More than 280 commercial real estate professionals packed into Germania Place to attend last Thursday’s Metro-Chicago Apartment Summit hosted by Illinois Real Estate Journal. Patrick Tuohy, vice president of Marquette Bank, kicked off the program by introducing keynote speaker Michael Daniels, chief operating officer of Cagan Management Group.
Daniels got his start at Cagan early on during his junior and senior years in high school when he took on custodial cleaning duties at two of the company’s properties. Later on, while he was studying in college to become a CPA, Daniels took on a property management role with Cagan. Eventually, Daniels abandoned the idea of becoming a CPA and instead pursued a broker’s license. Today, Daniels oversees a staff of more than 60 people, comprised of managers and administrative and financial staff.
Daniels said one of the challenges Cagan faces today as a property management firm is embracing technology.
“We are finding that the residents are becoming emboldened, as they have no need for personal interaction and email and text conversations seem to make people more demanding,” he said. “The Google search engine makes them experts in everything and Yelp reviews are held as a hammer above your head.”
Daniels added that he believes resident portals and Web-based services will be the norm in the near future across the full spectrum of real estate properties. He also said management companies will need to provide Web-based leasing processes, from application to electronic lease signatures. The latest software, he noted, hosts large amounts of data, including floor plans, energy use data and property photos and descriptions that can be sent via e-mail or accessed on the properties’ Web page.
“Potential residents are beginning to demand these and will not consider properties that do not provide them,” he said.
Another innovation taking place is year-round leasing, Daniels said.
“The traditional May and September expiration dates in Chicago are becoming obsolete,” he said. “Although there are a few slow months you may want to avoid, the flexible lease now seems to be the norm with many operators.”
Additionally, the market in 2014 is once again witnessing a rise in values, according to Daniels.
“I think we are in a situation now that has properties becoming overvalued only for buyers with limited cash but a good investment for those with plenty of cash, and this seems to be trending for the near future,” he said. “This run-up is more sustainable in my opinion than the past run-up because the current crop of buyers are putting more money down or paying cash for their properties.”
Daniels also said future condo conversion projects are still an option if mortgage rates remain low, adding that a new young crop of buyers is currently saving up for the necessary down payment and will be ready to buy.
Also, it appears as though banks are loosening up a little in 2014, Daniels said.
“Does that worry me a little bit? Yes,” Daniels said. “Sizeable loans on higher priced properties could face some of the trouble if rates rise on adjustment or balloon. Rent increases are becoming more modest recently as new products hit the market.
“All in all, with a proper understanding and analysis of the markets you are entering, real estate is still the one investment that has something for everyone – conservative, risk taker or somewhere in between,” Daniels said.
