Earning a profitable return on your commercial property investment boils down to the art of finding the right tenants, managing expenses, and ensuring ongoing property upkeep – all while respecting your precious time.
One common concern is the cost of commercial property management fees. Many investors see these fees as potential deductions from their profits. However, this is often far from the reality.
Partnering with the right commercial property manager can offer significant advantages.
Their industry connections, knowledge, and efficient processes will often lead to a better return on investment compared to managing everything by yourself. And while fee structures may vary, your main focus should always be on the value you get in return.
In this article, we’ll shed light on the usual fee structures for commercial property management in Perth and across Australia. By the end, you should have a better understanding of the average fees charged by commercial property management agencies and what value they can bring to property owners.
General Fee Structures
There are several different commercial property management fees to factor into your calculations.
Letting Fee: A charge to source commercial tenants to lease your property, which is generally calculated based on 2-3 weeks of rent but can differ between agencies.
Management Fee: Charged as a weekly fee to manage the commercial property in terms of property maintenance and tenant payments, generally calculated as a percentage figure based on a series of market factors – we will explore average commercial property management fees further below.
Other Fees: Beware that leasing agencies can also charge additional fees (on top of the above two) so it is important to factor this into your financials. Some agencies also provide annual statement summaries of total fees to help business owners balance their outgoings and bottom line.
Some examples of additional commercial property management fees may include:
- Routine inspections
- Advertising for tenants
- Collecting tenant bonds
- Prospective tenant viewings
- Lease-up fees and lease renewal fees
- Preparing, processing, and lodging applications and contracts
Fees Inclusions and Services
After understanding the differences in fees between differing agencies, we can begin to understand the value behind commercial property management services.
Whilst there is no “one size fits all” approach to what these services entail, a good gauge of what to expect from your commercial leasing fees should include at least the following:
- Sourcing quality commercial tenants who maintain the property and pay their bills on time.
- Chasing up late payments from tenants and maintaining a cashflow positive investment.
- Evicting tenants who breach their contracts – for example late payments or non-payers.
- Working with contractors to maintain the property’s safety, security and functionality.
- Supplying the owner with financial records to assist in annual reporting.
Who Pays for Commercial Management Fees?
In most commercial leases, management fees and landlord costs can be paid by the TENANT. However, there’s an important exception.
For retail properties subject to the Retail Tenancies Act, landlords cannot charge tenants for these fees. Always be aware of your property’s classification and the applicable regulations.
Commercial Property Management Fees in Perth
As local commercial property management specialists in Perth, the team at Vast Commercial Property have extensive experience understanding the local commercial property management fees in Perth and throughout Western Australia.
Since the Perth property market provides ample investment opportunities for commercial business owners within a growing market, local commercial leasing agencies generally charge between 7% and 10% for their weekly management fees.
Whilst this range can differ between agencies who offer more/less services from one another, this is an accurate gauge of what to expect locally.
Commercial Property Management Fees in Australia
To ensure you’re getting the best deal, it’s important to understand the differences in value proposition between competing agencies, as commercial property management fees in Australia can vary drastically.
Weekly rental fees are often calculated based on a percentage of the current commercial rent, with the lower end of the scale seeing agencies charging as little as 4%, with others charging up to 12% for their management fees.
As the old saying goes, “You get what you pay for”, so beware of seeking out the cheapest option, as you’ll need to make sure you’re still getting the value you need to maximise returns from your investment.
Understanding Average Commercial Property Management Fees
As outlined earlier, there is a notable fee range for commercial property management in Perth and throughout the nation, so it’s important to understand the factors that drive these figures.
Determining an accurate weekly percentage can come down to several factors, both internally and externally, so we have outlined some of these factors below to give you an insight into how these affect commercial property management fees.
- Tenants: This is a significant factor when calculating fees as this determines the number of tenants in the property, and factors like their reliability for payments, any specific needs they have within the property and any custom expectations they have from their contract.
- Local fees: Commercial property management agents factor in the local property management rates charged within the area or postcode, as this will ensure the fees are set at market rates and indicative of the local surroundings.
- Company Deliverables: Property management agencies always consider the specific products and/or services offered by the tenanted company when determining the right fees to charge, as these can determine specific requirements within the contract.
- Location: If the property is within a busy area with high levels of footfall, this can also have an impact on the weekly rental figure charged by the agency.
- Contract Classification: Commercial leasing contracts can be either retail (shops and stores in high footfall areas) or non-retail (industrial properties such as warehouses and factories, or offices) which has a bearing on the weekly figure charged, with each contract style having their own requirements, regulations and guidelines.
- Size: The size of the property can also determine the weekly fees, as the square meterage of the property determines the level of maintenance and scale of support required.
- Property Condition: If the commercial property is in poor condition and requires regular maintenance and safety checks, this will add to the ongoing management fees as commercial property managers will be required to spend more time than they usually would.
There can also be other factors that determine the weekly commercial property management fees throughout Australia, and this varies from agency to agency.
If you’re a current commercial property owner and feel your average commercial property management fees are not aligned with the above factors, we encourage you to reach out to our team of specialists who would be more than happy to walk through the above to ensure you’re getting the value you deserve.
How Much Can We Save You?
Experience Results-Driven Commercial Property Management
With so many factors that can drastically affect your commercial property’s profitability and reliability, it pays to have an experienced commercial property manager.
Vast Commercial Property are your local Perth specialists in results-driven commercial property management. Our hands-on approach is dedicated to optimising your assets, maximising returns, and taking your investments to the next level.
Contact us today to learn how our tailored management plans can enhance your commercial property’s profitability, efficiency and service while providing exceptional value.
Discover for yourself the Vast Commercial Property difference.
