How Different Is Commercial Property Management Service From The Rest?

Property management services are offered by companies which are licensed and experienced to manage properties on behalf of the owners. A property management company charges a certain amount of fees for rendering the service, and the fee pattern may vary according to the properties and the range of services offered by them. Commercial property management services are different from residential propertiy management  or  blocks management, hence the fee charged for managing the former is also arrived at in a different manner.

Commercial property management services are based on several business models and they include percentage fee, fixed fee, and guaranteed rent models. The mode of payment is chosen according to the type of properties the management company has to control. For some properties a revenue share business model may be applied under agreement with the owner. In this model the service fee is paid in the form of revenue generated by commercial properties, and the generated revenue is shared between the owner and the property management service.

The revenue share arrangement works this way. It is applied to commercial establishments like retail outlets and business centres that are designed to generate revenue. The provider of commercial property management services agrees to develop the properties into money-making retail outlets or service apartments. Unlike in other cases, the management service does not receive a specific fee from the owner, but shares the revenue the business properties have generated. A hybrid structure involving fixed fee and revenue share is also applied in some cases.

The most common business model applied to managing properties is percentage of rent, wherein the provider of the commercial property management services takes a certain percentage of the rent charged. Under agreement the property manager collects rents from tenants and keeps a percentage of typically 10-15% as a service fee. A commercial property management contract has a different set of duties than contracts relating to residential properties as commercial premises may have a different set of legislations and rights governing them, including laws in place to protect members of the public who may need to enter the premises as customers, on behalf of other companies in the supply chain, and so on. However, primary duties like rent collection, maintenance and upgrade of properties, attending to legal matters and screening of the tenants remain the same for the commercial property managers.