That鈥檚 the question that 乐竞体育赛事直播 President Donald B. Wilkerson, CPM, posed as he pondered the nature of strategic property management for his . Wilkerson writes that property managers should avoid getting so caught up in daily firefighting that they forget the bigger picture:
鈥淲e have to address the needs of our tenants in a timely and professional manner. But we also have to respond--rather proactively provide answers--to our ownership clients. This means looking beyond the day-to-day to see and understand what鈥檚 happening around us in the greater environment of commercial real estate value.鈥�
To that end, he urges members to turn to 乐竞体育赛事直播鈥檚 annual Income/Expense Analysis Reports. 鈥淭he 2018 edition, which was released earlier this month, reveals some interesting trends with which property managers can evaluate the performance of their properties against the larger market and, if necessary, create strategies to enhance that value.鈥�
Such as? Wilkerson takes examples from the condo, traditional apartment, office and retail markets:
鈥淭he ongoing recovery of the single-family housing market translates, at least in part, to a growing set of expectations on the part of potential multifamily occupants, particularly in the condo and co-op market,鈥� he writes. 鈥淭hese include luxury comforts and urban amenities that rival a five star-hotel; integrated retail buildings that include built-in retail elements such as coffee shops and boutiques; and startup housing that allows entrepreneurial millennials to work from home.鈥�
On the apartment side, he reports robust performance, despite the single-family home recovery. In fact, 鈥淕arden buildings reported the highest increase--3.8%--up to $12.56 per square foot. Rents in elevator buildings reported the highest rents and the second highest increase--$20.53 per foot, representing a 3.2% increase.鈥�
He goes on to say that, among low-rises, buildings with less than 25 units posted rents of $13.03 per foot last year, an uptick of 3.4%. Meanwhile, rents in low-rises of 25 units or more logged a 3.0% increase, to $11.29.鈥�
NOI fared well to boot, and the Income/Expense reports reveal that 鈥渆levator buildings top the list, with increases from 6.5% to $11.13 per square foot.鈥� NOI for low-rises with 25 or more units rose 2.7%--to $5.70 per foot in 2017. Garden buildings reported in at $6.74 per square foot in 2017, a 3.5% increase. The only decrease came in low-rise buildings with 12 to 24 units, which also reported the lowest NOI at $5.57 per foot in 2017, a 1.8% decrease from 2016.
In the office market, vacancies were down for suburban and downtown properties, by as much as 3%, depending on the market. But, oddly, collections were down.
In fact they dipped 鈥渇rom $19.76 per square foot in 2016 to $19.66 in 2017 in the suburbs; and from $24.05 per foot in 2016 to $22.19 in the nation鈥檚 downtown markets,鈥� the 乐竞体育赛事直播 president reports. 鈥淥n the other hand, net operating costs were up year over year in both downtown and suburban markets: from $7.41 to $7.63 per foot and from $5.90 to $5.92, respectively.鈥�
Of course, data for the retail segment reveals that sector鈥檚 ongoing issues. 鈥淪hopping centers that are prospering in this period of disruption are being looked at through a different lens,鈥� WIlkerson writes. 鈥淪avvy owners and managers no longer see them strictly as places to purchase clothing and housewares and other products.
鈥淩ather,鈥� the report continues, 鈥渢hey are repositioning their properties as gathering spots, entertainment centers, and places to meet friends and take part in community-like experiences. This is especially true of open-air shopping centers and malls, which more readily lend themselves to this type of environment.鈥� The numbers underscore the sector鈥檚 woes, revealing the downward pressure on gross rents, from $15.22 per square foot in 2016 to $14.57 last year.
鈥淐learly, from market to market, and from product type to product type, the nuances of the marketplace bear close watching for an accurate, comparative picture of performance, for building managers and for our constituents,鈥� Wilkerson concludes.