What is a reasonable property management fee

Question

Hi to the BP community! I'm new here and trying to understand what you more experienced investors consider the range for reasonable percentage of gross revenue property management fees for a commercial lease. For something between 10 and 15,000 sq feet. In Naperville. From one source I read 3 - 6 % of gross revenue. But never more than 12%.

Adam Bartomeo · Answer

It will depend on a multitude of fact, there’s including commercial type, location, age of the property, traffic to the property. The higher, the risk of not making money, the higher the percentage of the management fee.

Amit Patel · Answer

Hey Dana,

So excited to see you in the BP community I’ve been working with properties in the Naperville area and Chicagoland in general for 30 years , and for a 10-15k sq ft commercial lease, you’re typically looking at 6-10% of gross revenue for property management fees. If it’s just basic stuff like collecting rent, it’s more like 6-8%, but for full-service management—think tenant screening, maintenance, and detailed reports—it often lands at 8-10%, depending on the property’s size, age, or spot in Naperville. Anything over 12% feels high unless it’s a super tricky setup. I’d recommend asking for a clear list of services and chatting with other landlords for references. Is your space retail, office, or something else? That’d help pin it down! Please let me know if we can help you in anyway!

David Bovyn · Answer

From my experience, for individual unit management, you are looking closer to 8% for residential units, not including the leasing or maintenance, of course.

Jake McCain · Answer

3-5% of gross collected revenue or a minimum amount (whichever is greater).

Common fees that could be in the contract:

- Collected late fees - shared 50/50 with manager

- Lease renewal fees  - If allowable by law, your manager negotiates renewals at a 1-1.5% of the lease value.

- Mileage - Some PM's like charging mileage associated with the building.

- Tech Fees - Usually $3-$5/unit a month

- Printing and Postage - Only as needed.

Henry Clark · Answer

OP.  Drive around your area and/or look at CREXI or Loopnet online.  Look for Commercial brokers.  Ask them to take a look at and give you estimates on managing it.  Or a large local RE firm.

Evan Polaski · Answer

@Dana Garbo, is this a single tenant building?

Typical third party management fee for commercial property (not apartments) is 3-5%, in my experience.  I have seen some with floors, i.e. 5% of gross revenue, not to be below $2,000 per month.

Note, this is JUST for property management services.  Leasing commissions, construction management mark-ups, etc are on top of the PM fees, and should be outlined in the PM agreement what services are included, what markups happen, and any additional costs associated.

Dana Garbo · Answer

@Evan Polaski - thank you!!! Yes, single tenant. Really appreciate your thoughts here!