As a commercial property owner, you may be wondering how to determine how much to charge for rent. There are a number of factors to consider when setting rent prices, such as the location of the property, the size of the property, and the amenities the property offers.

Deciding on your leasing rates for a commercial property is important — arguably more so than setting rates for multifamily assets. With office, retail, and industrial properties, lease contracts span multiple years — meaning if you underprice your space, you may have to live with the effects for years.

Commercial Property management provides the guiding hand and overall supervision of the day to day operations of a property and can exist with regard to a variety of responsibility, obligation and occupation within the realm of the commercial real estate market. Professional management is a key to real estate profits over the long term. At IPA Commercial Real Estate, we offer the full range of management services, from rent collection and contract negotiation and renewal, through ongoing upkeep and preventive maintenance. With extensive experience and a portfolio of thousands of tenants, IPA has the strength to provide an immediate solution to any management problem.

Commercial and retail leases use various rental pricing methods. The nature of a tenant’s business often determines which commercial lease calculation is best to use.

What is Commercial Real Estate (CRE)?

While it might not be immediately obvious, commercial real estate is a constant part of our daily lives. Simply put, commercial real estate (CRE) is defined as any property that produces income for its owner(s). From the office you commute to every weekday to the store where you buy household goods to the gas station down the road, every property that has the potential to bring income is considered a commercial property.

Commercial properties are generally classified into four main categories: Office, retail, industrial and multifamily. Many larger commercial properties are mixed-use, which means they feature two or more types of commercial real estate within the same lot or building. While investors may buy or sell commercial real estate, it is more often leased to individual business owners. Stores and restaurants might lease space in shopping centers and businesses might lease office space or warehouse spaces.

 Types of Leases

Different types of commercial leases imply different financial responsibilities for the landlord and the tenant, which can have a big impact on what you can charge.

 NNN (Triple Net) Lease

The three ‘nets’ of a triple net lease are: property taxes, property insurance, and common area expenses (sometimes called CAM or common area maintenance). With a NNN lease you will pay a base rent plus all of the triple net extras. So, if you have a 1,000 square-foot space that rents for $8 per square foot per year and the NNN fee is $4 per square foot per year, your commercial rent with a NNN lease would be:

• 1,000 sq. ft. x ($8/sq. ft. per year + $4 NNN/sq. ft. per year) = $12,000 per year or $1,000 per month

 Modified Gross

Modified gross leases don’t include all the NNN fees. The only additional charge you pay for with a MG lease is utilities. For example, if you’re renting a 1,000 sq. ft. space and the modified gross rent is $10.00 per square foot per year, your rent would be:

• 1,000 sq. ft. x $10/sq. ft. per year = $10,000 per year or $833.33 per month + utilities

 Full Service Gross

Full service gross leases are basically the rent paid for occupying the space. The landlord covers all property operating expenses, including taxes, insurance and utilities. If the size of the space you’re renting is 1,000 square feet and the rent is $12 per square foot per year, then your commercial rent is:

• 1,000 sq. ft. x $12/sq. ft. per year = $12,000 per year or $1,000 per month

4 Factors to Use in Setting Rental Rates

1. Location and Market Analysis

One of the most critical factors in setting rental rates is the location of the property since this plays a significant role in determining its market value. You or your property manager will need to analyze the location’s demographics, population growth, and economic trends to assist in determining your rental rates.

Look at comparable properties in the area to determine their rental rates. This is where market analysis comes into play. Analyzing the rental rates of comparable properties can help you determine the market demand, which in turn can help you set the right rental rate for your property.

2. Property Size and Configuration

The total square footage of any commercial real estate property is the usable square footage of space that a tenant can occupy. In some cases, the size of space compared to the overall space in a building will further expand the definition of usable space.

When a landlord leases commercial space, there are advantages to dividing the space to allow for multiple tenants. This division will determine the usable space calculations and areas each tenant can occupy.

In a partial floor commercial lease, the usable space includes all office space, storage areas, self-contained restrooms, entryways, and internal fixtures.

A full-floor commercial lease includes all usable square feet enclosed by the boundaries of the floor. This lease contains space that is not always usable for conducting business.

3. Operating Expenses and Capital Improvements

It ou or your property manager will needs essential to consider the operating expenses and capital improvements when setting the rental rate. Commercial real estate operating expenses include the costs for maintaining and operating a commercial property. These include rentals for office space, warehouse or industrial space, retail, and restaurant buildings. Capital improvements include any significant upgrades or renovations made to the property, such as a new roof, HVAC system, or flooring.

To determine the right rental rate, you should consider the operating expenses and capital improvements and add them to the property’s mortgage payment to determine the total cost of ownership. You can then use this figure to set the rental rate that will cover these costs while generating a profit.

4. Tenant Demands

Tenant demands include the type of tenant that the property attracts and what the tenant is looking for in a property. For example, an office tenant may need a particular layout or access to specific amenities, while retail tenants may require high traffic areas and large parking lots.

To determine the right rental rate, you should consider the tenant demands and ensure that your property meets their needs. This can help you set the right rental rate that will attract the right tenants and generate a steady income.

What Is Professional Property Management?

Property management means that you hire someone else to run a property you own for you, handling the day-to-day tasks that keep your investment prospering. A commercial property manager handles non-residential properties like offices, retail spaces, storage facilities, shopping centers and industrial buildings. Like residential property management, commercial management encompasses the tasks and responsibilities of operating an income-producing property.

Many property owners choose to engage a commercial property management firm to ensure all the day-to-day details of operating a commercial property are handled competently. The management firm is usually granted authority to make decisions that impact the amount of income the owner derives from the property. In many cases, the right management can result in a lower turnover of tenants as well as securing the best possible rental rates for the space.

Commercial property management involves being able to prioritize and execute a wide array of tasks such as the advertising, marketing and leasing processes. Property managers of commercial spaces must keep meticulous administrative and financial records, and keep all applicable maintenance, taxes, mortgages and insurance updated. They ensure rent is collected, and respond to tenant needs and issues.

Basic Responsibilities Involved in Managing a Rental Property

• Advertising your property
• Preparing and enforcing the lease
• Tenant screening
• Evicting (when necessary), and finding new tenants when vacancies occur
• Doing basic and preventative maintenance, making repairs as needed
• Handling complaints, as well as moderating issues between tenants
• Financial Management (establishing the right rent, collecting rent, calculating costs and taxes, pay invoices, etc)
• Overall Supervision
• Staying up-to-date with Landlord-Tenant laws and regulations

 Why Choose IPA Commercial Real Estate?

Choosing the right commercial property management company can make real estate ownership a breeze. For people who own commercial and industrial properties, working with a respected property management company can be a great resource. With 30+ years of experience in the Inland Empire, the experience of the IPA Commercial Real Estate team provides a depth of knowledge regarding maintenance and project costs.

Just like management in any other business, a respected management company can monitor the care and financial requirements of any property. We can also help evaluate your rent structure. IPA Commercial Real Estate very focused on client properties and tenants and we have the skills and knowledge to make your ownership experience easy and pain-free.

We offer 24/7 Service from our team day or night! Call IPA COMMERCIAL REAL ESTATE at (951) 686-1462 to discuss how we can help you. Let us show you how to add value to your property.

 

Managing your own rental property comes with a lot of responsibilities, one of them being finding quality vendors to do the work around the property. It takes a sound network of vendors to deliver services to your tenants while also keeping your property operating smoothly. As a property manager or landlord, you will need to hire vendors for a variety of services such as landscaping, plumbing, electrical, pool maintenance and more.

Vendors basically represent you, so they have to be reliable and they have to be excellent at what they do. With so many companies and contractors providing maintenance and building services, it can be difficult to tell which one will get the job done right. It is never a good idea to choose a vendor based strictly on price. In the long run, you might end up paying a higher price if they do not get the job done right or at all.

Here are some tips to help you select the right vendor for your business.

5 Vendors to Keep on Speed Dial

In property management, a vendor is a company that provides specific services related to the purchase, renovation, upkeep or management of your properties. There are many vendors that your business likely relies on but a few stand apart. These companies are valuable partners in the operations of your business.

Residential and commercial properties have unique needs. Many of the responsibilities of managing commercial properties may seem the same as those faced by residential property managers but that doesn’t make vendors interchangeable. Your commercial property should be tended to by skilled professionals who understand the unique challenges of commercial properties.

Here are five commercial property vendors that you need to keep on speed dial.

1. Property Management Firm

One of the most important commercial property vendors you can have is your property management firm. Property management means that you hire someone else to run a property you own for you, handling the day-to-day tasks that keep your investment prospering. A commercial property manager handles non-residential properties like offices, retail spaces, storage facilities, shopping centers and industrial buildings. Like residential property management, commercial management encompasses the tasks and responsibilities of operating an income-producing property.

Many property owners choose to engage a commercial property management firm to ensure all the day-to-day details of operating a commercial property are handled competently. The management firm is usually granted authority to make decisions that impact the amount of income the owner derives from the property. In many cases, the right management can result in a lower turnover of tenants as well as securing the best possible rental rates for the space.

Commercial property management involves being able to prioritize and execute a wide array of tasks such as the advertising, marketing and leasing processes. Property managers of commercial spaces must keep meticulous administrative and financial records, and keep all applicable maintenance, taxes, mortgages and insurance updated. They ensure rent is collected, and respond to tenant needs and issues.

2. Commercial Pest Control Services

Every building, whether it’s a home or a business, eventually has to deal with pests. To combat the presence of pests, there are many accessible pest control solutions available that allow building occupants to deal with pests on their own. That being said, however, some pests require the professional attention of commercial pest control services to deal with.

Prevention is just as important and thorough property managers know that maintaining a good relationship with a reputable pest control service can stop unwanted visitors. Commercial pest control experts do just as much outside as they do inside. Stopping pests from entering the premises means no infestations and no downtime for tenants.

Commercial properties need a custom approach to pest management. Homes tend to have little variation and therefore residential properties are susceptible to similar issues. Commercial properties include warehouses, retail, office space, restaurants, and more. Choose a commercial property vendor that is experienced and knowledgeable.

3. Landscaping and Snow Removal

From roadways and parking lots to pathways and sidewalks, you need to ensure that surfaces are clear of hazards so that workers, residents, clients and employees can safely access facilities. If your property has any greenery at all, you will need lawn care and mowing, monthly weeding and detail service, spring and/or fall cleanups, edging and mulching, trimming and pruning shrubs, and seasonal flower installation.

While most California cities avoid the yearly snow season, those mountain cities that do get snowed on will need snow removal services.  Aside from keeping the exterior of your property looking its very best during the warmer growing months, efficient and responsive snow removal services are critical to keep your property fully functional in the winter season. From light to heavy snowfalls including icy conditions and blizzards, you need a team to maintain the safety and traffic flow of your property!

4. Commercial Cleaning Services

If you own or manage a commercial property, you have quite a bit of work on your hands on any given day. The burdensome task of cleaning and disinfecting does not need to be one of them. Because commercial properties can vary substantially in their use and function, each property requires a customized cleaning program that is specifically designed for the needs of the facility. Look for vendors that can do the regular maintenance such as cleaning washrooms, floors, and sanitizing items that are touched often along with specialized jobs such as dryer vent cleaning, exterior pressure washing, garbage chute cleaning, and more.

5. General Contractor

A commercial general contractor may be an individual or a Construction company, who has the knowledge, experience, and professional standing to take control, conduct, and complete large to substantial commercial construction projects. General contractors work with plumbers to keep your system operational and prevent flooding. They can keep sewers and drains clear to stop water from getting backed up and causing damage. Plumbers can also install new fixtures to keep your property up to date and functional.

The HVAC system on your commercial property needs to be maintained by a subcontractor as well. These professionals can keep ducts and heating as well as cooling units clean and functioning properly. They can conduct regular maintenance to extend the life of your furnace and air conditioning unit and they can make repairs and replacements as needed to keep your property in working order.

All electrical work should be handled by a professional. Your general contractor should know quality electricians that can repair problems with the existing electrical systems on your property. They can also make changes and install new switches, outlets, and fixtures as needed.

The roof on just about any property should be inspected regularly and replaced before water starts getting in. A quality roofing company can save you a lot of hassle and money. A good general contractor would know when your roof is due for replacement and they will have the right roofing company lined up for you,

The commercial general contractor is responsible for overseeing and managing the entire construction from its starting stage to the final finishing stage. They take control of the entire project and are responsible for managing all construction phases and related activities. They take care of each bit and parcel of the project and make the construction complete with all the necessary building components like civil works, electrical and plumbing works, interior and exterior decoration, landscaping, and installation of all the HVAC and safety installations.

Why Choose IPA Commercial Real Estate?

Choosing the right commercial property management company can make real estate ownership a breeze. For people who own commercial and industrial properties, working with a respected property management company can be a great resource. With 30+ years of experience in the Inland Empire, the experience of the IPA Commercial Real Estate team provides a depth of knowledge regarding maintenance and project costs.

Just like management in any other business, a respected management company can monitor the care and financial requirements of any property. We can also help evaluate your rent structure. IPA Commercial Real Estate very focused on client properties and tenants and we have the skills and knowledge to make your ownership experience easy and pain-free.

We offer 24/7 Service from our team day or night! Call IPA COMMERCIAL REAL ESTATE at (951) 686-1462 to discuss how we can help you. Let us show you how to add value to your property.

 

 

When you invest in commercial real estate, you do not necessarily want to be involved in every aspect of managing those properties Commercial property managers oversee the day-to-day operations of buildings and complexes, such as malls, industrial units or office  buildings. Their duties typically include collecting rent, negotiating leases and supervising the maintenance activities. Commercial real estate management is anything but passive, and there is a significant amount of work that must be done to keep the investment in good working order.

In order to decide if you need a property manager, it is first important to understand what they are and how to spot a great one.

What is a Commercial Real Estate Property Manager?

Commercial property managers have the responsibility of overseeing and directing operations at properties, ranging from office buildings to retail spaces to industrial units. They will show spaces to potential lessees, maintain lease agreements and they will collect and process rent checks. They will also manage the daily requirements of these properties, which include custodial tasks and maintenance. This is a role that demands the ability to resolve customer service questions successfully, a high level of organization and an efficient point of contact for building owners and tenants.

What Does a Property Manager Do?

For simplicity’s sake, a property manager’s responsibilities can be divided into two buckets: operations and finance.

Operations

A property manager’s operational responsibilities are all about keeping the property running smoothly on a day-to-day basis. Depending on the property type, this could include things like:

Managing Tenant Issues

Your tenant communication plan is what will improve your relationship with tenants by responding quickly and resolving issues fairly. If a tenant has an issue, needs a repair, or has a specific request, it is the property manager’s responsibility to take care of it.

Managing Tenant Occupancy

An experienced property manager has dealt with hundreds (if not thousands) of tenants and generally know how to select applicants who will pay the rent on time and cause fewer problems. They know what type of tenant is most compatible with your property and will advertise space availability in a way designed to attract these parties. Professional property managers have considerable marketing and advertising expertise in both print and digital channels.

Staffing the Property

Larger commercial properties may have concierge staff, cleaning crews, and security personnel. If you purchased this type of investment property, the property manager would ensure that these employees are carrying out their duties as required. They may also hire, pay, and even terminate these employees. If the property requires full time staff, the property manager is responsible for finding and training the onsite management team including an assistant property manager, maintenance staff and accounting staff.

Preventative Maintenance Plan

Preventive property maintenance is the important task of managing regular inspections and repairs while equipment around the property is still functioning properly. The goal of preventative maintenance is to prevent expensive system failures and repairs before they happen. Also, catching problems early helps keep maintenance costs lower and reduces the risk of accidents.

Upgrades and Maintenance

As a property ages, routine upgrades must be made to HVAC, plumbing, and electrical systems. This will extend the useful life of the property and ensure it remains in good working order.

Maintaining and Replacing Landscaping

Commercial property landscaping is an essential part of a commercial property. It is the first thing that a customer will see when they come to visit  the project and it can make all the difference in how they feel about the businesses in the project. The right landscaping can create the perfect atmosphere for productive work, while a poorly laid out design could make  customers feel unwelcome and want to leave as soon as possible.

 Responding to Emergencies

Unfortunately, emergencies happen—a pipe bursts, a storm causes damage, or the power goes out. The property manager is responsible for responding to these types of events and keeping the owner updated about the status of necessary repairs.

Evictions

Evictions usually start with a notice period in which both tenant and landlord can either negotiate terms regarding payment or simply avoid dealing with each other entirely. If negotiations fail and the property manager or landlord does not agree to a cancellation of the eviction, they will obtain the services of an attorney before going to court. It is important for property owners to remember that going directly into an eviction without using any legal methods first may result in a dismissal of their case against the tenant.

Finance

The other major bucket of responsibility for a property manager is overseeing the property’s finances. This includes activities like:

Rent Collection and Processing

Having a good rent collection process and tool is essential if you want to run successful commercial rentals. It’s not enough to just collect a check each month, commercial tenants expect a high level of professionalism and as such it’s a good idea to explore the modern property management software solutions currently available for commercial property managers.

 Late Payments and Other Fees

As with managing any real estate, late rent payments can cause cash flow issues and negatively impact your investment’s potential.

Budgeting

Each year, the property manager is responsible for setting the property’s operational budget. To do so, they need to work with the property owner to ensure that the financial performance of the property tracks as closely as possible to  the investor’s financial projections.

Essential Skills Needed by Commercial Property Managers

 The property manager is working with a client for the long term on a variety of complex things.  They may be working on a number of issues for months if not years in the case of property upgrades, renovation and refurbishment works.

So what skills should a good commercial property manager have?

Excellent Communication Skills

Tenants and landlords must be able to easily reach the real estate manager for any non-emergency or emergency related issues. Therefore, a commercial property manager must possess excellent communication skills. It can be challenging to keep the lines of communication open when email inbox is full and phones are ringing. The environment can also be very stressful. It is the job of the property manager to be able to communicate concisely and clearly, both in writing and verbally.

Organized and Detail Oriented

Property managers, in general, collect rents, and they need to ensure that every rent is paid and posted to the account of the tenant as received. They need to keep financial records that detail each and every transaction made. Rent increase letters, lease renewals, and expiration, as well as rent invoices, should be  delivered on time. A skilled commercial property owner is able to keep site files organized, prioritize assignments and repairs and can multi-task.

Problem Solving 

Property managers are constantly dealing with unexpected issues that pop up during their days. In order to maintain control over the chaos that can arise, a critical skill the modern property manager needs to encompass is the ability to quickly and confidently solve problems – all while remaining calm and collected.

People Skills

As a commercial property manager deals with a lot of different people all the time. Therefore, the ability to work well with every individual is a vital skill that every property manager must possess. They must have a positive attitude, friendly and excellent customer support and service skills. This is also important to establish lasting relationships with new and existing tenants and clients. Property managers must be reasonably tolerant, patient and can handle issues and respond to service requests and complaints in a rational and positive manner.

Strong Sales Skills

It’s not all burst pipes and site tours. When all is said and done,  a property manager will constantly be selling  personal value as a property manager and the value of your property in marketing strategies, in meetings, and all  relationships.

Vendor Management

A property manager is in charge of managing vendor relations, from setting clear expectations to ensuring that all work has been completed. They are also responsible for coordinating vendor payment.

Why Choose IPA Commercial Real Estate?

Choosing the right commercial property management company can make real estate ownership a breeze. For people who own commercial and industrial properties, working with a respected property management company can be a great resource. With 30+ years of experience in the Inland Empire, the experience of the IPA Commercial Real Estate team provides a depth of knowledge regarding maintenance and project costs.

Just like management in any other business, a respected management company can monitor the care and financial requirements of any property. We can also help evaluate your rent structure. IPA Commercial Real Estate very focused on client properties and tenants and we have the skills and knowledge to make your ownership experience easy and pain-free.

We offer 24/7 Service from our team day or night! Call IPA COMMERCIAL REAL ESTATE at (951) 686-1462 to discuss how we can help you. Let us show you how to add value to your property.