Building Value: Ever-Evolving Property Management Profession Combats Age-Old Misconceptions about the Field While Trying to Attract New, Valuable Practitioners

Article excerpt

Richard Muhlebach, CPM, got his first job as a property manager in 1971. While Muhlebach walked with his father through the regional mall he managed, showing off the 85 stores under his charge, his dad asked why the mall needed the newly minted property manager if every store already had a manager.

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Muhlebach said he, too, was unsure about the definition of a property manager's role and the need for the position when he started out in the profession. Now a senior managing director at Kennedy Wilson, an international real estate services and fund management firm headquartered in Beverly Hills, Calif., Muhlebach said vague notions and fundamental misconceptions about the roles and responsibilities of property managers still exist--the results of an evolving profession.

"I think most people don't understand what property managers do," he said. "Within the real estate industry, they have kind of a vague familiarity with the position, but they don't really understand it. And the general public doesn't have a clue."

Bulb changer to business manager

The evolution of a property manager from someone who merely manages a property--unclogging toilets and changing light bulbs--to someone who operates an asset and manages a business, has blurred understanding of the profession, property managers said.

"I've been in the business since 1983, and I've seen the role truly evolve from what once was a custodial position--collecting the rent, paying the bills, a pretty basic level of services--into a profession involving complex budgets, financial investments and contract negotiations," said Lynda Clarke, senior vice president at Norris, Beggs & Simpson, a commercial real estate firm based in Portland, Ore.

The profession became more complicated as more institutional real estate investors like insurance companies, real estate investment trusts and national brokerage firms bought more real estate, said Scott Meadows, senior vice president at Wells Real Estate Funds, a Georgia-based real estate investment management company.

"Institutionalization has driven the need for the profession to keep pace," Meadows said. "When I got into the business 20 years ago, properties were much more locally owned. Today, it is very common to have national investors who have large real estate holdings and require a very high level of professionalism from the staff."

Responsibilities and rewards

As financially sophisticated national investors poured more money into real estate, Clarke said they began to demand an equal level of sophistication from their property managers.

"Now, property managers still have the custodial duties, but also more complicated financial duties," she said. "The institutional clients are demanding more expertise from the property managers, and that has forced the property managers to upgrade their skills."

With the increase in responsibilities, came an increase in compensation. The median annual earnings of salaried property, real estate and community association managers was $36,880 in 2002, according to information from the Bureau of Labor Statistics. The highest-paid 10 percent of property managers earned more than $86,650. Other industry surveys showed salaries and commissions routinely reaching more than $100,000.

Meadows said ten years ago a typical property manager would have made between $35,000 and $45,000. He said today, with the increase in responsibilities, the typical manager earns between $55,000 and $75,000.

"The requirements for a property manager today are dramatically more complex, more challenging and require a very high skill level," said Christopher Lee, president and CEO of Los Angeles-based consulting firm CEL and Associates, "and [managers] need to be paid for the complexity and skill level required."

Complex skill set required

The skill set for a property manager today calls for a unique combination of communication, technical and financial abilities, said Paul Bettano, chief financial officer of Symes Associates, a Massachusetts-based real estate firm. …