As a property owner, you may be responsible for both residential and commercial properties.
While the two types of properties present certain similarities, there are also some pretty big differences when it comes to commercial real estate property management.
In this post, we’ll answer some of the most common questions about commercial property management.
So whether you’re just starting out in commercial property ownership or you’ve been managing them for years, this post is for you!
What is commercial real estate property management?
Commercial real estate property management is the process of managing commercial properties, such as office buildings, retail centers, warehouses and industrial parks.
A property manager is responsible for the day-to-day operations of the property, including maintenance, repair and security.
Commercial real estate comes in many different forms. Office buildings are the most common type of commercial real estate, followed by retail centers, warehouses, industrial parks, and apartment buildings.
Types of CRE properties
The first step in commercial real estate property management is to understand the different types of commercial real estate. Each type has its own unique challenges and requires a different approach to management.
- Office buildings are typically managed by a team of property managers. The team may be responsible for multiple buildings in a single complex or multiple complexes in a single city.
- Retail centers are often managed by a single property manager. The manager is responsible for the day-to-day operations of the store, including maintenance, repair and security.
- Warehouses and industrial parks are typically managed by a team of property managers. The team may be responsible for multiple buildings in a single complex or multiple complexes in a single city.
- Apartment buildings frequently have an on-site leasing and property management office, depending on the number of units in the building. Managing apartment buildings requires a slightly different skill set from the other types of commercial real estate, because you are working with residential tenants versus commercial businesses.
The most important step in commercial real estate property management is to develop a clear understanding of the goals of the owner. The goals of the owner will dictate the approach to management.
Once the goals of the owner are understood, the property manager can develop a management plan that includes all of the necessary steps to achieve those goals.
The management plan should be reviewed on a regular basis to ensure that it is still in line with the goals of the owner. If the goals of the owner change, the management plan should be updated accordingly.
How does commercial real estate property management differ from residential property management?
Commercial real estate management and residential property management – such as single-family rental homes – are two different types of property management.
While both types of property management deal with the care and upkeep of a property, there are some key differences between commercial and residential property management.
Complexity
For one, commercial real estate property managers typically have to deal with more complex properties than residential managers. This is because commercial properties often have more tenants, each with their own unique needs. In addition, commercial properties may also have tenant-occupied space, common areas, and parking lots that all need to be managed.
Leasing
Another key difference between commercial and residential property management is the type of leases that are used. Commercial leases are typically much longer than residential leases, and they can be very complex. This is because commercial leases often include clauses about the use of the property, and they may be negotiated by lawyers on behalf of the tenants.
Experience
Finally, commercial real estate property management typically requires a higher level of financial expertise than residential property management. This is because commercial properties often have larger budgets, and their income and expenses can be more complex. Commercial property managers must understand things like tax laws, financing, and investment strategies in order to be successful.
What are the responsibilities of a commercial real estate property manager?
Commercial real estate property managers are responsible for a wide range of tasks. Here are 10 of the most important responsibilities:
- Maintaining the property in good condition and ensuring that it meets all applicable safety and code requirements.
- Handling all tenant communications, including responding to maintenance requests and concerns.
- Collecting rent payments and enforcing lease terms.
- Conducting regular inspections of the property.
- Preparing reports on the condition of the property and any necessary repairs or improvements.
- Overseeing contractors and other service providers who work on the property.
- Negotiating leases with new tenants and renewals with existing tenants.
- Marketing the property to prospective tenants.
- Keeping financial records for the property, including income and expenses.
- Complying with all local, state, and federal laws and regulations pertaining to commercial real estate management.
How do commercial real estate property managers get paid?
There are several ways that a commercial real estate property manager can be paid.
The most common method is for the building owner to pay the property manager a percentage of the total rent collected from tenants each month. This percentage is typically between 3 and 10%.
Another common method is for the building owner to pay the property manager a flat fee each month. This fee is usually based on the size and type of property being managed.
Some property managers also charge a commission for leasing vacant space in a commercial building. This commission is typically a percentage of the total rent that will be received for the new tenant.
What experience is necessary to become a commercial real estate property manager?
To become a commercial real estate property manager, you will generally need a minimum of five years’ experience in the real estate industry. However, many employers prefer candidates with seven or more years of experience.
In addition to experience, you will typically also need to have a bachelor’s degree in business, real estate, or a related field. Some companies may require that you have a master’s degree or certification from the Institute of Real Estate Management (IREM).
You will also need to be well-versed in the use of technology, as property management is becoming increasingly reliant on software and other tools to manage large portfolios efficiently. Strong interpersonal and communication skills are also essential, as you will be working closely with tenants, landlords, and other stakeholders.
Finally, you should be detail-oriented and organized, with the ability to multitask and handle multiple deadlines under pressure.
Are there any certification or license requirements to become a commercial real estate property manager?
To become a commercial real estate property manager, you will need to obtain a certification or license. There are several different types of certifications and licenses that you can obtain, but the most common ones are the following:
- Certified Property Manager (CPM)
- Real Estate Broker’s License
- Registered Property Manager (RPA)
- Certified Commercial Investment Member (CCIM)
- Society of Industrial and Office Realtors (SIOR)
- Licensed Real Estate Appraiser
- Counselor of Real Estate (CRE)
- Certified Leasing Specialist (CLS)
- Master Property Manager (MPM)
- Accredited Residential Manager (ARM)
What are some common challenges faced by commercial real estate property managers?
One of the biggest challenges that commercial real estate property managers face is finding and retaining good tenants. In order to overcome this challenge, a good property manager must be proactive in marketing the property and keeping it well-maintained.
Another common challenge is dealing with problem tenants. A good property manager will have a strict policy in place for dealing with problem tenants and will not hesitate to evict them if necessary.
Another challenge that commercial real estate property managers face is managing the finances of the property. A good property manager will have a solid understanding of financial principles and will be able to properly manage the income and expenses of the property.
Finally, commercial real estate property managers must always be prepared for the unexpected. Whether it is a natural disaster or a sudden vacancy, a good property manager will have a plan in place to deal with any situation that may arise.
Is it possible for a residential property manager to become a manager of commercial real estate?
If you’re a property manager with experience managing residential rental property, you may be wondering how to become a manager of commercial real estate.
The good news is that the skills you’ve acquired in managing residential property can be translated to commercial properties. However, there are some key differences that you’ll need to be aware of.
Here’s what you need to know about making the transition from managing residential to commercial real estate:
- Commercial properties are typically much larger than residential properties. This means that you’ll need to be able to effectively manage a larger staff and budget.
- Commercial tenants are usually businesses, so you’ll need to have a good understanding of business operations and management.
- Commercial properties often have specialized needs, such as security and parking. You’ll need to be familiar with these needs and how to best meet them.
- Commercial real estate is often governed by different laws and regulations than residential real estate. It’s important that you’re familiar with these differences so that you can comply with all the requirements.
Making the transition from managing residential to commercial real estate can be a challenge, but it’s definitely doable if you’re prepared for the challenges. Keep these tips in mind and you’ll be on your way to success!
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Article written by J. Scott Digital freelance copywriting services.
