A plain-English guide to how commercial property management fees actually work — what's typical, what's included, the exclusions to watch for, and who ends up paying. So you can compare proposals properly before you sign.
Talk to our teamIn New Zealand, commercial property management fees are almost always charged as a percentage of the gross annual rent collected, rather than a flat dollar figure. The percentage typically falls somewhere between 3% and 5%, depending on the type of property, how many tenancies it has, and how much work the building actually requires.
For smaller properties, a percentage alone wouldn't cover the cost of doing the job properly, so a minimum fee usually applies — commonly charged on a time basis, at an hourly rate for the work actually carried out, rather than a fixed percentage.
As a rough illustration, a property returning $1,000,000 in gross annual rent might attract a management fee somewhere between $30,000 and $50,000 a year — but the headline percentage is only part of the story. What's included in that fee, and what isn't, matters just as much as the number itself.
The percentage isn't arbitrary — it reflects how management-intensive a property is. The main factors are:
This is the part most owners overlook. A management agreement will quote a base fee, but many contracts then carve out a list of exclusions — tasks that sit outside the base fee and are charged separately. Common exclusions include:
None of these are unreasonable in themselves — but they can add up quickly, and they're usually an owner expense. Before you sign any management agreement, ask for the full list of exclusions and how each is charged. A low headline percentage with a long exclusions list can end up costing more than a higher all-in fee.
Here's the fact most owners overlook: under the standard Auckland District Law Society (ADLS) Deed of Lease that governs most New Zealand commercial property, the management fee is typically a recoverable outgoing. It forms part of the OPEX paid by the tenant — not money out of the owner's pocket.
That single fact should change how you choose a manager. If the tenant is largely funding the fee, then selecting a manager on price alone is a poor proposition that benefits no one. You shave a little off a cost the tenant was mostly carrying anyway, while putting at risk the far larger sums tied up in rent reviews, lease renewals, vacancy and compliance — exactly where a capable manager earns, or loses, you many times the fee.
Choose your manager on capability first, and price last. The right manager protects and grows the value of the asset; the gap between a good manager and a cheap one is measured in rent reviews won, vacancies avoided and risks headed off — not in a fraction of a percent on the fee.
Whether the fee is recoverable depends on the wording of your specific lease and outgoings schedule. We structure new and renewed leases so that management is treated as a recoverable outgoing wherever possible.
Usually between 3% and 5% of gross annual rent collected, with a minimum annual fee (commonly based on an hourly rate / time charge) for smaller properties. The exact percentage depends on property type, the number of tenancies and how management-intensive the building is.
Often, yes. Under most ADLS-based commercial leases the management fee can be included as a recoverable outgoing (OPEX), meaning the tenant pays it. Whether it's recoverable depends on your specific lease and outgoings schedule.
No — capability should come first, price last. Under a standard ADLS lease the management fee is usually paid by the tenant as a recoverable outgoing, so choosing on cost alone saves little and benefits no one. The real money is in rent reviews, renewals, vacancy and compliance, where a capable manager is worth many times the fee. Pick the manager best equipped to protect and grow your asset.
Common exclusions are lease renewals and negotiations, rent review negotiation or arbitration, project management of capital works, insurance claims and dispute/litigation support. Always ask for the full exclusions list before signing.
Usually because the cheaper quote excludes more. A low base percentage with a long list of separately-charged exclusions can cost more overall than a higher, more inclusive fee. Compare what's included, not just the headline number.
Not necessarily. Fees sit within a similar market range regardless of firm size — the difference is in the level of attention. A boutique manager with a deliberately small portfolio can give your property far more focus for a comparable fee.
Tell us about your property and we'll give you a clear, all-in proposal — no hidden exclusions, and structured to recover the fee from outgoings wherever the lease allows.
Talk to our team