As I travel the country for the Institute of Real Estate Management, I have the opportunity to meet with many young professionals and college students considering careers in commercial real estate. It should come as no surprise that I let them know the great opportunities that await them in the management disciplines.
I say disciplines because increasingly, we at IREM are engaging with institutional asset managers and embracing the entire spectrum of management opportunities. This is especially embodied in two watershed events. The first was the Commercial Summit we held in Chicago this past January, wherein representatives from major institutions and third-party management firms came together to share their market-leading thoughts on industry direction. In fact, this year marked the second annual Summit.
The second major event is the release by our publications division of Real Estate Asset Management, a Process and a Profession, by Dustin Read, PhD/JD.
These events bring to center stage the increasingly intricate relationship that exists between these two disciplines and the very different mindsets that make for success in each. It is important to understand this relationship because, of all the potential career paths a young professional can take, I believe property and asset management are the two most misunderstood.
Read, by the way, agrees, and in the executive summary of his book, he says asset management, “is nonetheless poorly understood outside, and to some degree inside, the real estate industry due to the use of inconsistent terminology and differences in the organizational structure of companies specializing in the ownership and oversight of income-producing properties. The confusion is problematic to the extent that it prevents talented individuals from pursuing careers in asset management or impinges upon the development of supportive services for those already working in the field.” And I believe the same can be said for property management.
As presenters at the Summit demonstrated (Read was among them), at their core, asset managers have a strong financial management orientation, and the best join this with strong human resources and team-building capabilities. And while, yes, property managers must have strong operational skills, increasingly, this is being married to a strong financial aptitude and strategic understanding.
In every profession there are those practitioners who define their roles within very narrow parameters and essentially punch in and out every day. Essentially this thinking is very internal, while best practices in property management increasingly point to an external view.
The property managers who shine—and advance—are those who go beyond the basics. The day of the property manager who limited herself or himself to understanding all the components of an elevator are over. I try to instruct my managers that they have to start thinking like asset managers, and focus on driving value for the owner/investor—hence the need for a strong financial footing.
Cutting-edge property managers today have a keen eye for how to drive asset value, a talent that really helps build a stronger relationship between the asset and property manager. With a more external view of the asset, property managers now fully face such issues as the impacts of lease-up and capital improvements, and how that property is positioned in the portfolio comparative to other competitive businesses.
So they have to know not only what’s going on with the asset, but what’s going on in the market. In other words, the successful property manager today is taking a more external, asset management-oriented view.
This is a major change, in both the day-to-day reality of what property management is, and in the relationship between asset and property management. It is an especially critical change as asset managers themselves are increasingly squeezed to take on additional roles in the service of the portfolio managers and/or ownership entities to whom they report.
This is a recipe for opportunity for young professionals. IREM supports 25 colleges and universities with text and materials on real estate management to spread the gospel of this exciting industry among those who would form the next generation of property managers. What’s more, as David Funk, managing editor of the SelectLeaders Job Barometer, told the attendees of the January Commercial Summit, next to finance and investment, property management and asset/portfolio management scored the greatest number of job postings, outpacing more visible disciplines such as brokerage, acquisitions and development.
With the growing financial acumen of property managers practicing today and the clear and present need for property and asset managers, it is clear that the management disciplines offer a rich source of opportunity for young professionals today.
Michael T. Lanning is 2017 president of IREM. In addition, he serves as senior vice president and city leader for the Cushman & Wakefield, AMO, office in Kansas City, Mo.