equally, an asset-management strategy that ignores the operational reality will not survive contact with the building. I feel the difference is one of perspective.

Property management is often concerned with keeping the asset functioning well today. Asset management is also concerned with what the asset needs to become tomorrow.

Sometimes that means negotiating a lease regear, or it might mean looking at whether refurbishment expenditure is justified. Maybe (and this might be controversial) it means accepting that an apparently strong rent should not be defended ‘at all costs’ because it’s actually damaging tenant retention. And maybe it means concluding that the best course of action is to sell.

Looking after the pennies is not quite enough

We’re all familiar with the saying that “if you look after the pennies, the pounds will look after themselves”.

If we apply this to commercial property, there seems to be a lot of sense in it. If lease events are managed properly, occupiers are looked after, rent is collected, service charges are controlled, planned maintenance is completed and the day-to-day administration is sound, then much of the asset’s risk is already being reduced. It will sort-of ‘look after itself’.

There is another aspect though. An asset can be well managed operationally and still be strategically inadequate. The building might be becoming obsolete, there might be a refinancing event approaching, it might be that planned maintenance has repeatedly slipped across several assets, maybe too much capital is tied up in properties that no longer fit the wider portfolio and money be released from one asset to strengthen another…?

These are very different considerations. They are less about whether the individual actions are being completed, and more about whether the asset is still delivering what it was meant to. My analogy of this, is like swimming the Channel. You absolutely need to be a strong swimmer. You need technique, endurance and the ability to keep working for hours and hours on end. And every so often, you need to look up. It’s more than possible to be working very hard whilst actually heading in the wrong direction. To me, this is one of the clearest differences between managing property well and managing it as an investment.

Commercial property has to compete for capital

There’s another reason I think this distinction matters particularly at the moment. Commercial property doesn’t compete only with other commercial property; it competes with every other place an investor could put their money to work.

Government bonds, equities, private equity, cash, infrastructure and numerous other investments are all competing for the same capital. When lower-risk investments are capable of producing reasonably healthy returns, commercial property has to justify the additional complexity involved in owning it.

Consider an investment property producing a yield of 7 or 8%. In isolation, this might seem a fairly attractive return, but the investor is also accepting illiquidity, transaction costs, tenant risk, capex, management and the possibility the income will change at the next lease event. Therefore the likely question is “is the slightly higher return on property actually worth the risk and effort involved”? That might be a difficult one to answer.

Property does have advantages, but they need to be captured

None of the above means commercial property has become an unattractive investment. In fact, I’d suggest it’s quite the opposite. One of property’s great characteristics is that owners can influence the outcome (try this with shares in Tesco…).

Leases can be renegotiated; vacancies can be reduced; the standard of accommodation can be improved; poorly structured income can be strengthened; and an underperforming asset can be repositioned in the market. Government bonds regrettably do not generally allow the investor to increase asset value by improving the reception area.

The ability to intervene is one of the principal reasons property can be such an interesting investment asset, but that potential only matters if somebody is looking for it. If the property is just being passively maintained rather than managed strategically, much of the potential advantage of owning an active asset might never be realised.

The investment has to remain competitive

This is where I think asset management earns its place. The objective is not simply to keep the building occupied or to maximise today's rent at any cost. It’s to keep the investment competitive.

This might mean strengthening income, or involve looking deeply into lease-event concentration before too many expiries arrive together. It might mean bringing forward capital expenditure to improve the building as it’s presented to a future buyer or lender. It might mean sacrificing some short-term income today in exchange for greater lease security tomorrow. Maybe accepting a void so the asset can be repositioned in the market. Also, it could simply be to do nothing because the cost of intervention is greater than the likely benefit. It’s not about constant activity, it’s about the activity that improves the investment case.

The owner matters as much as the property

The next important dimension, is that the same property can mean very different things to different owners.

For one investor, it might represent a substantial part of a pension or family wealth; and for another, it might be one relatively small asset within a much larger portfolio. One owner might heavily prioritise secure income; another may be seeking capital growth; and another might want to release capital within three years. The most ‘appropriate’ strategy therefore cannot be established from the building alone.

Asset management always begins with an understanding of what the owner needs the capital to achieve. This is why two perfectly rational investors could own the same property and adopt completely different strategies. The asset doesn’t exist in isolation from its owner.

Information creates options

So much of good asset management is therefore about looking ahead early enough to have options. An approaching lease expiry is not necessarily a problem if it’s identified early enough.

A refinancing event three years away is unlikely to seem urgent now, but the asset presented to lenders in three years will be shaped by decisions taken today. Good information creates time, time creates options, and options usually improve decision-making.

This is also why the mundane tasks such as maintaining an accurate tenancy schedule, keeping lease documents properly organised, understanding service-charge exposure and tracking important dates matter far more than their administrative appearance might suggest. Sophisticated investment decisions very often depend on very ordinary information being correct.

Managing the investment, not just the building

Commercial property is clearly unusual because it’s simultaneously a physical asset and a financial one. The building aspect needs to work, because occupiers expect suitable accommodation, leases need to function, and the roof still needs repairing when it leaks.

Behind all of that though, is a large amount of capital which has been committed to the asset and is inevitably (and understandably) expected to produce a return. Managing commercial property as an investment means keeping both aspects in view. It means understanding what’s happening in the building today while also considering what the income, risk and value might look like several years from now.

So when someone asks me what I do, I think I’ve finally found the simplest answer: “I manage commercial property, as an investment asset”.

And I think this naturally brings me to a question: “Is the property being managed, or is the investment being managed too?”