How do property managers envision themselves? Are they building managers? Property managers? Real estate managers? Given the advancements that have been made in the profession over the past 15 years or so, if today you are not seeing yourself as COO of your asset you might be undervaluing your worth.
For, in fact, as manager, you are the chief operating officer of that asset, managing a multi-million-dollar company asset for the near-, mid- and long-range goals of the ownership entity. It falls squarely on the shoulders of the asset COO to take front-line responsibility for the fiscal, administrative and operational health of that property or properties, in tight alignment with the asset manager.
Such a repositioning of the role has major implications for a variety of relationships. As it relates to occupants, whether they be residents or commercial tenants, the relationship elevates from manager-and-tenant to a more B-to-C model, business to client.
Facing in the other direction, the title more accurately reflects the true relationship of that other member of the C-suite, the asset manager. To continue the analogy, if the building manager is the COO, the asset manager is the CFO and both report to the owner/investor, the chief executive officer.
It’s an accurate replication of the industry today. Technological changes, advances in the courses of study pertaining to real estate in general and real estate management in particular and the sheer need for traditional building managers to shoulder more fiscal responsibility have all resulted in a new level of sophistication for management practitioners.
As was documented in IREM’s recent white paper on the relationship between the two disciplines: “We must consider the proliferation of computer-based operational and analytical tools that support the work, as well as the availability of more educational programs,—at the under-graduate and post-graduate level. This higher education focused on real estate managers naturally leads to a more sophisticated professional community.”
“The property manager’s role is changing,” the white paper continues, “as asset managers—themselves squeezed by ownership entities to do more—increasingly turn to their on-site team members for more financial analysis.”
In preparation for the study, we sponsored a Job Analysis Survey. More than 1,400 real estate management professionals across North America participated in the survey, rating the importance of 155 activities related to real estate management and 110 areas of critical knowledge.
Among the activities rated important by asset/portfolio managers and property managers were: Collaborating with property owner(s) and/or board of directors to develop ownership goals and objectives; preparing annual budgets, e.g., operating, capital, marketing; presenting annual budgets for approval; and presenting financial and/or operating reports to owners and/or boards, e.g., balance sheets and budget variances. Clearly, we’re no longer talking about yesterday’s building manager.
We must be clear here that asset management and property management remain two separate and distinct functions. What the industry is experiencing is a closer alignment of those two disciplines in the assignment of specialized tasks—all for the good of the CEO. Possible exceptions to that rule would be firms such as mine, where property managers are taking over the dual role of understanding the asset and managing it directly for the owner.
Today’s asset COO is doing far more than overseeing rental payments and landscaping contracts. He/she is diving much deeper than NOI to help unlock the long-range income potential of the business unit they oversee—the built environment.
With more than 30 years of property management experience, Chris Mellen, CPM, is 2016 president of IREM. Mellen is also vice president of property management for the Boston-based Simon Companies, supervising the day-to-day operations of all properties in the firm’s portfolio.