Once upon a time a property manager’s responsibilities consisted chiefly of collecting rent, managing the property and negotiating lease contracts. Now it’s becoming apparent that property managers have much more on their plates, from acting as asset managers to providing research and valuation to leaseholders and lenders who are not collocated with the property. Some experts say today’s property manager is actually a financial manager who happens to work in real estate. The upshot is that new responsibility brings bigger rewards, and the surge in interest in the rental market is opening up new opportunities every day.
A property manager’s job is never done. Especially not in today’s world, where the need to retain old tenants and attract new ones, combined with those tenants’ heightened expectations for round-the-clock service, have left property managers with more responsibilities than ever.
Just a few years ago, property management was about basic building services: contract negotiations, rent collection, cleaning and maintenance, says Dan Pufunt, president of property management with Jones Lang LaSalle in Chicago. Today, property managers also have to act as asset managers, with a focus on helping grow Net Operating Incomes, especially when it comes to distressed assets being taken back by lenders and special servicers.
Lenders might also deal with entire real estate portfolios or operate thousands of miles away from a specific asset, so property managers must be able to offer capabilities ranging from capital markets research to valuation to leasing to construction management, says Steven M. Ring, city leader for Northern California corporate occupier and investor services with Cushman & Wakefield.
“They are not just asking for property management services, but a whole asset strategy,” he says. “Before the downturn, you could buy a property, do nothing, sell it in a year and earn money. Now you really need seasoned professionals to show you where the value is.”
And property managers often have to guide owners through transactions, says Randy Woodbury, president of the Woodbury Corp. in Salt Lake City. That can include doing due diligence, providing asset documentation, keeping owners apprised of issues that arise during site inspections and tracking lease structures to ensure they create maximum value for the landlord.
For Joseph Greenblatt, San Diego-based Sunrise Management Co.’s president and the Institute of Real Estate Management’s secretary/treasurer, property managers are now “financial managers who just happen to be in the business of real estate.”
Ten years ago, a property manager could satisfy investors “by just managing sticks and bricks,” he says. “Today, clearly the expectation has shifted to include a mastery of real estate as an investment. Without that understanding, the property manager is hard put to do his or her job.”
The good news is that life is not as tough for property managers as it was two or three years ago, when many commercial properties were hemorrhaging tenants and most conversations centered on re-negotiating existing rents. Conditions have improved, and in select cities and buildings, occupancies steadily hold at 100 percent, says JoAnne Corbitt, director of property management with The Mathews Co. in Nashville, Tenn.
But because commercial tenants have a healthy choice of buildings to relocate to, property managers must give them reasons to stay at their current address, notes Ring.
Managers try to achieve this in part by driving down operating costs, for both tenants and landlords. For example, at Southeast Financial Center in Miami, a 1.2-million-sq.-ft. class-A office building, Jones Lang LaSalle “reduced energy and operating expenses by a quarter of a million dollars, just by rebidding contracts and driving down energy costs through a good review of the current operating procedures at the building,” Pufunt says. “We reviewed the cooling system and lighting … When you reduce operating costs for the tenant, the landlords are able to achieve the sorts of rents at the property that they want.”
But in terms of keeping tenants happy, nothing beats having an experienced management team on site, says Ring, so Cushman & Wakefield’s property managers provide concierge-level service at commercial buildings.
“It’s almost as if we never close,” says Corbitt. “Because of the various communication devices we have, tenants think, ‘If I want it now, somebody can deliver it now.’ They really don’t have hesitation about contacting you at noon on a Sunday because they might be in the office working.” (credit to Elaine Misonzhnik, NuWire)