Property Management - What Sort of Costs/Fees?

It’s a great question – but one which is not simple to answer. In reality, there is no universal management fee structure. Just as commercial properties vary from location to location and market to market, so to do the related costs to manage these properties.

Factors to consider should include:

·        Size of the property and total # of tenants

·        Types of tenants – commercial/medical/retail/office

·        Projected maintenance requirements – based on prior years

·        Projected capital improvements pending (ie. new façade/roof)

·        Type of Financial Management required (ie. proformas/budgets)

·        Vacancy Status (management needs differ w/ high/low vacancy)

·        New Lease Involvement w/ Placements & Marketing

·        Historical Cost to manage the property (minimum 3 years)

Your best fee comparisons are done locally in your own market, making best efforts to find similar type commercial properties. Interviewing a minimum of 3 management companies is a good strategy, ensuring that you establish the same criteria for each proponent  -- comparisons need to be “apples to apples”.

In our local market of Windsor-Essex (Canada), if I had to provide a range for management fees, it would likely fall in the area of 3-5% (commercial properties only, not multifamily) of the total gross revenue.  Again, services offered may differ from company to company and you need to ensure you are making valid comparisons. As well, this would not include any ‘new leasing’ related services, which would be the responsibility of a related real estate brokerage.

As always seek out the advice of experienced commercial realtors within your market, as you look to establish a good management plan.