Commercial Property Management: Lease Administration and Operations
Commercial property management on the ACoM exam focuses on lease-driven cash flow and risk control: abstracting leases, billing rent and recoveries, managing vendors, and protecting the owner's asset. The exam tests whether you can read the lease as the controlling document and operate the building without creating liability.
Core rules and concepts
- Abstract every lease: parties, premises, term, base rent, escalations, expense recovery method (gross, net, NNN, base-year stop), caps, TI, options, exclusives, co-tenancy, and radius restrictions.
- CAM/operating expense reconciliations: tenant share = tenant rentable area ÷ total rentable area (or the lease-specified denominator). Apply gross-up, caps, base-year stops, and exclusions exactly as written.
- Bill accurately and on time; late fees and default notices follow the lease and local law.
- Collect certificates of insurance, estoppels, SNDAs, and vendor COIs before work begins.
- Maintain emergency plans, life-safety systems, ADA and building-code compliance, and preventive maintenance.
Worked example
A 50,000 sq ft retail center has $180,000 of recoverable CAM. Tenant A leases 7,500 sq ft and pays its pro rata share subject to a $3.20/sq ft base-year stop. Tenant A's share = 7,500 ÷ 50,000 = 15%, so its CAM share is $27,000. The stop is 7,500 × $3.20 = $24,000. Bill $3,000, then test any lease cap: if the lease caps increases at 5% over the prior year's recovery, apply the cap after the stop. Reasoning: denominator, stop, and cap order matter; read the lease rather than applying a habit.
Traps that cost marks
- Using the wrong denominator: gross building area versus rentable area versus occupied area.
- Forgetting gross-up when the building is below full occupancy.
- Applying a cap before the base-year stop, or vice versa.
- Missing estoppel or SNDA deadlines.
- Billing capital items as operating expenses.