Management Fees in CAM Reconciliation
Fees paid to the property management company (or charged internally by the landlord's management division) for day-to-day building operations, tenant relations, vendor oversight, budgeting, CAM reconciliation, and financial reporting.
Benchmarks per SF
Source: BOMA EER / IREM 2024
Typical GL Codes
Recoverable Components
- Property management fee (percentage of gross revenue or per-SF fee)
- On-site management staff salaries
- Management office expenses
Non-Recoverable Components
- Asset management fees (investment-level decisions)
- Leasing management fees
- Construction management fees
- Portfolio-level overhead
Allocation Method
Pro-rata by rentable square footage. Management fees are typically calculated as a percentage of collected revenue (3-5% for office, 4-6% for retail) or as a fixed per-SF fee. Subject to gross-up if the fee is a percentage of revenue (lower occupancy means lower revenue means lower fee — but at full occupancy the fee would be higher).
Common Lease Language
“Operating Expenses shall include management fees paid to the managing agent in an amount not to exceed [3-5]% of gross revenues, or such greater amount as is customary for comparable buildings in the market.”
Common Billing Errors
- Charging both a management fee percentage and separate line items for management staff salaries (double-counting)
- Exceeding the lease cap on management fees without tenant consent
- Including asset management fees (investment decisions) in operating expense management fees
- Charging management fees on capital expenditure projects
Year-over-Year Trends
Management fees have remained relatively stable as a percentage of revenue (3-5% for office). However, the absolute dollar amount has increased as base rents and CAM charges increase. Technology investment by management companies (smart building systems, tenant experience apps) is increasing management costs but may reduce other operating expenses.
Additional Context
Management fees are the most scrutinized CAM line item because tenants perceive them as the landlord paying itself. Many leases cap management fees at a stated percentage or require that the fee be competitive with market rates. Self-managed properties (where the landlord manages directly) often charge an imputed management fee at market rates.
Related Resources
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