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The Changing Role of the Property Manager
by Tom Stokes, CCIM, CPM
A day in the life of a property manager
today dramatically differs from that of a decade ago.
Modern office and multifamily property managers are involved in many areas
beyond traditional rent collection and bill paying. They now arrange
insurance; provide tax information; design and collect renovation bids;
develop marketing plans; hire, manage, and motivate staff; coordinate
maintenance services; improve landscaping; oversee property security;
ensure compliance with governmental regulations, and report income and
expenses.
To accomplish these tasks, today’s property managers must evaluate and
respond to changing market conditions and world events, new developments
in technology and other areas, and find additional ways to increase fee
income. At the same time, they must maintain the personal client
relationships that are so integral to their business. There is little
difference between what managers at large and small companies are doing in
this regard. A senior manager with a national firm reports, “We’re on a
mission. Our team takes a client or major tenant to lunch at least once a
week.” Similarly, Steve Urie, MPM, former president of the National
Association of Residential Property Managers (NARPM) and a member of their
national faculty teaches the owner/manager of smaller firms across the
country how to unbundle their services to increase revenue while
maintaining rapport with their clients.
In recent years -– and especially in the past few months –- numerous
external factors have affected how property managers work.
Today, property managers are specializing in a specific property type. As
licensing requirements, government legislation, lender regulations,
insurance requirements, environmental concerns, accounting and taxation
issues become more complex and property specific, specialization makes
sense. In addition, the growth of real estate investment trusts and other
large real estate companies has created a consolidated marketplace, where
expenses are allocated over a larger income stream and expensive resources
like office space, equipment, and software are shared.
Another result of consolidation is increased use of branding, in which
companies develop a unique image based on management services that
translates across all properties. Often property managers are critical to
developing and maintaining a company’s branding identity.
Recently, property managers have found branding strategies to be key to
surviving an economic downturn, in which new considerations affect
building occupancy.
Building a positive brand image helps retain tenants; however a negative
image can do just the opposite. Tenants that have had bad experiences at
one property managed by a certain company may transfer that emotion to
another property run by the same manager. Thus, it is critical to ensure
that customers have a strong positive experience with the brand at all
times. Property managers have an essential role in maintaining good tenant
relations. To help them, companies should have mechanisms in place in
which a disgruntled tenant or service provider can seek correction to a
problem. EpiCity has a “Problem Resolution” program in its tenant
Handbook. The program gives its customers, and a similar program exists
for clients and staff members, the exact details of how the company will
escalate a complaint through management, all the way to the president’s
office, if necessary, in an attempt to address a complaint without
resorting to litigation, or outside mediation or arbitration.
Recently an EpiCity resident was experiencing a maintenance problem in her
unit that she felt was not being properly addressed by the on-site
personnel. The Site Manager promptly invoked the Problem Resolution
mechanism which involved his supervisor. Less than twenty-four hours later
the formerly disgruntled resident had communicated her thanks and
satisfaction to all involved complimenting the staff and even offering to
provide referrals to prospective residents. Convenience of emailing work
orders and leaving voice mails instead of waiting on hold or having to
make requests during office hours, are some general ways a company can
help customers gain a strong positive experience. One specific example, on
a larger scale, is the web portal offered by essention [note the spelling
is with a lowercase e – check out the web site at www.essention.com]. The
company has the ability to store everything of importance about a property
including drawings of each suite. They can connect their database to the
mechanical systems and show in real-time the current operation of fan
motors, HVAC registers, floor temperatures and the status of various alarm
systems throughout a given facility. Tenants can report work orders and
prospects can research space available for lease. Also offered is a
twenty-four hour a day help desk for tenants with staff able to take calls
about a building, answer basic questions, dispatch onsite or third party
maintenance personnel. Services such as this will allow good management
operations to expand into additional markets as it will eliminate the need
for them to have an on-site presence in each submarket.
In their effort to deal with the slowing
economy many firms have embraced new methods of marketing. Nearly all have
increased their efforts to visit in person with client representatives.
Others are engaging new forms of advertising such as print media, direct
mail, billboards and even email campaigns. In the meantime most have
reduced expenses, primarily through personnel reductions.
Property insurance is another new wrinkle. Since Sept. 11, 2001, insurance
rates for investment real estate have risen as much as 75 percent on some
product types such as residential apartment insurance. According to a
southeastern regional insurance agency, since September 11, there is 50
percent more capacity in the insurance business today (dollars available
to pay losses with) than before. Moreover, some insurers have drafted
terrorism exclusions that will not cover terrorist attacks in future
policies. Without proper insurance it would be difficult for property
owners to operate, acquire properties, or refinance loans, according to
the Institute of Real Estate Management. While this is first an issue for
ownership, managers have traditionally relied on the insurance coverage
provided in the owner’s policy for their protection. If coverage is
lessened, managers become more vulnerable and put at risk.
Property managers also must be ready to adapt to local external factors
such as changing urban and economic trends.
For example, in 1994, Atlanta was emerging from an economic recession in
which the multifamily segment was especially hard hit. One spot tapped for
economic improvement was the area surrounding the Lindbergh transit
station, which was across the street from a 304-unit apartment community.
The building’s property management company was asked to represent the
interests of building’s owner in meetings with strong, vocal resident and
homeowner groups. Those interests were to maintain or enhance existing
residential redevelopment options, preserve or enhance the existing
quality of living, and seek expanded options for multi-use redevelopment.
The result included a more pedestrian-friendly district. Property owners
received additional density and incentives to improve the street grid,
maintain or add to the existing open space with new developments, and
include affordable housing in their new projects. This may not have been
accomplished if the property management team had not taken such an active
role in this seven year process. The property management company formed a
team of four key personnel to work on the project. The site manager of the
community, the senior property manager, its chief financial officer, who
also serves as its government liaison officer, and finally the president
due to his long association with the client and the property. With this as
the base and the unique perspective offered by their role as the long-term
property manager, they developed a program to determine more specifically
the objectives and potential outcome of the study and juxtaposed this with
the needs of the client. From this analysis they were able to develop an
internal ‘white paper’ which was periodically updated and circulated among
the team members and the client so that everyone could equally articulate
our objectives throughout the process which remained fundamentally
unchanged:
1. Maintain or enhance existing options for residential redevelopment.
2. Preserve or enhance the existing quality of living experienced in
community, thereby preserving value of the asset.
3. Seek expanded options for multi-use redevelopment in keeping with the
movement toward urban live-work-play communities around the MARTA train
stations.”
For the next three years one or more members of the team represented the
property management company and its client at meetings of the study group.
Property managers likely will continue to get more involved with community
improvement districts in which they work. Along with other local business
representatives and the government, they can help raise awareness and
funding to help with issues such as traffic congestion, sewer systems, and
other growth challenges.
Leasing lead time is increasing. As lease rates rise, governmental
regulation of construction and renovation increase, and technological
issues become more complicated it is critical that tenants see space
“ready to go.” In the past it was common for leasing personnel to show
space to a prospective tenant and then spend months negotiating the lease,
planning the space, renovating the space and moving the tenant. Today,
tenants need to see space that is available much sooner. Property Managers
must work with their client and their leasing personnel to anticipate the
needs of the tenant and make infrastructure and other changes before a
lease is signed.
Numerous advances in technology and other areas are helping property
managers do their jobs more effectively.
As in most industries, computerization has
provided some relief regarding data collection, manipulation, and storage,
as well as new and better means of communication [AUTHOR: SUCH AS?]. James
Piper reports in his article “Project Management Goes Online” on the
Facilitiesnet.com web site that “Today’s organizations are different and
therefore react differently to project requirements. No longer are team
members found in a single location; they are often scattered among various
locations across the country or even around the world. No longer are team
members drawn primarily from the organization itself. Outsourcing has led
to dependence on outside sources for performing many project activities,
and these outside sources can be located practically anywhere. The result
is a communication and coordination nightmare for the project manager.
Schedules have to be coordinated. Contract documents have to be
circulated. Project drawings must be kept current. Activities must be
tracked.”
Many firms have already deployed the
Terminal Server platform which allows their personnel to connect to
company network over the internet and run applications in a web browser or
through a proprietary client. Citrix is one of the most prevalent of
these. Excalibur Group, LLC in Atlanta has such a system and it allows the
firm’s personnel to connect to the company’s computer system from any
computer on the internet and run all the software applications as if they
were connected to a computer on the local area network (LAN) in the
office. According to Mike Nelson, President, “this makes us tremendously
more efficient. Our folks can get to what they need from home or even a
client’s property if necessary.” Nelson has even taken this application
one step further. He currently is in the beta-test phase of allowing his
clients to connect to the system with limited access and run reports on
their properties using the Yardi software that his staff utilizes to
manage their portfolio. One client reports that the system “works like a
charm.”
However, managers now must spend more time
to acquire, implement, develop, and maintain these systems. At the same
time, tenant and client access to market information has made many of them
more demanding.
Thus, property managers must be savvier and more technologically oriented,
while still maintaining meaningful personal relationships. A property
manager is much more comfortable if a client calls to report a problem in
his/her office if it has to do with maintenance, janitorial services or
something else along those lines. The property manager adjusts to the
challenge and solves the problem. If a manager has a problem relating to
new technology, they simply may shut down, not knowing how to solve that
type of problem. This mindset has to change to accept and understand the
technological advances and to work through the difficulties that may arise
from the changes.
Advances have occurred in several areas.
Technology - Property management
software has exploded in the last 15 years. A few longtime providers such
Yardi now compete with dozens of other applications that have become more
specialized.
Efficiency in operations is one factor behind increasingly advanced
software needs. For example, one national company created a customer
service center just for service calls, maintenance dispatches, and
janitorial and security services. The company also uses property
management software for work-order tracking, which makes it possible to
dispatch wireless messages that technicians receive on equipment similar
to personal digital assistants.
Such effective use of technology allows the property manager to spend time
on other tasks such as financial analysis and reporting as well as with
face-to-face contact with tenants.
Energy Management - Advances in energy management also have helped
property managers analyze buildings’ energy consumption and develop
strategies to manage energy more efficiently to lower total operating
lease costs.
For instance, by creating strategic alliances with Enerwise Global
Technologies and Strategic Energy LLC, Grubb & Ellis developed an
Internet-based energy-management platform that enables managers to collect
and analyze energy use data, share information and best practices, and
help clients develop demand-side and supply-side energy management
programs. Programs include designing purchasing programs customized to a
client’s particular needs, conducting tariff and rate analyses, and acting
as the client’s agent to procure energy in deregulated markets, including
the use of aggregation to increase purchasing power. It also lets managers
isolate costs for individual tenants and allocate these costs based on
actual tenant use.
Revenue Beyond Rent
To stay ahead of the game in 2002, property managers must continue to look
beyond rent as the sole revenue source. New ways to make properties
valuable also are key to gaining and retaining tenants.
In the past, tenants paid common-area-maintenance fees for janitorial
services and some utilities. Today, fees are more widespread, collected
for services such as applications, administration, memberships, parking,
secretarial services, furnishings, and construction management.
An emerging multifamily property trend is
offering pay-as-you-go features such as high-speed Internet connections,
wiring for surround-sound, exclusive club memberships and fitness club
programs, premium parking passes, and access to social areas and
conference facilities with high-quality audio/visual equipment.
A similar trend is occurring in the office sector. For example, a class A
building in Atlanta has a built-in conference room, training room, and
auditorium that tenants can rent
Fiber-optic broadband service is another
add-on that some companies offer. One company has made a “fast office
lease” available in some areas for tenants that are in a hurry to move in
and want immediate access to telephone and data lines, furniture, office
supplies, and kitchen supplies. Many property managers also make flu
shots, blood drives, and book fairs and other events available to tenants.
There may be additional fees involved to have some of these activities,
but it’s all a part of obtaining and retaining tenants.
Aside from fees, property managers should
look to new technologies to find additional revenue sources. For example,
in certain markets, renting out rooftop space for telecommunications
equipments such as antennas had created a new and profitable revenue
source.
Attracting Tenants
Despite the numerous changes in property management, maintaining good curb
appeal continues to be a critical aspect of getting prospects in the door.
But while pleasant buildings and landscaping add to a property’s visual
appeal, other attractions have become important as well. Because many
people spend more time at work than at home, some office properties have
added amenities such as restaurants, travel agencies, laundry services,
and car washes to add to a facility’s allure. Yes but that’s not the
primary motive for these amenities. The idea is to make the building
attractive to prospective tenants. Multifamily properties also now offer
various amenities to residents. For instance, prospective tenants at
Oakwood Corporate Housing properties can choose from packages including
furnished apartments, furnished offices, specialty kitchens and even a
kids’ package. Fitness clubs, movie theaters, day-care centers, dry
cleaners, car rental, conference rooms, and activity programs also are
popular add-on features in many new multifamily developments.
Security issues are another significant factor in tenant retention. To
ensure that the property and personnel are up to the task, it is necessary
to measure tenant satisfaction. Companies such as SatisFacts.com provide
surveys that can measure tenant satisfaction. SatisFacts.com is a division
of Market Concepts Inc. and conducts thousands of surveys each week,
translating them into meaningful information that management can take
immediate action on.
Multifamily communities in urban settings still struggle with how to
effectively increase security. Property managers typically use paid
security patrols or have a local law enforcement officer live on the
property who provides security patrols for a reduced rent.
In addition, many property managers believe
that the best protection is an involved and informed resident group. For
example, during a recent spate of break-ins and vandalism on Buford
Highway just north of Atlanta, a coalition of 11 apartment community
managers began to meet weekly and share information. The heightened
awareness was transferred to the residents, whose involvement led to the
apprehension of some suspects.
In another case, the property management team for a national company
recognized the security exposure that a sprawling office park in a wooded,
park-like setting in Atlanta, Georgia presented. This was a general
upgrade for the office park. Restricted parking access and individual
building security personnel were not feasible given the buildings’ design,
layout, and budget. To overcome these obstacles, the property management
team added building access control systems (ID Cards) to the more than
25-year-old buildings to limit unnecessary, after-hours foot traffic. The
company also contracted for a security patrol service and spread the costs
across numerous operating budgets. The team also formed a close
relationship with the county police department to provide focused
attention on the office park.
In an office environment where tenants come
from many different companies, it can be difficult to get the same level
of involvement or consensus. This particular building access control
system also has cards for each individual to track when they come and go
from the building, as well as a separate suite entry that coincides with
the general building access control system. The system also has a timed
lock and a record keeping program of who has come and gone.
Other aspects of security for property
managers to consider include personal safety, building integrity, and
systems administration. With the heightened sense of concern it is prudent
to study each of these areas for potential security weaknesses.
But clearly good old-fashioned customer
service is a key to successfully attracting tenants and keeping them
there. Many of the common-sense basics to achieve this haven’t changed:
answering the telephone promptly and politely, returning telephone calls
quickly, and resolving maintenance requests promptly.
Marketing programs, advertising campaigns and public relations efforts are
also a part of a property manager’s day. The competition is so great today
that a property manager continually has to think about how to stand out
and make a name for his/her property and company.
Next Up
As the real estate investment market matures, the pressure for
professional property managers increases. Some 10 years ago, virtually no
school offered a bachelor’s degree in real property management; today
several do.
Technology advances, along with changing
client needs, will affect the property manager’s role over the next
decade. The job will continue to evolve as technology advances,
infrastructure transforms, and the world changes. However one role will
stay the same: The importance of personal customer service will remain a
constant.
Tom Stokes, CCIM, CPM, is president of EpiCity Real Estate Services, which
provides personal and professional real estate services in the Atlanta
area. Contact him at (770) 457-2300 or TStokes@EpiCity.com.
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