Formed in the hard-luck environment of the Great Depression, the Institute of Real Estate Management (IREM) is intent on sending a message that it is keeping pace with the fast rate of change in commercial real estate.
As if to underscore the relevance of the 16,191-member organization, Chicago-based IREM, which is celebrating its 70th anniversary this year, is launching a set of new services and educational programs that officials say will set new “best-practice” guidelines not only for the property management field, but also for commercial real estate as a whole.
Since its inception in 1933, IREM's philosophy has been one of “performing the work, documenting it and documenting the results,” according to Jane O'Sullivan, IREM director of education. Now IREM is dedicated not only to boosting the professional skills of property managers, but also to staking out a larger leadership role in the real estate industry.
“In the 20th century, the old maxim was that knowledge was power,” says John Martens, IREM vice president in charge of marketing. In the 21st century, “power is sharing information with others.”
One of the most touted initiatives is the IREM FIRST Web site, which will contain six databases. Beyond useful, if prosaic, features such as jobs postings and downloadable contract documents, the Web site also will feature a best practices forum covering 144 topics.
Touted as a “template of information in live-chat form,” according to Chuck Achilles, vice president of research and legislation, the information forums are constantly being updated with fresh postings on such topics as environmental issues, employee training, human resources and client satisfaction, in addition to separate forums on different types of commercial property.
“What we are trying to do is be the source for whoever in the industry needs information,” says IREM president Patricia Nooney, who also is senior vice president of asset management in the St. Louis office of American Spectrum Realty Inc.
Funded largely through member dues and the proceeds of seminars, courses and other special events, IREM bills itself primarily as an educational organization. Its instructors are offering courses in skills that scarcely existed 10 years ago, let alone in 1933, the year IREM was founded. Emerging disciplines, such as psychographics, mold detection and keeping abreast of sophisticated accounting software are among the current offerings.
Changing Role of Property Managers
IREM is making an effort to stay current as an advocate for the property management industry, which is being confronted with fundamental changes in real estate, according to Nooney. “What has changed the most (in recent years) is that most of the ownership of real estate has consolidated into big owners, as opposed to many small entrepreneurs,” Nooney says.
In the REIT industry, for example, the total number of shopping center REITS fell from 31 in 2000 to 21 in early 2003, while the number of regional-mall REITs declined from 12 to nine (see May 2003, NREI).
IREM's own history mirrors the evolution of property management as a profession. Far from the passive caretaker of yesteryear, the property manger has become a consultant who continuously looks for ways to lower costs, retain tenants and enhance net operating income.
In creating the new Web site and course offerings, IREM is trying to respond to demand for more training on the part of property managers.
“The level of skill and professionalism” among property managers “has increased ten-fold just in the past five to seven years,” says Mez Birdie, an asset manager who is senior vice president of portfolio management at Commercial Net Lease Realty of Orlando, Fla.
A job analysis conducted by IREM last year, which identified 80 different property management tasks, indicated that the difference between the responsibilities of asset managers and property managers is increasingly blurred.
“When a manager is interviewed these days, an owner will say to them, ‘don't tell me how great you are,” Birdie says. “Show me some case studies of properties you have managed.’” The job candidate who can produce those case studies that show results, he explains, is “likely the one who gets the assignment.”
Brainchild of the Depression
The professional competence of property managers has followed a steep upward curve since 1933, when IREM was created. During that year at the height of the Great Depression, nearly one-quarter of working Americans were without jobs, and annual household income had fallen from $2,300 to $1,500 in only four years.
The situation in commercial real estate was not much brighter. The number of non-farm foreclosures rose from 116,000 in 1928 to a peak of 252,400 in 1933. Lenders swamped by the unexpected volume of foreclosures or “real-estate owned” properties searched for qualified managers.
Yet many self-described property managers lacked either competence or honesty — or both. “There were a lot of unethical practices, such as people disappearing with security deposits and rent changing unpredictably,” says Nooney. “There was a potential for owners to demand a kickback from vendors, saying in effect, ‘I will let you have the concession in this building, if you kick me back a piece of the action.’”
With the newly minted professional designation, the founders of IREM appeared determined to set themselves apart from the con artists and self-described “experts.”
Even in the early years, “we were delivering managers capable of achieving bottom-line performance and meeting consistent goals and objectives,” says Anthony Smith, IREM secretary-treasurer who also is vice chair of CB Richard Ellis Mid South in Norfolk, Va. From the beginning, IREM members were required to pass a written exam demonstrating professional skills.
Seventy years later, the real estate industry has grown beyond recognition in size, wealth and financial sophistication. O'Sullivan explains that to help managers become more competitive, “we teach the practical applications: How do you improve cash flow and thereby enhance value? How do you analyze the results of what you have done in a way that shows the value has indeed been enhanced?”
Keeping Tabs on Cultural Change
Property managers also must respond to societal and cultural change. IREM course offerings take property managers into unfamiliar waters — such as the emerging discipline of psychographics — the science of gauging the cultural preferences of shoppers.
Richard Muhlebach, a former IREM president who is senior managing director of Kennedy-Wilson Properties Northwest Ltd. of Bellevue, Wash., defines psychographics as the particular tastes of different ethnic groups. For owners and managers, psychographics is a way to keep retail properties fully occupied and well trafficked by responding to the needs of local shoppers, according to Muhlebach, who teaches a course on psychographics for IREM.
With many urban neighborhoods undergoing demographic changes — Latinos displacing African-Americans in South Central Los Angeles, Russians moving into New York and Chinese moving into Seattle — the property manager has to adapt to new patterns. “In areas with a large ethnic population,” Muhlebach says, “you need to understand the customs of the customer base.”
Charting IREM's Milestones
1933: IREM founded to educate real estate managers and certify their competence and professionalism.
1934: First “Journal of Property Management” published.
1935: IREM's first education course is presented in Chicago.
1938: CPM designation is created.
1945: Accredited Management Organization (AMO) designation established.
1972: Member Joseph Murray receives first J. Wallace Paletou award for devotion to the improvement of the real estate management industry.
1975: Accredited Residential Manager program established within IREM.
1976: Institute releases popular “Practical Apartment Management” text, the first IREM book to focus exclusively on apartment management.
1977: IREM Foundation established as the Institute's research and administrative support arm.
1986: Tung Fung of Hong Kong and Liu Thai Ker of Singapore approved as first CPM members outside of North America under invitational program.
1990: IREM releases “Before Disaster Strikes: Developing an Emergency Procedure” manual.
1994: Beverly Roachell serves as Institute's first female president.
1995: Institute signs first protocol agreement with Russian Guild of Realtors, marking the beginning of IREM's expansion outside North America.
1998: First IREM international chapter outside of North America is formed in Poland.
2001: First Capitol Hill Visit/Leadership and Legislative Conference promotes awareness of industry's legislative concerns.
2002: IREM launches associate membership program, making its resources accessible to those who don't qualify for IREM credentials.
2003: First IREM/CCIM Commercial Real Estate Conference brings together commercial mortgage brokers and property managers.