Are you a commercial property owner looking to streamline your operations, maximize your property’s value, and ensure tenant satisfaction?

Hiring a commercial property management company might be the solution you’ve been seeking. In this comprehensive guide, we’ll walk you through everything you need to know about engaging the services of a property management firm, from understanding their roles and responsibilities to evaluating the benefits they bring to the table.

Graham Moore | Property Manager | AQUILA Commercial About the Author

Graham Moore

Graham manages a diverse portfolio of office and retail properties, handling the day-to-day operational and financial management.
Chapter 1

Who Should Hire a Commercial Property Management Company?

Commercial property owners who lack the time, expertise, or desire to handle the complex responsibilities of managing their properties should strongly consider hiring a commercial property management company. This includes owners of:

  • Office buildings
  • Retail spaces
  • Industrial facilities
  • Multi-unit residential properties

Property management companies offer a wide range of services, such as rent collection, tenant relations, maintenance, financial management, and legal compliance. By partnering with a reputable firm, owners can:

  • Maximize their property’s value
  • Streamline operations
  • Reduce vacancy rates
  • Ensure proper maintenance and upkeep
  • Free up time to pursue other opportunities

Ultimately, hiring a commercial property management company is a strategic decision for owners who want to minimize risk, increase profitability, and achieve long-term success in today’s competitive real estate market.

Chapter 2

What Is a Property Management Company and What Do They Do?

What Does a Property Management Company Do?

A property management company provides a wide range of services designed to facilitate property ownership and streamline operations. These services typically fall under two main categories: financial services and management services. 

Financial Services

Financial services encompass accounting, budgeting, and rent collection. A property management company can help you achieve your financial goals by providing these expert services. This allows you to focus on other aspects of your business or investment portfolio while ensuring that your property remains financially stable and profitable


A property management company will provide monthly financial statements, such as: 

  • Variance Analysis
  • General Ledger
  • Income Statement
  • Balance Sheet
  • Rent rolls
  • Aged Delinquencies
  • Statement of Cash Flows
  • Bank Reconciliation Statement
  • Cash Reserves Summary

These comprehensive reports offer valuable insights into your property’s financial performance, enabling you to make informed decisions and plan for the future.

Read Next: 34 Commercial Property Management Terms You Should Know (Glossary with Definitions)


In addition to accounting, a property management company will assist with budgeting by projecting income and expenses, establishing a budget that reflects your goals, and providing periodic executive summaries to track property performance relative to the budget. 

This helps ensure that your property remains financially stable and profitable. Rent collection is another crucial aspect of financial management, and a property management company will maintain tenant ledgers, track account balances, and pursue default remedies when necessary, ensuring a steady cash flow for your property.

Management Services

Management services, on the other hand, focus on the physical aspects of your property and tenant relations. A property management company will help maintain your property by employing a skilled engineering team and implementing detailed maintenance schedules. The team also ensures repairs are made when necessary, and suggests property upgrades to keep your property updated and in good condition. By maintaining your property’s infrastructure and appearance, a property management company helps preserve its value, prevent major repairs, and attract new tenants.

Tenant relations are another critical aspect of property management. A property management company serves as your liaison with tenants, handling day-to-day maintenance requests, staying up-to-date on regulations, and maintaining code compliance. By serving as your maintenance representative, a property management company saves you time and resources. Property managers also foster positive relationships with tenants and by addressing their concerns proactively, a property manager can increase the likelihood of lease renewals and minimize vacancy rates.

Read the Full Article: What Does a Property Management Company Do?

Property Management Differences by Property Type

While property management services are generally similar across different building types, there are some key differences to consider when hiring a property management team for office, industrial, or retail properties.

Office Properties

  • Property management maintains everything in the suites considered “building standard” and all common areas and systems.
  • Utilities (electricity and water) are typically provided and billed to tenants based on their pro-rata share, with exceptions for tenants using significant amounts.
  • Janitorial services are provided for all suites and common areas.
  • Property management also maintains landscaping, amenities, elevators, HVAC systems, security, plumbing, and lighting.

Industrial Properties

  • Tenants maintain everything inside their suite.
  • Tenants usually contract directly with utility companies for power, and water is sub-metered and billed back to tenants.
  • Property management focuses on keeping costs to a minimum and maintains common areas, exterior walls, roofs, foundation, minimal landscaping, parking, lighting, and security.

Retail Properties

  • Tenants maintain everything inside their suite.
  • Tenants usually contract directly with utility companies for power, and water is sub-metered and billed back to tenants.
  • Property management focuses on maintaining an appealing property to attract customers and ensure tenant success.
  • Property management handles landscaping, window washing, security, common areas, exterior walls, parking lot, pressure washing, and lighting.

Understanding these differences helps property owners know what to expect when hiring a property management company for their specific property type.

Read the Full Article: The Difference Between Property Management for Office vs. Industrial and Retail Properties

Chapter 3

What Are the Benefits of Hiring a Property Management Firm?

Hiring a property management company to oversee your commercial office building can provide numerous benefits and ultimately save you time and money. From handling day-to-day operations to implementing strategies to attract and retain tenants, a property management firm can help you achieve your financial goals and maintain a competitive edge in the market. In this article, we’ll explore the key advantages of partnering with a property management company.

Financial Management and Budgeting

A property management company can take the stress of financial management off your hands. They provide a variety of financial statements, such as income statements, balance sheets, and cash flow statements, giving you valuable insights into your property’s performance. Property managers also create budgets, forecast expenses, and track variances to help you make informed decisions and reach your financial objectives.

Rent Collection and Tenant Ledgers

Collecting rent from multiple tenants with varying lease terms and rates can be a complex task. Property management companies maintain meticulous records and tenant ledgers to ensure timely rent collection and accurate account balances. This helps maintain a steady cash flow and minimizes the risk of delinquencies.

Regular Maintenance and Preventative Measures

Keeping your property well-maintained is crucial for attracting and retaining tenants. As we mentioned in the first chapter, a skilled property management team will create detailed maintenance schedules, perform regular inspections, and handle repairs promptly. By implementing preventative maintenance measures, they can help you avoid costly repairs and keep your property in top condition.

Property Upgrades and Vendor Relationships

A property management company can advise you on strategic property upgrades to keep your building up-to-date and competitive. They often have established relationships with vendors, ensuring that you get the best prices and quality work for your investment. Keeping your property updated can enhance its appeal, attract new tenants, and increase customer satisfaction.

Tenant Relations and Lease Renewals

Property managers serve as the primary point of contact for your tenants, handling their day-to-day needs and concerns. By providing excellent customer service, responding promptly to maintenance requests, and fostering a positive tenant experience, they can build strong relationships with your tenants. This can lead to increased tenant satisfaction, higher lease renewal rates, and reduced vacancy periods.

Creative Solutions

Property managers are skilled at developing creative solutions to the various challenges that arise in managing a commercial property. Their expertise and experience allow them to think outside the box and find innovative ways to solve problems, some of which can even generate additional revenue for your property.

One example of a creative solution is implementing an effective parking control system to maintain order and efficiency in your commercial building’s garage. Property management companies can help you choose the best solution for your needs, such as gated or gateless systems, parking reservation software, or license plate recognition. Additionally, they can explore revenue-generating opportunities by leasing extra parking spaces to non-tenants, turning a potential challenge into a financial benefit for your property.

Read the Full Article: Parking Control Solutions for Your Commercial Building’s Garage

Attracting Tenants Back to the Office

Many businesses have adopted remote work policies, leading to reduced office occupancy. Property management firms can help bring tenants back by creating welcoming and comfortable workspaces, implementing sustainability initiatives, organizing networking events, leveraging technology for a seamless office experience, and providing value-added services like package delivery and on-site amenities.

Read the Full Article: Bringing Tenants Back to the Office: Why Property Management Is Key

KingsleySurveys and Tenant Feedback

KingsleySurveys is a valuable tool that property management companies use to gather insights into tenants’ experiences, satisfaction levels, and perceptions of the property. By analyzing this feedback, property managers can identify areas for improvement, make informed decisions about amenities and services, and create action plans to enhance tenant satisfaction and retention.

Read the Full Article: What Is KingsleySurveys and Why Should It Matter to Commercial Property Owners?

In conclusion, partnering with a property management firm can provide a wide range of benefits for commercial office building owners. From financial management and budgeting to tenant relations and property upgrades, a skilled property management team can help you maximize your investment, maintain a competitive edge, and achieve your long-term goals. 

By leveraging their expertise and resources, you can free up your time to focus on other opportunities while ensuring that your property is well-managed and positioned for success.

Read the Full Article: 5 Benefits of Using a Property Management Company to Manage Your Office Building

Chapter 4

How Much Does It Cost to Hire a Property Management Company?

Owning commercial real estate can be an attractive but complicated investment. To protect their investment and maximize returns, commercial real estate investors often hire property management companies.

Typical property management fee structures include:

  • Percentage of Gross Receipts: 2% to 4% of gross receipts collected (Annual Gross Receipts = Base Rent + Operating Expenses + Other Tenant Charges)
  • Flat Fee: Typically used for buildings with significant vacancy. The owner will be charged a flat monthly fee based on the property manager’s determination as to the amount of time required to properly maintain the building, with a reasonable margin built in. 
  • Hybrid: During low occupancy, the owner pays the agreed-upon flat fee.  As rental income increases and the percentage of gross fees outweighs the flat fee, the property management company receives a higher fee to help account for the additional work required by having more occupied square footage (this is the most commonly used fee structure).

Agreements are usually one-year terms with 30-to-60-day cancellation options that auto-renew.

Factors influencing pricing include:

  • Square footage/size of portfolio
  • Number of tenants
  • Vacancy rate
  • Anticipated work required
  • Additional services offered

Fees are paid monthly for the previous month’s expenses. In many cases, property management fees can be passed through to tenants via operating expense charges, depending on the lease terms. 

These can include:

  • Common area maintenance
  • Management’s office costs (copies, supplies, etc.)
  • Heating, ventilation, and air conditioning
  • Much more

The landlord usually covers costs like legal fees, capital expenditures, late fees, and leasing costs.

Read the Full Article to Get a Detailed Answer: Cost to Hire a Commercial Property Management Company in Austin, TX (Fees/Rates)

Chapter 5

How to Hire the Right Commercial Property Management Company

Choosing the right commercial property management company is a critical decision for property owners. A good property manager can streamline operations, maintain the property’s value, and ensure tenant satisfaction. However, with numerous options available, selecting the best fit for your property can be challenging. This chapter will help you navigate the process of hiring the right commercial property management company.

Considerations Before Hiring

Before diving into the hiring process, there are several factors to consider that will help you narrow down your options and find the best match for your property.

Property Type and Size

Ensure that the property management company you choose has experience managing properties similar to yours in terms of type (office, retail, industrial, or mixed-use) and size. Different property types come with unique challenges and require specific skill sets.

Local Presence and Reputation

A strong local presence is essential for a property management company. They should have established relationships with local vendors and be familiar with the market. Additionally, research the company’s reputation among clients, tenants, and industry professionals through testimonials, reviews, and rankings.

Read Next: Best Commercial Property Management Firms in Austin, Texas

Services Offered

Make sure the property management company provides the services your property requires, such as rent collection, maintenance scheduling, financial reporting, budgeting, and emergency response. Confirm that they can adapt to your specific needs and reporting methods.

Credentials and Insurance

Look for a property management company with relevant credentials, such as Certified Property Manager (CPM), Real Property Administrator (RPA), or Accredited Management Organization (AMO). These certifications demonstrate expertise and commitment to industry standards. Additionally, ensure the company has proper insurance coverage, including liability insurance and a fidelity bond.

Key Questions to Ask Before Hiring a Property Management Company

When interviewing potential property management companies, ask the following questions to gain a better understanding of their capabilities and fit for your property:

  • What is your experience managing properties similar to mine?
  • Can you provide references from clients and tenants?
  • Who will be on my management team, and what is their experience?
  • How do you handle maintenance, rent collection, and financial reporting?
  • What is your fee structure, and what factors influence the cost?

Read All the Questions You Should Ask Here: 5 Key Questions to Ask Before Hiring a Property Management Company

30 Questions to Ask Before Hiring a Property Management Company

Finding the right commercial property management company for your property can be a challenge, especially in a competitive market like Austin. Hiring a good company from the beginning can save time, money and a lot of headache down the road. To help make this selection process easier, we have compiled 30 must-ask questions for you to reference during the interview process.

Download Now

Red Flags to Watch For

While evaluating property management companies, be aware of potential red flags that may indicate poor performance or mismanagement:

  • Rent collection issues or lack of enforcement for late payments
  • Persistent tenant complaints about maintenance, cleanliness, or staff behavior
  • Poor communication with owners and tenants
  • Lack of a comprehensive maintenance schedule
  • High tenant turnover rates

Read the Full Article to See All the Red Flags to Look Out For: 4 Signs You Need a New Commercial Property Manager

Making the Final Decision

After thoroughly researching and interviewing potential property management companies, it’s time to make a decision. Consider the following factors when making your final choice:

  • Alignment with your property’s needs and goals
  • Demonstrated expertise and experience
  • Transparent communication and reporting
  • Competitive and reasonable fee structure
  • Positive reputation and references

Hiring the right commercial property management company is a critical step in ensuring the success and profitability of your property. By considering your property’s unique needs, asking the right questions, and evaluating potential red flags, you can find a property manager who will be a valuable partner in maintaining and enhancing your investment.

Remember, a successful property management relationship is built on trust, communication, and shared goals. Take the time to find the right fit, and you’ll be well on your way to a thriving, well-managed commercial property.

Read the Full Article: How to Choose the Right Commercial Property Management Company

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