Leveraging Competitive Tension to Maximise Revenue
Background
A commercial property owner was reviewing the renewal of their parking agreement with an operator. The initial proposal was received, and Parking Asset Advisory (PAA) was engaged to assess its competitiveness and financial impact.
Challenges Identified
During the initial review, several key issues were discovered:
Under-priced Rent: The original offer from the parking operator was significantly below market value.
Unpaid Turnover Rent: The operator had not paid turnover rent for three years, amounting to over $500,000 in lost revenue.
Lack of Invoice Reconciliation: The owner's previous experience with another operator had resulted in millions of dollars in outstanding unpaid turnover rent due to a lack of proper invoicing and compliance checks.
Strategic Approach
To address these challenges and secure a better outcome for the owner, PAA implemented the following strategies:
Competitive Tender Process: By introducing competitive tension in the tender, multiple operators were engaged to bid for the contract, ensuring the best possible financial return.
Rent Increase Negotiation: Using data-driven insights and market benchmarking, PAA successfully negotiated a 50% increase in rent compared to the operator’s initial offer.
Turnover Rent Recovery: A thorough audit of the agreement revealed the unpaid turnover rent, allowing the owner to recover a significant portion of lost revenue.
Results & Impact
50% Rent Increase: The owner secured a significantly improved financial outcome, maximising the asset’s revenue potential.
$500,000+ Recovered: By identifying and addressing the unpaid turnover rent, the owner was able to reclaim substantial funds.
Improved Compliance & Transparency: PAA implemented better reporting and compliance measures to prevent future revenue leakage.
