GUEST COMMENTARY: Property management: The other side of real estate coin
Arguably, real estate’s most tangible segment is residential sales — the buying and selling of homes. Why? Likely, this connection can be contributed to the immediacy that most individuals have with the concept and process. It is part of the “American Dream” to own a little piece of land with a three-bedroom, two-bath house, white shutters, and a picket fence — right?
However, ignoring the other side of the real estate coin means missing out on a world of economic drivers, career opportunities, and investment potential. The other side I’m referring to is property management – the leasing or renting of real estate as a means of producing income.
Disclaimer: Be careful not to let the image of landlords, or more accurately “slumlords,” narrow your vision of what property management actually involves. This global industry is comprised of both commercial and residential income-producing property. If it’s leased, it’s being managed.
Commercial applications involve the management of where people work — office buildings/parks, retail structures, even medical, research, and industrial facilities. Residential involves the management of where people live — apartments, condominiums/townhomes, single-family houses, or manufactured housing.
Looking closer at certain segments, roughly 35 percent of Americans rent their housing — this number is closer to 40 percent for the local Anchorage market. Nationally, renters form over 40 million households, and about one-third of those renters live in an apartment — those buildings with 5+ units.
The National Apartment Association and the National Multi Housing Council released a report from their partnered effort to quantify the economic impact of the apartment industry. Their findings indicated that 19.3 million apartment homes across the nation directly contributed $67.9 billion in existing apartment operations and directly employed 686,000 on-site positions to manage and maintain its assets in 2011, alone. These numbers are impressive, but they are only one submarket of one segment of this industry.
Locally, the Municipality of Anchorage has 10,412 commercial properties with a total assessed value of $9.9 billion. BOMA International estimates that the office market in Anchorage, alone, contributes $103 million to Alaska economy and supports over 5,000 jobs.
With recent improvements in technology, shifting legislation, and evolving density needs, income-producing assets continue to increase in scale and complexity. Today’s property managers can be responsible for tens to hundreds of millions of dollars in assets with annual operating revenues in the millions. Historically, these managers were promoted from entry-level positions with no requirements for a college degree.
Even today, only a handful of universities across the nation have a property management degree offering. Ball State University and the University of Wisconsin-Stout, two schools with four-year degree programs in property management, will be the first to tell you that companies are excited by the great strides these programs and their students have made. Several quote rapid progression, along with a refreshing commitment to the profession as reasons they keep coming back to recruit from these schools.
Respectively, graduates of these programs boast about the experiences they had as students, citing the job shadowing opportunities, internships, and focused curriculum that gave them a real competitive advantage entering the workforce. More importantly, many graduates will tell you they received multiple offers prior to graduation, and their only worry was choosing the company that would be the best fit for them.
In Alaska, Dean Weidner, the founder and owner of Weidner Apartment Homes, has endowed $4 million to the University of Alaska Anchorage to create and support a property management and real estate program in the College of Business and Public Policy. The college has been reaching out to national organizations like the Institute of Real Estate Management and the National Apartment Association, along with local real estate providers to build, promote, and support the program.
Today, Alaskan students have the opportunity to study this exciting field in one of only a few property management programs in the nation, and Alaskan companies are taking notice.
Joe Beedle, president and CEO of Northrim Bank, says, “Quality property managers are essential to a strong real estate industry and UAA’s new program will allow students an opportunity to receive training that will better equip them for a job that will fill a demand in Alaska. The management program’s specialized focus on real estate and property management will be an asset to the community.”
The economic impact that this industry has, coupled with the ongoing sophistication of its management and career opportunities, certainly gives reason for many to be excited.
Terry Fields is Term Assistant Professor of Property Management and Real Estate at UAA’s College of Business and Public Policy. Andrew Romerdahl is the Weidner Chair of Property Management and Real Estate.