Construction Oversight Fee for Property Manager

[Kim Hopkins]

Hi Everyone,

We are engaging with a new property manager for a 100k SF multi-tenant building we own. In addition to their % management fee, they want to charge a construction management fee as a % of the project cost for any tenant or capital improvements. They're proposing 4% up to $250k in project cost, and 3% above that. 

So for example, if it costs us $100,000 to paint the  building, that would be a $4,000 fee to our property manager. If it costs us $1M to  put new roofs on the building, that's a $30,000 fee to the property manager.

In my opinion, $30,000 for supervising putting on new roofs seems pretty steep. We have fees like this in our other agreements but none of our other properties have improvements that could cost this much. 

Any experience on what is reasonable to counter with here if anything? 

Thanks,
Kim