The question we’re asked most often by prospective landlords? (And as a leading Southern California retail property management firm, we talk to LOTS of landlords!)

“How much does property management cost?”

It’s a perfectly natural question. And it’s not necessarily and issue of affordability. It’s a matter of value.

Unfortunately, the “short answer” is wholly unsatisfying: “Well, it all depends…”

In fact, this is one of the most difficult questions for us to answer about our services.

How come?

Largely because every property, not to mention every landlord, is unique. And each comes with their own set of needs and requirements. Which, understandably, makes it difficult to quantify management fees without specific details.

So what details are necessary for us to calculate management fees? Well, here are the four key factors we consider in determining… How Much Property Management Costs

Current Rents

The FIRST thing we ask to see is a rent roll. This tells how many tenants are in place and their monthly rent.

Rental rates are critical because base management fees are calculated either as percentage of total monthly rent, or as a flat monthly fee.

If tenants are paying high monthly rents, a percentage management fee doesn’t make sense. Essentially, the fee would be greater than the value of services rendered.

Conversely, if tenants are paying low rents, a percentage fee doesn’t make sense, either. The fee wouldn’t justify the amount of time and effort required to manage the property.

Type of Tenant

Secondly, we need to the know the type of tenants occupying the center. Are they corporate tenants or “mom & pop” shops?

Corporate tenants don’t necessarily require as much one-on-one attention. Most corporate tenants, however, insist landlords enter complicated leases agreements, which often demand specific accommodations. Dealing with these types of leases requires expert knowledge. Especially when it comes to justifying CAM charges and conducting periodic CAM audits, which are required in many corporate leases.

On the other hand, independent, “mom & pop” tenants need much more hand-holding and one-on-one interaction. This is critical to ensure such tenants consistently pay rent and CAMs in a timely manner.

But regardless, every tenant is a party (and personality) a property manager has to deal with. And the greater the weight of individual tenant demands, the higher the management fee.

Property Age + Condition

Next, we always insist upon a site visit. This gives us an idea of the property’s age and overall condition, which is critical because a brand-new building requires MUCH less oversight than a 40+ year old structure in need of TLC.

A newer building not only has little wear and tear, it’s also constructed in accordance with current building + safety codes.

Older structures, on the other hand, often suffer from deferred maintenance. But even well-maintained properties will eventually require roof and HVAC replacement, parking lot slurry and the like. Sizable projects that will demand a great of a manager’s time and attention.

Moreover, older buildings usually aren’t up-to-date with current building and safety codes. And with ADA lawsuits running rampant throughout Southern California, compliance with present-day codes is major concern. It’s also a complicated and laborious matter that can absorb a significant amount of a manager’s time.

In short, an older building demands far more time and effort, not to mention expertise, from the property manager. And in turn warrants a higher fee.

Landlord Expectations

Finally, we need a CLEAR picture of the landlord’s expectations. This is why always request a face-to-face meeting.

Some landlords are content to turn over their property and the let the manager handle everything. Their only major concern is that their monthly check arrives on time ;—)

But other landlords want to discuss their property at length on a regular (sometimes even daily) basis. This included consulting with their manager in detail on all manner of property related issues and decisions. Additionally, they want to review monthly reports and financial statements with the manager, in person.

Additionally, some properties are owned by several people in partnership. This often compels a manager to generate and distribute multiple, highly detailed reports and financial statements to satisfy the various partners. And while one partner may act as the primary representative, other partners will at times also demand the manager’s attention, too.

And the more demands landlord’s make on the manager’s time, the higher the management fee.

Clearly, Calculating Management Fees is No Simple Task…

As you can see, calculating a management fee is not an easy proposition. Several critical issues must be factored in to arrive at a fair and equitable price.

Want to Know How Much it Costs to Manage Your Shopping Center?

Get in touch with CBM President, Rick Rivera, to discuss your property. He’ll walk you through the fee calculation process and provide a quote the accurately reflects the effort required to manage your property.

You can contact Rick at 310.575.1517 or rickr@cbm1.com.


By SCTWeek, Friday, April 11, 2014

Family Dollar to close 370 stores, cut prices

FAMILY DOLLAR Closes 370 Stores

Family Dollar, a juggernaut of expansion in recent years, announced plans to close 370 of its 8,100 stores in the second half, and to slow new-store growth to about 400 per year (from 525 in fiscal 2014) beginning next year. The announcement comes on the heels of a slow holiday sales season for the chain. Family Dollar posted a 6.1 percent year-on-year drop in net sales for the fiscal second quarter (ended March 1). Same-store sales fell 3.8 percent during the quarter, while net income dropped to $90.9 million, from $140.1 million for the year-ago quarter.

“The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer,” said Howard R. Levine, chairman and CEO, in a press release. “In addition, like many retailers, our second-quarter results were significantly impacted by severe winter weather — which resulted in numerous store closings [and] disrupted merchandise deliveries — and higher-than-expected utility and store-maintenance expenses.”

Family Dollar will also try to boost traffic by slashing prices on about 1,000 basic merchandise items, and to increase profits by slashing an unspecified number of jobs, Levine says. The store closures and staff reductions should result in annual savings of about $45 million, he says.

During the first half of the fiscal year, the chain opened 244 stores, closed 22 and renovated, relocated or expanded 319. Family Dollar says it anticipates that same-store sales for the fiscal third quarter will decline in the low-single-digits range. For the coming fiscal fourth quarter, the company predicts that same-store sales will be flat or up slightly.


By CoStar, Tuesday, April 9, 2014

Just What the Doctor Ordered: New ‘Medtail’ Tenants Filling Vacant Shopping Center Space

retail minute clinics
Changing Medical Economics Prompting Caregivers to Offer Services Where Patients Shop

With the era of retail medicine fast approaching, health care providers and medical specialists are increasingly opening facilities in shopping centers, which offer an attractive combination of affordable space, good patient access and ample parking.

“We’re seeing a lot of strip centers being converted to medical offices of various sizes, if a dollar store or grovery store goes out,” Robert Moon, vice president, brokerage services, for Farmington Hills, MI-based Friedman Integrated Real Estate Solutions, tells CoStar News. “New MOBs can cost upwards of $200 a foot to development — those are big numbers. Existing space at a retail center will be substantrially less than that, so there’s a big incentive to take that space rather than building from the ground up.

Read more…


By Commercial Observer, Monday, April 8, 2014

Death of Malls Exaggerated: REIT Leaders

Shopping malls–that much-maligned asset class—are actually no thorn in the side of real estate investment trusts, a group senior executives at top REITs said today. The group was assembled at the New York University Schack Institute’s annual REIT symposium, held today at the Pierre Hotel.

REITs are in fact seeing these assets perform well despite the many news reports to the contrary.

Death of Malls Exaggerated: REIT Leaders

Tysons Corner Center in McLean, Va.

“Reports on the demise of malls are greatly exaggerated,” said Joseph Coradino, CEO of PREIT LLC, a Philadelphia-based REIT that focuses on retail. He made the remarks at a panel called “Strategy at the Mid-Cycle,” this morning.

He was not alone in the sentiment.

“Spaces [in malls] above 10,000 square feet,” remain well-leased, according to Matthew Lustig, the head of real estate at investment management giant Lazard Ltd.  While smaller spaces in malls nationally sometimes remain vacant, the larger spaces and big box retailers are indeed faring well, he said.

Read more…


By SmartBlog Tuesday, March 4, 2014

Whole Foods takes fwhole foods down scale marketresh to the middle market

Whole Foods Co-CEO Walter Robb said recently that the chain plans to grow in part through high-grade conventional produce offerings, a move that goes well beyond recognizing that organic is now mainstream and no longer a viable way to differentiate itself. Robb highlighted produce in particular — an excellent place to reach shoppers in the less educated/affluent zip codes where it is now expanding.

Like most natural/specialty grocers, Whole Foods no doubts wants to increase the number of people who regularly fill carts, not just baskets, at its stores. Its successful 365 private-label program has helped in that endeavor, offering lower-cost commodities that still uphold the brand’s natural, less processed promise — but that is mostly happening in the center store.

Read more…


By New York Time, Tuesday March 4, 2014

RadioShack to Close Up to 1,100 U.Radio Shack Closes 1,100 StoresS. Stores

NEW YORK — There will soon be about 1,100 fewer places to buy batteries.

RadioShack said Tuesday that it plans to close up to 1,100 stores, or about a fifth of its U.S. locations. The news came as the retailer reported a wider quarterly loss after a disappointing holiday season. Its stock tumbled 16 percent in afternoon trading.

CEO Joseph Magnacca said the closings would leave the company with more than 4,000 U.S. stores. That’s still far more than Best Buy, which has roughly 1,400 U.S. locations, and makes RadioShack stores nearly as common as Wal-Mart.

RadioShack didn’t immediately identify which stores will close or how many jobs would be affected. A call to the company, based in Fort Worth, Texas, was not returned.

Read more…



By Los Angeles Business Journal, Tuesday, March 4, 2014

L.A. Council Passes Restrictions on E-Cigs

The Los Angeles City Council voted on Tuesday to ban smoking of electronic cigarettes at all public buildings and restaurants, as well as at parks, playgrounds, beaches, libraries and public schools in the city.

The council voted 14-0 to approve an ordinance that places the same restrictions on the use of electronic cigarettes, or e-cigs, as on the smoking of traditional cigarettes.

The ordinance allows the smoking of e-cigs at any of the scores of vaping lounges that have recently opened around the city and by performers during theatrical productions.

Supporters of the measure say that because e-cigs contain nicotine, their use should be restricted until the health impacts are fully studied. Opponents of a ban say that e-cigs release fewer toxic chemicals than conventional cigarettes and provide a way for smokers to wean themselves off nicotine.

In December, the council voted to ban the sale of e-cigs to minors. That ordinance also requires that e-cigs be sold only by licensed tobacco retailers and bans their sale at kiosks and displays directly accessible to customers.

Other local cities have also begun regulating the sale and use of e-cigs, including Long Beach and Beverly Hills.


By Globe St., Monday, January 27, 2014

Retail Flight to Quality Continues

CBM President, Rick Rivera
CBM President featured in Globe St. article on recent Acre event

LONG BEACH, CA-National retail tenants are focusing on centers with the best positioning and visibility and the highest traffic counts, said panelists at the Association of Corporate Real Estate Executives of Southern California’s 2014 Industry Forecast here last week. However, portfolio diversity helps businesses remain steady over time, they added.

Panelists agreed that 2013 was an outstanding year for their teams. Greg Fisher, president of Present Value Properties, said, “We have more than tripled our business since 2007,” and Shauna Mattis, SVP of Wilson Commercial Real Estate, added, “We also had a very successful year. Now our concern is that much of the quality space got leased and retailers seem to be back in the cautionary role.”

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By SCTWeek, Friday, December 13, 2013

Retail rents, values outperform other property sectors

Retail properties were strongest among property types worldwide in capital values and rents in the third quarter, rising 2 percent from the previous quarter and 8 percent year over year, according to CBRE Group. Returns in commercial real estate have been very strong relative to other asset classes, attracting institutional capital to the sector, says Raymond Torto, global chairman of CBRE Research. The limited number of assets available also helped boost growth, he says.

The firm’s global industrial capital index rose 1.4 percent versus the previous quarter, while its global office capital index rose 1.1 percent.

Retail rents outpaced other property types. CBRE’s index rose 1 percent relative to the previous quarter and 4 percent year over year. Meanwhile, office rents were virtually unchanged, and industrial rents improved less than 1 percent during the quarter.