Commercial Property Management

What commercial property management actually entails

Property management is not limited to collecting rent. In practice, it consists of four main tasks:

Administrative and financial management. Drafting and monitoring leases, rent collection, follow-ups on unpaid rent, annual rent reviews (indexed to the ILAT or ILC), adjustment of service charges, and property-related tax filings. This forms the foundation and is often the most time-consuming aspect when managed in-house.

Technical and maintenance management. Routine maintenance (cleaning, landscaping, common areas), preventive maintenance (elevators, air conditioning, fire safety systems), claims management, and repair work. A 2,000 m² commercial building generates an average of 80 to 120 service requests per year.

Tenant relations. Welcoming new tenants, handling complaints, monitoring satisfaction, managing move-ins and move-outs (inventory checks, handing over keys/badges). In a multi-tenant building, this relational aspect is crucial for tenant retention.

Regulatory compliance. Compliance with fire safety standards (public access buildings or the Labor Code, depending on the property’s use), accessibility for people with reduced mobility, mandatory inspections (energy performance, asbestos, electrical), and compliance with the commercial building decree (requiring a 40% reduction in energy consumption by 2030).

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Key figures

The cost of commercial property management ranges from 5% to 12% of collected rent when entrusted to a property manager. This percentage varies depending on the size of the portfolio, the number of units, and the level of services included.

The cost of vacancy is much higher. One month of vacancy represents an 8.3% loss on the asset.

The commercial building decree requires buildings larger than 1,000 m² to reduce their energy consumption by 40% by 2030, 50% by 2040, and 60% by 2050 (compared to a base year). Failure to comply exposes the offender to financial penalties and the publication of their name on a public list.

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Manage it yourself or delegate: the real calculation

In-house management is suitable when the portfolio is limited (1 to 2 buildings), the company has a real estate manager or an office manager with available time, and the occupancy rate is stable.

Advantage: total control.

Disadvantage: It is a profession in its own right that requires legal, technical, and interpersonal skills.

The property manager is the traditional solution. They manage the entire rental relationship on behalf of the owner: leases, rent, maintenance, and compliance. Fees: 5–12% of rent + one-time fees (drafting leases, move-in/move-out inspections).

Advantage: professionalism and complete peace of mind.

Disadvantage: the manager handles the property portfolio but does not solve the vacancy problem. Filling spaces is generally not part of their job.

The space operator goes a step further: they handle not only day-to-day management but also filling and operating the spaces. They transform empty offices into managed spaces, manage tenants, and remit revenue to the owner. This model is particularly relevant for vacant or underutilized spaces, as it addresses both management AND marketing.

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The 5 key metrics to track for managing your portfolio

1. Financial occupancy rate. The ratio of actual rent collected to potential rent if 100% of the space were leased. If it falls below 85%, there is a vacancy issue that must be addressed as a priority.

2. The collection rate. The percentage of rent collected on time. A rate below 95% indicates payment difficulties among some tenants and potentially a risk of unpaid rent that needs to be managed.

3. Operating cost per square meter. Total operating expenses (maintenance, cleaning, utilities, insurance) divided by floor area. Allows for comparing management efficiency across different buildings or against market benchmarks.

4. Average time to re-lease. The time between a tenant’s departure and the arrival of the next tenant. Beyond 6 months, each additional month of vacancy significantly impacts profitability.

5. The tenant satisfaction rate. Measured through annual or semi-annual surveys. A satisfied tenant renews their lease. An unsatisfied tenant leaves, and the cost of turnover (repairs, vacancy, marketing) is always higher than the cost of retention.

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Costly mistakes in commercial property management

Neglecting preventive maintenance. Replacing an air conditioner that breaks down in the middle of summer costs 3 to 5 times more than an annual maintenance contract. And the impact on tenant satisfaction is immediate.

Underestimating regulatory compliance. A failure to conduct an asbestos inspection, a missed fire safety inspection, or non-compliance with the commercial building code can result in penalties or even make it impossible to rent out the premises.

Failing to anticipate vacancies. When a tenant gives notice, it is often too late to avoid a vacancy period. Actively tracking lease expiration dates (three-year renewals, end of term) allows you to begin marketing the space 6 to 9 months before the tenant actually leaves.

Treat vacant spaces as a temporary problem. Many landlords “wait” for a tenant to come along. However, an empty office that generates no revenue continues to incur costs (utilities, maintenance, insurance). Solutions such as providing services through an operator (this is Sora’s model) allow these spaces to be monetized quickly, without the constraints of a new commercial lease.