Successful professional property management doesn’t just happen without forethought, planning and good administration. To be assured a property manager has the skills to create and administer a good property management plan, look for the professional designation called Certified Property Manager (CPM).
“Those of us who can hang out a shingle and say we are CPMs have knowledge, experience and training to provide services in this area,” said David L. Lane, president, Ridgeway Lane & Associates, Flowood, who was the 2004 national president of the professional association that provides training for the CPM designation, the Institute of Real Estate Management. “The knowledge is gained through professional training by someone like the Institute for Real Estate Management. Of course, additional knowledge is learned in the trenches where you perform day-to-day operations managing the property. The experience just comes from doing your job.”
Lane said it is important when starting to work in property management to be supervised in the field by someone who knows the ropes.
Step by step
With third-party management, the first step is to meet with the owner, and find out the owner’s goals and objectives. Some want to maximize cash flow, while others might want to maximize investment through appreciation. Then the owner’s objectives are used to devise a management plan.
“The first thing is to have a plan that is bought into and directed by the owner, and then carry out that plan in accordance with the owner’s objectives,” Lane said. “Never try to manage without a plan.”
There are good reasons to hire a knowledgeable property management professional rather than trying to do it yourself. It is a lot of work managing property, and an experienced property manager can do it not only better, but less expensively.
“Time is money,” Lane said. “Your typical real estate investor is going to be wasting a lot of money if they use their time to try to manage the property. Most lack the experience of managing a property.”
Lane is not typically seeing a decline in commercial real estate due to the slowing economy, although it makes it harder for small mom and pop tenants to do business.
“Anything that affects the business and causes a downturn makes it harder,” Lane said. “But you find most people seem to be able to weather the storm. Real estate is cyclical by nature, so the strong survive.”
He reports rents are fairly stabilized right now in the area, and there might even be a small decline. There is not a lot of new construction these days. New construction costs have gone up greatly and rents are not going up.
“I say that and then turn around and we are involved in Lost Rabbit and Flowood Town Center, which will both have retail and professional offices in them,” Lane said. “We’re betting that a turn will take place, and we will be there to capture it.”
Merle Flowers, who is president of Flowers Properties, LLC, Southaven, said the commercial market in Desoto County remains steady, but the vacancy rates have increased in the past six months with more inventory coming into the market.
“Several companies have also consolidated operations as a direct result of the sluggish economy,” said Flowers, who serves as a senator representing DeSoto County in the Mississippi Legislature. “Desoto County competes directly with the Memphis market. While the Memphis market has recently offered considerable front end discounts, Desoto County has not yet followed suit. Lease rates have remained stable both at the retail and light industrial segments. My company has a mix of both commercial and light industrial, and we have felt the slowdown. However, I remain optimistic that occupancy rates will increase in the fourth quarter as we progress through this business cycle.”
The largest challenge of the current economic conditions is to run the property as efficiently as possible.
“It is important to control all operation expenses such as taxes, insurance and other operating cost as this savings can be reflected in a fair rental to the lessee,” said Andy Stetelman, president of London & Stetelman Commercial, Hattiesburg. “We are seeing some lessees in these hard times come to their lessor asking for assistance in rent abatement or postponement. Some lessors can provide this, but many have debt service and cannot afford to do so. Commercial rents have not decreased much, but are not increasing either.”
It seems as though all aspects of commercial real estate are becoming more specialized and property management is no exception, he said. Most commercial professionals work around property management services as this is the most labor-intensive facet of the industry as more time is spent on the day-to-day operations of keeping a building properly maintained.
Stetelman said it is prudent for property managers to have a variety of skills such as accounting, maintenance and basic understanding of mechanical operations to plumbing, roofing, electrical heating and air conditioning.
“It is also good to have a good cell phone as a good property manager will wear a good phone out in six months,” Stetelman said. “Cellular South and I have been great partners since 1991 when they opened their first Hattiesburg office in our conference room. It is also good to be involved in professional networking organization as referral of lessees are an important part of our business as well as the training from these organizations are important.”
London & Stetelman Commercial has been in the business for 75 years and has found it helpful to divide its office into leasing, maintenance, collection and accounting.
J. Douglas Molyneaux, president of Grubb & Ellis|Sawyer Commercial, Gulfport, agrees specialization in an important trend in his profession. In large enough markets, professionals are able to specialize in, say, only property management or just office buildings for that matter.
Molyneaux said attention to detail and a customer first attitude are traits that would be helpful to any property manager. Communication and analytical skills are a plus. While the commercial market on the Coast is not growing at a very fast rate, Molyneaux has not seen people going out of business.
“Office space demand generally tracks employment, and specific types of employment such as finance and insurance for example,” he said. “These types of jobs require office space, as opposed to service or construction jobs. We are not seeing any significant growth in office jobs. Demand for new office space is low. We should begin seeing a decline in office rents.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.