The Biggest Property Management Stories in 2014
After watching The Wolf of Wall Street, we're convinced the biggest problem for property managers in 2014 will be discouraging tenants from bringing in nude marching bands. But to be sure, we asked leaders in the industry for the top three trends they'll be looking at this year.
Randy Buddemeyer, President of Property Management Services, Newmark Grubb Knight Frank
1) Continued consolidation of service providers—Expect to see more M&A activity in the property management space, particularly among larger firms expanding into new geographic areas or adding a service line into markets in which they already operate. It's advantageous to partner with a full-service, national firm focusing on all property types, Randy says, especially if clients own properties in more than one sector. This creates synergies that otherwise wouldn’t exist.
2) Movement back to CBDs—As more tenants, especially tech types, look to lease space in cities, they’re depending less on vehicles and require different amenities than those found in suburban office buildings. (They don't want to drive around their building in minivans.)
3) Sustainability—The focus on greening buildings slowed during the recession, but it's gaining traction again, Randy says. Many funds require sustainability as part of their investment criteria, so buildings with a path to get there or the capital to pull it off will reap the rewards.
Bill Grillo, Senior Managing Director & Principal, Cassidy Turley
1) The technology shift—Property managers have moved from radios to smartphones, allowing them to work remotely and provide continuous access. "You don’t have to be tied to your desk anymore,” Bill says, but the challenge is balancing work and life. He’s also watching for the ever-changing impact of technology and how it'll affect operating expenses.
2) Emergency preparedness—There will be a continued focus on being prepared and ready for an event as it unfolds, instead of saying, "We should have done this." Bill quotes John Wooden: "Failing to prepare is preparing to fail."
3) Transformation of property managers into asset managers—You need the right talent to keep up with building owner demands. Bill’s firm revamped its training program (Cassidy Turley University) to reflect this. Having the right chemistry is essential to a successful relationship.
Steve Core, President, RiverRock Real Estate Group
1) The economy—Where the economy is going will affect how and where RiverRock’s clients will buy and develop buildings. The company recently branched into Denver to meet clients' needs there.
2) Technology implementation—More buildings will adopt fully integrated software that merges property management, maintenance, and customer service interfaces, "making it easier to do our jobs," Steve says. And technology is also encouraging tenants to look at open, collaborative workspaces, so RiverRock has to take that into account while marketing space to maximize its appeal.
3) New California laws—Assembly Bill 1103, which was passed in ’07, is finally going into play and mandates energy benchmarking and disclosures. (Owners and managers will need to closely monitor and report consumption using Energy Star.) Although management firms have been gearing up for the new requirement, not all utility providers are prepared and are still working out the bugs in their systems. Additionally, new construction requirements become effective January, impacting tenant improvement and capital upgrades. "We’ll be tracking that and others closely, especially how they impact clients’ costs."
Bryce Egbert, Director of Business Development, Vestar
1) The next generation of store design—Bryce (above, center with colleagues Jeff Axtell and Jeff Miyaoka) is seeing changes in store prototypes, and understanding and accommodating the new plans of major retailers is going to be an important component in attracting and retaining the best national tenants.
2) Technology to predict shopping center success—There's tech to keep close track of tenant sales, shopping patterns, and other important indicators. "This data allows our leasing oversight and in-house marketing teams to create strategic plans, which are based on what the community wants," Bryce says. (Keep an eye out for tech telling us to build metal and hard drive stores; that's how we'll know our robots have become sentient.)
3) Sustainability in retail—Bryce says Vestar is constantly looking to improve efficiencies in water and energy, while also providing important technologies to the community such as electric vehicle charging stations.