Commercial Rent Reviews Cost You More | Here's Why

14 Aug 2025 · 5 min

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4:32

In this presentation, the speaker outlines the fundamental distinctions between commercial and residential property management. They explain that commercial management deals with business tenants, longer lease terms (typically 3‑5 years), and more complex, prolonged negotiations, while residential management focuses on individual tenants with shorter leases (6‑12 months) and simpler negotiations. The talk covers differing fee structures—commercial fees are often lower percentage‑wise and may be fixed or percentage‑based—versus residential fees that reflect higher day‑to‑day interaction. It highlights the variance in touch points, with residential tenants requiring more frequent communication and reporting. Legislative differences are noted, referencing the Property, Stock and Business Agents Act, Residential Tenancies Act, Retail Tenancies Act, and Strata Titles Act. The speaker also contrasts tenant modification processes (commercial projects are strategic and documented, residential changes are informal) and rental review mechanisms (commercial reviews are often pre‑negotiated, residential reviews rely on market analysis). Overall, the content serves as an instructional guide for landlords or property managers to understand the operational, legal, and financial nuances of managing commercial versus residential properties.

Chapters

Commercial versus residential property management. Okay, so commercial property management is a totally different beast. While residential focuses on individual tenants, commercial deals with business and business owners, typically leases of a longer duration And negotiations are typically more complicated and prolonged because there are often several, several different, um, considerations in a commercial lease. And above and beyond that, we're not even touching on, uh, clients— yeah, being the, the, our clients' strategies and higher level sort of outcomes. Commercial management fees are typically lower percentage-wise. That said, some— there are different models. Some are a fixed price model, some are a percentage based on rental collected. You know, they can vary, as we said in the previous video, but again, typically that reflects on the, the typical, uh, input of, of day-to-day touch points. So a residential tenant, you're typically going to have more touch points with them, um, there are going to be more details to do, whereas a commercial tenancy is often, not always, going to have less touch points required And likely less conversations and less reporting as well. There are differences under the Property, Stock and Business Agents Act, if that's what it's still called, by way of what is required for each different category of property and service you, you provide for that. Key differences, commercial leases could be, and we're being very broad, 3 to 5 years in term, per term, whereas a residential tenancy typically could be 6 to 12 months quite often. So we go back to that inputting of services and how often and the frequency. Tenant modifications. Commercial tenants typically have scopes of work. Their scope of work is often a little bit more like a building project in which how you approach it, it's a bit more strategic and documented. Whereas conversations with residential is very different and unstructured. So there's a lot of conversations have to be interpreted as to people's intention, and we need to fill in a lot of detail to make sure that there isn't a misunderstanding. And that comes back to the overcommunication that property managers need to constantly engage with. Rental reviews. Rental reviews often for commercial are pre-negotiated, so it'd be more of a case of application during most terms. Market reviews are a slightly different beast, whereas residential, there is no fixed formula. It is really more about market, market analysis and comparison. In that sense, legislation again, different base. The Residential Tenancies Act is one basket, the Retail Tenancies Act, you know, Strata Titles Act, and a myriad of other acts that we need to be across, you know, for commercial contracts and residential tenancy contracts.