A Day In the Life of a Commercial Property Manager

7 Replies

I’d love to hear some too. Commercial property management is the last thing I’ll need to have a vertical integration of the real estate industry.

I do not focus on commercial property management. There is very little money in it at all.

I have a friend whose company manages about 15 million sq ft of retail and it's almost a break even proposition at best. They make a little coin off of tenant placement in spaces for lease comissions and tenant renewals but fees charged off of management themselves are small.

Typically lowest return in commercial is property management, followed by leasing broker, followed by transactional broker, followed by being a syndicator owning the property.

Example a center with 300,000 gross income at 4% is 12,000. That is before expenses and employees and all the compliance and reporting etc. Some PM companies after overhead might net 2,000 a year on a center like that.

Originally posted by @Joel Owens :

I do not focus on commercial property management. There is very little money in it at all.

I have a friend whose company manages about 15 million sq ft of retail and it's almost a break even proposition at best. They make a little coin off of tenant placement in spaces for lease comissions and tenant renewals but fees charged off of management themselves are small.

Typically lowest return in commercial is property management, followed by leasing broker, followed by transactional broker, followed by being a syndicator owning the property.

Example a center with 300,000 gross income at 4% is 12,000. That is before expenses and employees and all the compliance and reporting etc. Some PM companies after overhead might net 2,000 a year on a center like that.

 Joel, what compliance and reporting is associated with commercial PM? A margin of 16% on revenue seems way off to me but I don't manage commercial yet. 

@Mark Eichenlaub I'd like to take a stab at answering your quistions... for the past 3 years my W2 has been a combination of managing a 700k sq. ft. portfolio of Class A commercial office space, industrial, retail and more specifically, right now 30 credit union locations. 

AVERAGE DAY IN THE LIFE - tenant maintenance requests, vendor management, project/construction oversight, bid gathering, tenant moves, financial reporting, budget tracking, rent collection, tenant/vendor networking.

BIGGEST CHALLENGE(S) - problem tenants (consistent unwarranted complaints), CAM calculations, Property Manager (employee) turnover - our market has a lot of PMs seeing if the grass is greener on the side.

CHANGES NEEDED IN THE INDUSTRY -  proprietary equipment needs eliminated, 

To follow up on what others have mentioned regarding lowest return - after working a W2 for 3 years in the commerial property management field, I'll be launching my own commerical property management company in a couple weeks with a portfolio of ~$1M in gross receipts (83k sq. ft). At a 4% property managment fee, I'm certainly not making bank. If you multiple that 9x, which would roughly equal the 700k sq. ft. portfolio I managed at one time, we would collect $360k in property management fees. With that amount of assets under management we'd probably need to have 2 maintenance techs, an accountant and a property manager on staff. Once you consider business expenses coupled with 4 salaries & benefits we're certainly not be profiting much if anything. 

Where property management companies make their money is in the additional fees that are outside of the management agreement... such as leasing, project management, asset management, etc.

Despite this example, I've worked for 2 real estate investment firms that have brought the property management operations in house rather than outsource the task. In each scenario the real estate firm saved money by making such move.