By Chris Nebenzahl
Drive for Differentiation
Property management grows in concert with the real estate industry, and supply has been increasing across all real estate sectors. The robust completion growth has allowed property managers to add significantly to their portfolios. From 2014 to 2015, the number of properties managed by survey respondents increased by 52 percent. As the employment market strengthens, so too has occupancy for many of the top property managers. Compared to 2014, average occupancy increased 1.8 percent to 92.7 percent in 2015 for respondent firms.
Many of the top 10 property managers from 2014 remained in the top 10 in 2015. These firms offer a wide array of real estate services to their clients, and manage a significant portion of the total market. Roughly 85 percent of the total square footage and 80 percent of the total properties managed by survey respondents are managed by the firms in the top 10 of our rankings. Since 2014, the average square footage under management increased 15 percent for the top 10 property managers, compared to just 4 percent average growth for all other respondent firms. Firms outside of the top 10 have seen substantial changes from our survey last year, as many have experienced decreases in properties managed and total square footage.
In addition to the financial fundamentals, property managers are looking for new ways to innovate and attract clients. Technology and a more expansive suite of services have become increasingly important to property managers. As a point of differentiation, many firms are selling themselves as well-rounded, offering a wide variety of services, from property management to investment and transaction strategy. More brokerage firms are offering property management and market analysis to their clients to provide a better-rounded real estate package.
Big data and technology are also being used by property managers to improve their standing in the industry and optimize profits for owners. Property managers are increasing efficiency by using Internet listing services to fill vacancies and developing interactive online platforms for tenants to make payments and communicate with their local management representatives. Newly constructed properties also include high-tech amenities such as interconnected utility controls that allow property managers to monitor and optimize energy usage.
For innovative property managers, sustainability has become an important focus for growing their business. The rise of “green buildings” has increased the awareness of environmental and financial paybacks in the real estate sector. Not only can property owners and managers market the benefits of a smaller carbon footprint but the cost savings from reduced resource usage is also significant. The growing real estate industry forces property managers not just to stay competitive in the traditional fundamentals of portfolio growth, rent growth and occupancy but to take innovative approaches to sustainability and technological advancement.
A different version of this ranking focusing on firms with multifamily operations appears on MHN.
The 2016 Ranking of Top Property Management Firms, featured in our September 2016 issues of CPE and MHN, utilized self-reported property characteristics for all firms. The ranking is a weighted formula based on a variety of factors (only a few of which are specified here), including the total square footage and number of properties under management, property operations owned and managed, and participation in property sectors, among others. The ranking represents what we feel is a logical balance between firm growth and market share, as well as property diversity.
To be included in upcoming surveys, email Samantha Goldberg at firstname.lastname@example.org.