by Brianna Crandall — May 9, 2018 — The complex and shifting relationship between asset and property managers and related commercial real estate professionals took center stage recently as IREM (The Institute of Real Estate Management) held its third annual Commercial Summit in Chicago.
With the role of facilities management (FM) continuing to expand and evolve as well, the information can also be useful for FMs as they attempt to collaborate more effectively with the members of these professions.
The issue was examined by Dustin Read, PhD/JD, assistant professor of Property Management and Real Estate at Virginia Tech. Read has been working for more than 18 months with IREM on an exploration of the relationship between asset and property management with the goal of establishing better understanding between the two disciplines.
As Read reported, the goal of the IREM initiative is to “explore the points of connectivity between the property management and asset management professions as well as ways to help individuals working in both to collaborate more effectively, drawing upon contributions of people working in the field.”
Changing management dynamics
If you go to five different firms, you might get five different job titles for asset managers, Read pointed out. Therefore, the problem becomes how to define it, especially to provide guidance for new talent in the market. This is made more difficult by so much “overlap in many responsibilities,” between asset and property management.
In his research for IREM, which included interviews with more than 90 professionals, Read said he approached asset management more as a process than as a job title — an important distinction given the need for clear definitions in the face of the much-publicized war for talent.
One of the major takeaways from his research was that, as one moves from property management to asset management and then to portfolio management, we begin to see “more independent decision-making, more strategic orientations as opposed to tactical orientations, and more financial metrics as opposed to operational metrics. Portfolio management is more investor-facing, asset management market-facing, and property management tenant-facing.”
The complexity comes in the overlap of those three disciplines. “How we manage those relationships can be beneficial or detrimental to investment performance,” he stated.
While definitions and working dynamics are still a work in progress, Read noted that there are essentially two acumens that mark asset management. The first is financial and the second is human resources, and too often, he noted, aptitude in one area means a deficiency in the other.
The sweet spot, he said, is what he referred to as “comprehensive asset management, when professionals can do high-end financial analysis as well as lead a team. This is the type of asset management we as an industry group want to serve.”
Despite differences in how companies define the asset management function, Read has identified four areas that define good asset managers. “They have strong financial acumen; they can lead a team of people and motivate; they can make decisions even without perfect information; and they have great communication skills.”
Based on the input of the Summit attendees, IREM is currently formulating plans for its next Summit.