Hi kait,
Wow, what a question! As you may have noticed, I've had it locked off
and on for the last 2 days as I've searched high and low for your
answer. It wasn't until tonight that I had a breakthrough -- a
corroborating email from a professional organization.
Because the specific answer you're looking for was not readily
available online, I made some phone calls and sent out some emails to
several organizations that keep track of such statistics in your area.
The most helpful people were from Building Owners and Managers
Association (BOMA) International, a network of over 18,000 commercial
real estate professionals.
http://www.boma.org/index.htm
Although I got no response from their main office, I did get some
information from their NJ chapter. Here is the short answer, as per
Marianne Carney, BOMA/NJ.
She says that the typical rate would be "3 to 5 percent. Closer to 3
than 5."
Marianne can be reached by phone at: 201-998-6385 or by email:
bomanj@ix.netcom.com
I also contacted Marianne's counterpart in NY, Roberta McGowan.
Although she said she didn't have any numbers for me, she did provide
me with contact information, in case you'd like to speak with her.
Roberta M. McGowan, CAE, Executive Director BOMA/NY.
Phone: (212) 239-3662 Fax: (212) 268-7441
Email: bomany@aol.com Web: www.bomany.org
Marrianne's numbers of 3-5% exactly support what I've found online for
more general situations.
"Assume a property management fee of at least 3-5%. Usually 5% is an
accurate estimate however, on larger properties 3% or 4% may be
sufficient."
http://www.mbaa.org/cref/docs/noi/instruct.html
"MANAGEMENT AGREEMENT ? A contract between the owner of a property and
an entity who agrees to manage it. Fees usually begin at 3%."
://www.google.ca/search?q=cache:D6YVZOYKvjYC:www.rmaffiliates.com/members/atools/glossary.doc+%22net-net+lease%22+fees&hl=en&ie=UTF-8
Although the balance sheet in the below pdf file is a lot to wade
through, if you do the calculations for the various properties, they
all work out to be in the 3.1 - 3.4 % range.
[search for "property management" and it will take you right to that
section.]
http://www.morguardreit.com/q2_1998.pdf
"During the initial five-year term, annual property management fees
are payable to the Property Manager at the rate of approximately 3.5%
of the gross revenue of the income properties."
[search for "property manager" in this file and the above quote will
be your first return]
http://www.hr-reit.com/HRdownload/downloads/HRannual97.pdf
So, as you can see by my examples, (just a few of many) no matter what
section of the country we examine, industrial space property
management fees are consistently close to 3%, just as Marianne
confirmed.
Regard the square footage, the only thing I noticed when wading
through the numerous balance sheets and company reports I found was
that the larger the warehouse, the lower the percentage. Not by a lot
mind you. But small disjointed warehouses like mini-storages run
closer to the 5% end whereas those in your range tend to run closer to
the 3-4%. That said, don't quote me on it. My observations were
purely unscientific. It was just an overall trend I noticed and I
can't really support it with concrete data for you.
The presence of a net-net lease should not make a difference in the
fee paid to the manager (except in the sense that it will change the
lease price that the percentage is based on) Net-net applies only to
the financial relationship between the owner and the tenant.
"Net, Net Leases (Double Net or NN): Usually means that the tenant not
the landlord is responsible for all operating expenses and real estate
taxes. Usually however, the owner or landlord is responsible for the
roof and structural integrity."
http://www.nnnsales.com/net-leased-properties/faq-net-leased-properties-3.html
Management fees are however not carved in stone. There is room for
negotiation ----
"Remember that property management fees are directly proportional to
the quality and quantity of services provided. Management fees are
generally based upon percentage of collections and though they may
vary, they are negotiable."
http://www.wnytoday.com/asstmgt01.htm
Services of a manager or management organization can include any or
all of the following:
--- Management means more than just collecting the rent. It involves:
--- Advising on acceptable lease structures so that your investment
not only retains its value but also has growth built in wherever
possible.
--- Negotiating lease terms with the tenant to obtain results that
ensure that the value of your property is enhanced by the lease and
not restricted or worse - devalued.
--- Dealing with your tenant in an expert manner regarding queries and
problems that inevitably arise from time to time with the property
and/or tenancy
--- Ensuring the property is maintained.
--- Advising the owners on rental and sale values and generally
keeping them informed of market trends.
http://www.commercialrealestate.com.au/faq.asp
A full-service management and leasing company may include:
Market analysis and feasibility studies
Extensive, computerized tenant-prospect database and CD-ROM phone
directory for targeted mailings and follow-up.
Financial modeling & long-term planning strategies
Retail tenant promotions
Rent collection
Accounts payable
Quarterly reports
Vendor and maintenance supervision
Vendor contract negotiation
Snow and trash removal supervision
Governmental liaison
Supervisory services and consulting
http://www.vrec.com/svc_property.cfm
A property manager's final negotiated fee will be dependant on which
of these things are included in the service.
I contacted the following organization and individuals who may or may
not ever get back to me, but I don' think that their information is
necessary for us to conclude that a realistic starting place for fee
negotiation is just around 3-4% of the collected rental income.
New Jersey Business & Industry Association (emailed - no response)
http://www.njbia.org/
Mal Shreibman, VP NAI Mertz Corp
malshreibman@mertzcorp.com
I phoned NAI Mertz and the woman I spoke to recommended I speak with
Mr. Shreibman. He was unavailable so I sent him an email. No response
as of tonight.
"NAI Mertz Corporation is one of the largest independently owned
commercial real estate brokerage firms in the Philadelphia
Metropolitan Area. Headquartered in Mt. Laurel, New Jersey, with
offices in Philadelphia,"
"We are NAI, the largest affiliation of independent brokers and
property managers in the world. With 150 firms and over 3,400
salespeople circling the globe, our access to markets of every size is
incomparable in our industry. The NAI affiliation allows us to not
only provide our local clientele with expanded service worldwide, but
also is a steady source of prospective buyers and tenants for the
local properties we represent."
http://www.mertzcorp.com/
Finally, understand that the people I spoke to do not know who you are
or why I was asking them this question. I just contacted them as an
"independent researcher" acting on behalf of "a client." You are free
to confirm these numbers and contacts independently. Meanhwile, if any
of them get back to me, I will post a clarification here.
I am entirely comfortable with these numbers now that Marianne has
confirmed them for us. I hope that you are too. Please follow up on
the links I've provided to read more details on industrial property
management fee structures. If there is anything I've said that isn't
clear, please feel free to ask for a clarification.
-- K~
Search terms --
"Property management fee" combined with: industrial, warehouse,
commercial
"Property Management" associations
"Property Managers" NY and NJ
"NJ Business associations"
"NY business associations" |
