How important is a strong property management division for commercial real estate companies that want to continue to grow? Randel Waites, principal for property management with the Chicago office of Avison Young, says that it’s not only important, it’s critical.
The reason? The commercial real estate industry remains a competitive one. To attract long-term clients, firms need to offer them a full suite of services.
And property management is one of the important divisions that a full-service CRE firm is expected to provide today, Waites said.
“To compete in the market with so many other players, you need a full option of services,” Waites said. “You need the capital transaction, leasing and property management to completely service your clients. And really, the best way to keep a long-term relationship going with clients is to offer that property management service.”
Waites is not alone. The real estate pros working in the property management divisions of CRE companies across the Midwest agree: These divisions are not only steady money makers for companies, they also help firms attract and retain clients.
Stable and predictable
Property management might not be the flashiest of divisions in a typical commercial real estate firm. But it is one of the steadiest. And in a business as competitive as commercial real estate, that’s a bonus, Waites said.
Commercial real estate firms can count on the revenue coming from their property management divisions each year. Sure, clients can come and go. But the revenue production of these divisions is far less volatile than it is, say, for the leasing side of a CRE company.
“It really is the most stable, predictable reoccurring income for a commercial real estate firm,” Waites said. “Property management is just more predictable. It is something that firms know they can rely on.”
The key to growing a property management division is to attract and retain a steady stream of clients who don’t want the hassle of managing their own commercial assets. This sounds obvious, but the trick lies in convincing potential clients that your property management division will provide them with the best service.
The property management divisions of companies vary in their approaches, usually depending on their sizes. Waites said that Avison Young’s property management division, for instance, prides itself on being large enough to provide all the resources that clients expect while also being nimble and flexible enough to meet any unique needs that clients might have.
Waites said that his division has an entrepreneurial mindset. The pros who work here understand how difficult it can be to build and maintain a business. So they make sure that their clients don’t have to add worrying about the management of their properties to their list of daily worries.
“We like to say that we are more nimble than our competitors,” Waites said. “To me, it’s about building a better mousetrap.”
The property management divisions serving Illinois deal with a wide variety of buildings. But certain property types are more common.
Waites, for example, said that Avison Young’s property management division targets retail, office and industrial owners. And these days, industrial is a particularly hot area.
“The industrial market here is very strong,” Waites said. “That’s not much different than it is around the country. It’s also a great market to serve when it comes to property management. Many of the owners who get into the industrial market, have little interest in having to manage these properties. So they call on companies like ours to take over that job. This is a segment that I only see growing in the near future.”