The Future of Management
By Dan Margulies

There were 303,900 Property, Real Estate and Community Manager jobs in the United States in 2010, according to the U.S. Bureau of Labor Statistics, and the industry is expected to grow 6% by 2020 – slower than the 14% job growth projected for the nation as a whole.

Even worse, the BLS was overly optimistic a decade before when property management jobs totaled 315,000 and were projected to grow by about 12% by 2010.

Clearly, growth in population and booming housing construction were expected to drive demand for managers. In fact, by some measures, there were 60,000 more management jobs in 2007.
Then housing fell off a cliff in 2008 and the jobs disappeared as well.

What happened to the industry?

The units finished in the go-go years didn’t just disappear. About 16 million units were added from 2000 to 2009. More than 80% of those, however, were single family homes. While managing foreclosed single family homes is a growing niche at the moment, it is still just a niche and will likely shrink again as the buyers come back.

More important to the jobs outlook, is how the industry is organized and operates. The economic collapse definitely accelerated changes. Management companies have consolidated to reduce the number of support and back office personnel. Technology allows more productivity, increasing the number of units a single manager can oversee. Tighter margins force managers to oversee more units whether they really can manage them well or not. Even specialization plays a role, instead of adding managers, some companies might add accountants, lawyers, or call center operators.

Owner/Managers are also consolidating. The Census Bureau did a survey in 1995-96 that found just 2.1% of apartment buildings were owned by Real Estate Investment Trusts and less than 10% by corporations. The survey is being redone this year and those percentages are expected to be doubled. In addition, large corporate builders and owners are acquiring larger buildings. Owning more of the larger properties will mean more units in corporate ownership. Third-party managers are either frozen out or have to compete for a few large portfolios rather than single buildings. The losers, obviously, lose big.

What does this mean for the aspiring manager, or the owner or association looking to hire a manager?

For managers it means you have to be absolutely up to date on technology, law, products and services. You have to communicate your value to ownership and emphasize any special added value you or your company can bring. Professional recognition, such as the Registered in Apartment Management certification, becomes more valuable both because of the credential and because it requires continuing education. You can’t know enough.
As for companies, larger managers can offer group purchasing discounts to distinguish themselves from smaller agencies. Or, conversely, special knowledge of heating systems and building efficiency can distinguish a savvy small company from a larger competitor with less experienced staff.

Local knowledge is also key. Familiarity with clearing violations, unique City laws on, say, smoke detector replacement, or how to comply with lighting or signage requirements, etc., can save owners money and prevent liability.

The times are also going to force managers to look closely at their own business plans. Can management survive as a loss leader for access to brokering apartment sales if the sales market remains slow? Does it make sense to charge based on a percentage of rents or revenue, or are fee per unit or flat minimums required? How selective can or should you be in seeking or accepting new business?

Looking ahead, the BLS’s prediction that management jobs will grow more slowly than jobs generally is hard to argue with. Some growth will come from new construction when the economy picks up, although new building permit numbers indicate that will be a few years yet. The trend to consolidation into midsize and larger companies seems likely to continue as requirements for technology and support in back offices put smaller operators under cost pressures.

"When I wanted to hire a new management company, I looked at the RAM directory to see which companies in my area had the most trained people."

– Condo Board President

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