by Brianna Crandall — November 15, 2010—Despite signs of an upturn in the economy, real estate managers anticipate they will increasingly be pressured over the coming year to grow net operating income (NOI) through cost controls and operating efficiencies, continuing the trend that has been seen over the last 12 months. This conclusion was drawn according to overwhelming agreement in a soft survey of hundreds of local, national and international leaders at a recent conference of the Institute of Real Estate Management (IREM).
Respondents observed that the ability to raise rents is very limited, making cost-control measures critical. Savings are being realized through lowering property taxes through appeal plus cutting man-hours, some observed. At least one respondent suggested that a new, second wave of receiverships is possible, which will add to this pressure. Most vulnerable to foreclosure are Class B office properties and properties with vacancies or near-term vacancies, respondents said. They noted that the increase in receiverships could happen if rents do not increase substantially in the next two years.
Approximately 68 percent of respondents saw an increase in demand for third-party professional management services over the last year from investors “inheriting” distressed properties who had not been educated to manage real estate assets and from owners who made the business decision to outsource their management. A slightly higher number (70 percent), expect this demand to continue to grow over the next 12 months, with 24 percent saying it will stay the same, and six percent saying it will decline.
Three quarters (75 percent) of those responding said that they had seen an increase in the use of social media to better manage their properties and promote their companies over the last 12 months, while 25 percent indicated no change. Nearly 9 in 10 (86 percent) expect an increase in social media usage as a management tool in the next 12 months, especially in the multi-family sector where everything moves more quickly. Some 14 percent said usage would remain the same but no one said it would decline. Many acknowledged that they need to learn to use social media more efficiently and effectively.
Because the pool of potential employees has increased as other professions have suffered, 51 percent of the respondents said that their ability to attract and retain talented employees has increased in the current business climate, 32 percent said it has stayed the same, and 18 percent said it had declined. Looking out 12 months, 57 percent said the climate for hiring and retaining talent will becoming increasingly favorable, 31 percent said it will remain the same, and 13 percent said it will decline. Some also mentioned that increased unemployment has resulted in qualified and experienced property managers being available.
