Find Best Commercial Property Management Companies Near You

A commercial property manager takes care of the daily operations of a commercial building, including tenant screening, lease negotiation, rent collection, and maintenance.

Just like a residential property manager, commercial property managers rely on a percentage of a building’s rental income as their fees. They have the same incentive as property owners to maximize rents and reduce vacancies.

In addition to managing tenants and maintenance requirements in a property, commercial property management companies will provide market analysis, financial reporting, and government compliance. Property management companies are responsible for the operations of CRE and will provide property owners all of the necessary tools to keep their properties running.

The purchase and sale of most CRE is a far less liquid process than buying/selling single family homes (however, multifamily properties are usually a more liquid asset than most CRE). By using a reputable property management firm, property owners will be able to tap into a network of CRE buyers and sellers through their property management agency’s other clients. This gives property owners invaluable access to off market opportunities.

Managing CRE is far more complex than managing single family homes. In addition to the complexity of the lease terms, understanding local CRE markets is a specialized skill. Commercial property management firms have significant experience in knowing where and how to find good tenants and how to properly price rental properties.

For apartment buildings, commercial property managers are uniquely able to handle the substantial property management and maintenance requirements that come with renting a multifamily property, such as tenant flow. They will also have relationships established with reliable contractors.

The rates charged by a commercial property manager will be based on the calculation of the total rent. Typical fees will be between 5%-12% of rents and a flat leasing fee when signing any new tenant or when renewing the lease of an existing tenant. These leasing fees are usually around $200 per signing for business tenants. Additionally, commercial property managers will also charge a small percentage – usually 5%-10% – of the total cost of repair or maintenance work.

Commercial portfolio managers view their clients’s properties as real estate investments. This top-down view goes beyond the duties of a property manager and looks at properties from the perspective of asset management.

Just as a financial advisor will seek to maximize the returns of their clients stock portfolio, commercial portfolio managers will look to maximize the returns of their clients’ real estate portfolios as a whole, including selling and buying properties.

They utilize a strategic real estate management approach by modeling out financials and expected returns, working directly with lenders, and performing due diligence for the acquisition and sale of properties.

A commercial lease usually involves a significant amount of negotiation between the business renting the property and the owner. In addition to the complexity of the commercial leases, the lengths of business tenant leases are much longer than of residential leases, and last 2-5 years on average.

At their core, commercial leases function like any other lease. They obligate the tenant to pay a fixed rent amount on a regular basis, usually monthly. Commercial leases become complex when tenants have unique requirements for their landlords. For example, a restaurant renting space in a mixed use condominium might obligate the property owner to not rent any other spaces in their property to another competing restaurant.

Facility managers are generally tenant-facing and are responsible for the upkeep of building amenities and common areas. On a daily basis, they directly serve the needs of residential and business occupants.

Unlike facility managers, property managers are responsible for negotiating leases and handling the cash flows of a building. Even for a firm providing complete property management, there tends to be very little maintenance-related tenant interaction, unless something breaks or when a larger renovation is needed.

The vast majority of commercial properties will have property managers, but only properties that are large or complex enough to benefit from having tenant-facing services will have facility managers.

Legally, property managers are overseen by the state government. Depending on the state, they may be required to hold a license given by the local real estate commission.
In practice, landlords who own a relatively small property portfolio will usually oversee property management firms themselves. In these situations, it’s ultimately the property owner’s responsibility to make strategic decisions relating to the purchase, sale, and lending terms of a property.

For larger property portfolios or esoteric property types – a warehouse for example – it’s usually in the best interest of the property owner to hire a commercial portfolio manager to oversee the property management firm by advising on strategic decisions.