Improving Income at a 40,000 SF Gardena Property: Rents Up to 86%, CAM Up 133%

Inconsistent tenant practices can undermine a multi-tenant commercial property. When rents, CAM charges, payment procedures, and lease obligations vary among tenants, owners may experience reduced income, tenant confusion, and unnecessary involvement in daily operations.

GM Properties encountered these conditions after assuming management of a 40,000 sf multi-tenant industrial property in the Hawthorne-Gardena market of Los Angeles County’s South Bay. The 12 tenants occupied comparable units, yet rents ranged from approximately $0.70 to $1.20 per sf and CAM charges averaged only $0.15 per sf.

Although one tenant situation required legal action, the larger challenge was correcting inconsistent practices across the property and their financial impact.

GM PROPERTIES’ STRATEGIC APPROACH

GM Properties reviewed the leases, rental rates, payment histories, operating expenses, and tenant obligations across the property. This property-wide assessment identified issues that would not have been addressed by focusing only on the most challenging tenant.

GM Properties reconstructed the operating budget and calculated each tenant’s appropriate CAM share. The management team then communicated updated charges, payment procedures, and lease obligations to all 12 tenants. Clear explanations, accurate documentation, and consistent follow-through helped establish expectations across the property.

One tenant continued submitting rent directly to the owner after GM Properties became property manager. With guidance from legal counsel, the owner redirected the payments through the appropriate management process. When the issue could not be resolved informally, it proceeded to court.

The matter was resolved without removing the tenant. GM Properties became the designated contact for future payments and management matters, reinforcing the structure established for every tenant.

RESULTS & CLIENT BENEFIT

As the under-market leases were marked to market, rental rates increased from a previous range of $0.70 to $1.20 per sf to $1.30 per sf. This represented increases of approximately 8% to 86%, depending on each tenant’s prior rate.

Average CAM charges increased from $0.15 to $0.35 per sf—a 133% increase that brought tenant contributions into alignment with the property’s operating costs. Previously vacant units were also leased, further strengthening property income and performance.

The property now generates more income after management fees than it did under direct owner management. GM Properties handles tenant communication, rent collection, lease administration, CAM reconciliation, and property concerns, allowing the owner to step away from daily operations while retaining oversight of the investment.

BOTTOM LINE FOR OWNERS

Challenging tenant situations may indicate broader management inconsistencies. Owners should also determine whether under-market rents, insufficient CAM recoveries, or uneven lease administration are affecting other tenants and property performance.

For multi-tenant commercial property owners, several practices can help:

• Review leases, rental rates, CAM charges, and payment histories across the property.
• Compare rental rates and expense recoveries with current market and operating conditions.
• Apply lease requirements and management procedures consistently.
• Clearly document charges, payment processes, and management responsibilities.
• Establish the property manager as the primary contact for routine tenant matters.

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