Self Managing vs. Hiring a Commercial Property Manager: Which Is Better for Property Owners?
Commercial property owners often face an important decision: Should I manage my commercial property myself, or should I hire a professional commercial property management company?
For some owners, self management works well, particularly when a property is small, uncomplicated, fully occupied, and the owner has the time and experience to stay involved.
As a property becomes more complex, however, professional management can provide significant advantages in tenant relations, maintenance oversight, accounting, lease administration, vacancy reduction, and long term property performance.
For commercial property owners in San Diego, the right decision depends on the size and type of property, number of tenants, complexity of the leases, condition of the building, and how involved the owner wants to be in day to day operations.
At McKee Commercial | The Herbert Group, we work with owners of office, retail, medical office, and light industrial properties throughout San Diego County. Many owners who initially self manage eventually choose professional management when they want to reduce their day to day workload and take a more organized approach to operating and leasing their property.
What Does Self Managing a Commercial Property Involve?
Self managing a commercial property involves considerably more than collecting rent.
A commercial property owner who manages a building directly is typically responsible for tenant communication, rent collection, accounting, maintenance, vendor coordination, lease administration, property inspections, operating expenses, insurance coordination, budgeting, CAM reconciliations, delinquent accounts, renewals, and vacancies.
When something goes wrong at the property, the owner is often the first call.
That might involve an HVAC failure on a hot afternoon, a plumbing problem, a roof leak during a storm, an electrical issue, a tenant access problem, or an emergency maintenance request after normal business hours.
For owners with sufficient time and commercial real estate experience, this level of involvement can be manageable. For others, it can quickly become a second job.
What Are the Advantages of Self Managing Commercial Property?
The most obvious advantage of self management is avoiding a professional property management fee.
Owners also maintain direct control over decisions and communicate personally with their tenants and vendors.
Self management can make sense when:
• The property has only one or a few tenants
• The building requires relatively little maintenance
• The leases are straightforward
• The owner lives or works close to the property
• The owner has commercial real estate experience
• The owner has reliable contractors and vendors
• The owner has time to respond promptly to tenant issues
• The property has little or no vacancy
The important question is not simply whether an owner can manage the property. It is whether self management produces the best financial and operational results for the property.
What Are the Challenges of Self Managing a Commercial Property?
As commercial properties become larger or more complex, self management requires substantially more time and organization.
One of the biggest challenges is that property issues rarely occur according to an owner's schedule.
Tenants expect maintenance concerns to be addressed promptly.
Vendors require coordination.
Bills need to be reviewed and paid.
Lease dates need to be monitored.
Certificates of insurance need to remain current.
Delinquencies require follow up.
At the same time, ownership needs accurate financial information to understand how the property is performing.
Even relatively small commercial buildings can generate a substantial amount of administrative work.
How Much Time Does Commercial Property Management Require?
The time commitment varies significantly by property.
A fully occupied building with long term tenants and few maintenance issues might require relatively little attention during some months.
A property with vacancies, tenant turnover, major repairs, construction projects, or delinquent tenants can require substantially more.The workload also tends to arrive unpredictably.
This is one reason owners sometimes underestimate the true cost of self management. The expense is not only measured in dollars. It includes the owner's time and the opportunity cost of dealing with property management issues instead of focusing on other investments, businesses, or personal priorities.
What Does a Commercial Property Management Company Do?
A professional commercial property manager serves as the primary point of coordination between ownership, tenants, vendors, and the property itself.
Depending on the management agreement, responsibilities typically include:
• Rent collection
• Tenant communication
• Maintenance coordination
• Emergency maintenance response
• Vendor management
• Property inspections
• Accounts payable
• Property level accounting
• Financial reporting
• Lease administration
• Tracking lease expirations
• Rent increases
• Operating expense reconciliations
• Insurance compliance
• Delinquency follow up
• Budget preparation
• Tenant move ins and move outs
• Coordination of repairs and improvements
When the management company also provides commercial leasing services, it can assist with vacancies, renewals, rental rate analysis, marketing, property tours, tenant screening, and lease negotiations.
What Are the Benefits of Hiring a Commercial Property Manager?
For many owners, the primary benefit is having an experienced team actively overseeing the property.
Professional management creates systems and accountability around activities that are easy to postpone when an owner is handling everything personally.
Faster Tenant Response
Tenants want to know who to contact when they have a problem.
A professional property management company provides a consistent point of contact for maintenance requests, questions, payments, and property related issues.
Fast response times can also contribute to stronger tenant relationships and retention.
Professional Maintenance Coordination
Commercial properties involve a variety of building systems and contractors.
HVAC technicians, plumbers, electricians, roofers, landscapers, janitorial companies, locksmiths, parking lot contractors, and other vendors all require coordination.
A commercial property manager can receive service requests, determine what needs attention, dispatch vendors, follow up on completion, review invoices, and keep ownership informed.
Better Financial Reporting
Professional commercial property management should provide ownership with organized property level financial reporting.
Instead of relying on spreadsheets, bank statements, email chains, or disconnected invoices, ownership can receive consistent reports showing income, expenses, tenant balances, accounts payable, and other important property information.
This gives owners a clearer picture of how their property is performing.
Lease Administration
Commercial leases contain important dates and obligations.
Rent increases, option periods, lease expirations, insurance requirements, operating expense provisions, and renewal deadlines all need to be monitored.
Missing an important lease provision or deadline can become expensive.
Professional property management creates a more systematic approach to lease administration.
How Does Professional Property Management Help With Tenant Retention?
Tenant retention is an important part of commercial property performance.
When a good tenant leaves, ownership can face more than lost rent. Potential costs include leasing commissions, tenant improvements, repairs, marketing expenses, free rent, and months of vacancy.
Responsive management cannot prevent every tenant from leaving, but it can improve the tenant experience.
Tenants are more likely to become frustrated when maintenance issues go unanswered, common areas are neglected, communication is poor, or property problems repeatedly remain unresolved.
A property manager provides ongoing communication and oversight intended to address these issues before they become larger problems.
Who Handles Commercial Property Emergencies When You Self Manage?
When an owner self manages, the owner generally remains responsible for developing an emergency response system.
Commercial property emergencies do not always occur during normal business hours.
Water leaks, electrical problems, access issues, broken glass, plumbing backups, HVAC failures, and other situations may require immediate attention.
A professional management company provides tenants with an established process for reporting emergencies and coordinating an appropriate response.
For owners who do not want to receive property related calls at night, on weekends, or while traveling, this can be a significant benefit.
What About Commercial Property Accounting?
Accounting is one of the areas where many self managing owners eventually seek assistance.
Commercial property accounting can involve more than recording rent deposits and paying bills.
Depending on the lease structure, ownership may need to track tenant charges, operating expenses, CAM recoveries, property taxes, insurance costs, vendor payments, security deposits, rent increases, outstanding balances, and annual reconciliations.
Accurate property level accounting helps owners understand what is happening financially at the property and provides better information for making management and investment decisions.
Some owners begin by outsourcing only their property accounting before ultimately moving to full service property management.
That approach allows an owner to maintain operational control while establishing professional financial systems and developing a working relationship with a management company.
Should the Same Company Handle Property Management and Leasing?
There can be significant advantages to integrating commercial property management and leasing.
A property manager already knows the tenants, building condition, operating expenses, maintenance history, ownership objectives, and upcoming lease expirations.
When that same team handles leasing, it can begin addressing renewals and potential vacancies before a tenant actually moves out.
If a vacancy occurs, the leasing team already understands the property.
At McKee Commercial | The Herbert Group, property management and commercial leasing are integrated. This provides owners with one team overseeing both day to day property operations and the leasing activity that directly affects property income.
What Happens When a Self Managed Property Becomes Vacant?
Vacancy often changes the economics of self management.
A vacant suite requires an entirely different set of activities, including rental rate analysis, property preparation, photography, floor plans, online advertising, signage, broker outreach, responding to inquiries, property tours, prospect follow up, financial review, and lease negotiations.
Simply placing a FOR LEASE sign on a property or posting a listing online is rarely a complete leasing strategy.
For owners who already have other responsibilities, actively leasing a vacancy while continuing to manage the occupied portions of a property can become difficult.
This is another area where integrated management and leasing can provide value.
How Much Does a Commercial Property Manager Cost?
Commercial property management fees vary depending on the property, number of tenants, services required, lease structures, accounting complexity, and overall management workload.
Property owners should not evaluate professional management solely based on the management fee.
The more important consideration is net property performance.
For example, an inexpensive management arrangement provides limited value if maintenance is neglected, tenants leave unnecessarily, lease increases are missed, invoices are poorly controlled, or vacancies remain unaddressed.
Owners should consider the overall effect management has on income, expenses, tenant retention, property condition, and their own time.
Is Self Managing Commercial Property Actually Cheaper?
Not always.
Self management eliminates a property management fee, but that does not necessarily mean it produces the lowest overall cost.
Owners should consider the financial impact of:
• Their own time
• Extended vacancy
• Missed rent increases
• Poor vendor oversight
• Deferred maintenance
• Accounting errors
• Uncollected tenant charges
• Lease administration mistakes
• Tenant turnover
• Slow leasing response
• Emergency coordination
The relevant comparison is therefore not simply management fee versus no management fee.
It is the financial and operational performance of a professionally managed property compared with the results and time commitment associated with managing it personally.
When Should You Hire a Commercial Property Manager?
Professional commercial property management becomes especially valuable when an owner begins spending more time managing problems than managing the investment.
Common signs include increasing tenant demands, difficulty keeping up with accounting, recurring maintenance issues, vacancies, multiple vendors, missed deadlines, complicated leases, or simply a desire to reduce day to day involvement.
Owners with multiple properties can also reach a point where self management becomes increasingly difficult to scale.
Self Managing vs. Hiring a Commercial Property Manager: Which Is Better?
There is no universal answer.
Self management is often best suited to owners with straightforward properties, sufficient experience, strong organizational systems, reliable vendors, and enough time to stay closely involved.
Professional commercial property management is often better suited to owners who want experienced oversight, organized accounting, responsive tenant service, systematic maintenance, lease administration, and less involvement in everyday property operations.
The decision should ultimately be based on which approach produces the best combination of income, expense control, tenant retention, property condition, and use of the owner's time.
Commercial Property Management in San Diego
For San Diego commercial property owners considering the transition from self management to professional management, it is important to choose a company that understands both property operations and commercial leasing.
McKee Commercial | The Herbert Group provides commercial property management and leasing services for office, retail, medical office, and light industrial properties throughout San Diego County.
Our integrated approach includes property management, tenant communication, maintenance coordination, property level accounting, lease administration, inspections, vendor oversight, vacancy marketing, commercial leasing, and lease negotiations.
Owners who currently self manage can also begin with property level accounting services before deciding whether full service management is the right next step.
Frequently Asked Questions About Self Managing Commercial Property
Can I manage my own commercial property?
Yes. Many commercial property owners manage their own properties successfully. Self management works best when the property is relatively straightforward and the owner has the time, knowledge, vendors, accounting systems, and availability required to manage it effectively.
Is hiring a commercial property manager worth it?
For many owners, professional management is valuable because it reduces day to day involvement while providing organized oversight of tenants, maintenance, accounting, vendors, leases, and property operations. The decision should be evaluated based on overall property performance rather than the management fee alone.
What does a commercial property manager handle?
A commercial property manager typically handles rent collection, tenant communication, maintenance, vendors, accounting, financial reporting, property inspections, lease administration, operating expenses, and other daily property responsibilities.
Can a commercial property manager also lease vacant space?
Yes. Some commercial management companies also provide leasing services. Combining property management and leasing can provide continuity because the same team understands the property's tenants, expenses, condition, lease expirations, and ownership objectives.
How do I know when to stop self managing my commercial property?
It is often time to consider professional management when tenant requests, maintenance, accounting, vacancies, vendors, or lease administration begin taking more time than you want to devote to the property or when you believe professional oversight could improve its performance.
Considering Professional Commercial Property Management?
If you currently self manage an office, retail, medical office, or light industrial property in San Diego and are evaluating whether professional management makes sense, McKee Commercial | The Herbert Group can review your property's current management needs.
Whether you need property level accounting, full service commercial property management, leasing assistance, or an integrated management and leasing solution, the objective is the same: operate the property efficiently, provide responsive service to tenants, reduce unnecessary vacancy, and protect the long term value of the asset.
