A good property manager is hard to find if JLL’s Mark Stevens has anything to say about it. They must be good with people, accounting and understand the bones of a building. The hands-on approach is one recognized by Traftin Thompson, LEED green associate and real estate manager with CBRE’s Asset Services.
“A good manager is always prepared for what may happen in the future,” says Thompson.
More sophisticated investors are buying larger portfolios of properties and they have increased reporting clients, which gets pushed down to property management level, adds Stevens. This means more trades and other movement of properties between companies and their preferred management entities. As portfolios grow in size, property managers are faced with a balancing act of being present in more places than before.
“During the most recent economic downturn, companies had to adapt and learn to do more with less,” Thompson says. “The result has been that even as the economy continues to improve and we return to ‘business as usual,’ many owners and their management teams have significantly improved efficiencies. That said, in order to provide a reasonable fee structure to our clients, industrial property managers tend to have several buildings in their portfolio.”
CBRE, Thompson says, has reacted to this issue by staggering small office buildings and large industrial buildings in the same portfolio so buildings “get the attention they deserve.”
“Having managed a 2MSF industrial portfolio in Atlanta prior to moving to Phoenix, I was accustomed to managing large portfolios, so it hasn’t been a difficult transition for me, as my current portfolio is much smaller,” Thompson says.
With the delivery of 5.2MSF of space in 2014 and the anticipated delivery of 4.5MSF in the near future, tenant retention will be of paramount concern, says Anna Riley, regional director of management for Ryan Companies.
“Managers will need to exert greater efforts to assure tenant satisfaction under the constraints of compressed management fees and the demands of portfolio workloads,” Riley adds.
Large industrial developments are breaking ground, despite some high vacancy rates. Southwest Phoenix has a high industrial vacancy of 14.3 percent, according to JLL Q3 reports. Gilbert, Tempe and the airport submarkets are all higher than 10 percent vacancy. Portions of these statistics are tied to obsolescence of existing industrial space.
“There are only a small percentage of older buildings that are truly obsolete,” says Riley. “Owners of older buildings that no longer satisfy the utility and function of the new industrial user have gotten creative in attracting less-traditional uses and in structuring competitive deals to attract an industrial user that can be accommodated by the old formula. Where possible, owners are also making investments to adapt buildings to meet the evolved need.
“As managers, it is our role to provide a well-maintained property with systems that are dependable and efficient at a competitive operating cost. The combined benefit of strong ownership and diligent management is a successful combination regardless of building age.”
What should a good property manager be looking for in him or herself?
“Learn about what the tenant does in your space and what’s important to them,” says Stevens.
Mark Stevens Traftin Thompson Anna Riley