Industrial management fees
What’s the property management fee for industrial real estate and lease-up fees? Also does capex tend to be owner or tenant?
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Management Fees - 0 to 5%. Completely depends on the number of tenants / nature of the leases. Single tenant absolute net? Probably doesn't make sense to charge more than for nominal cost of book keeping. Multi-tenant shallow bay / flex space? 3-5% would be market depending on how management intensive it is.
Another thing to keep in mind is tenant's will more likely pay the management fee in (if leases are NNN) the multi-tenant scenario vs single. So how much can be recaptured from tenant's will be a factor.
Leasing Fees - I'm assuming you mean leasing commissions, 3-6% is market depending on renewal vs new but we are paying 7% in some markets.
CapEx - Typically Landlord responsibility (Roof, Structure, Parking / Truck Courts) unless it is an absolute net lease or non-traditional NNN structure.
how is it fair that management fees for NNN leases (3 tenants) is the same % as multifamily? rather go to NNN route. less work..
industrial leasing can be significantly more complicated than the average multifamily leasing process. 3% might feel like a lot once you have a stabilized building with no tenants rolling over in that particular year, but the 3% is worth it to get and keep the building operating at stabilized occupancy. A NNN asset only works if it's leased up to paying tenants.
MF is a lot of rinse and repeat and industrial can get pretty complicated. It's also important to look at the gross dollars behind the percentage as a check of reasonableness.
Even though the leases are NNN, if it's a multi-tenant building, contracting all maintenance and repairs will typically fall on the property manager, not the tenant, at least for common areas. Often times you can put the maintenance responsibility on the tenant for items within their suite/unit, but sometimes the property manager will also handle those repairs and maintenance and bill back the tenant. It's been awhile since I have done multi-family, but the management fee is essentially profit to the management company as property management and maintenance personnel costs are also passed through to the landlord, no? If not, a previous employer was getting hosed because that's how a third party PM company charged us - a 3-5% fee and then cost of PM, leasing agent, maintenance staff, supplies, etc. In my experience with industrial, the fee is all the PM company is getting.
I'm on the sell side but based on the leases I've been reading and our firm's general expense assumption are 3% of EGR or 3% of Base Rent (we do base rent when it's written in the lease). For us we have capex come from the owner
Much appreciated. One other question is how do you find market TIs? Do you have to just reach out to brokers?
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