The down cycle in commercial real estate is giving facility and property managers a chance to prove their worth.
The lower volume of commercial real estate transactions has led to a bigger emphasis on managing existing assets, a factor that’s helping facility and property management stand out as career options.
“Lots of things have been learned recently about the field,” says David Funk, director of Cornell University’s Baker Program in Real Estate. “Over the last four years, we’ve defaulted to managing assets and tenant relations as best we can in order to get through.”
In the first quarter of 2012, Cornell’s Job Barometer Team (which tracks 40 job functions in the market) found asset management to be No. 1 on the list of overall career opportunities in commercial real estate. Property/facility management was No. 2, and accounting was No. 3. “Those three job functions accounted for 35% of all commercial real estate jobs posted in the first quarter,” says Funk. “That’s staggering.”
Looking for Ways to Create New Value
This sharper focus on managing existing buildings gives property and facility managers the opportunity to prove they can create value and profit. “Now, more than ever, there’s a sense that property and facility management are viewed as a critical part of the overall business operation,” Funk says.
When property and facility managers discover unique ways for their facilities to earn income, it emphasizes the importance of maximizing building value and garners attention from company leaders. “You have to get creative on how to keep tenants happy, and how to create more income for the property,” says Kristen Apple-Dunne, senior property manager at The Offices of South Coast Plaza in Costa Mesa, CA. “Do you have space you can convert into rental storage areas or empty parking stalls you can lease? As a facility or property manager, you can come up with all kinds of things to capture more revenue and add value.”
Organizational shifts in occupancy also reinforce the value of property management. When Anthony LoPinto, real estate global sector leader and office managing director of Korn/Ferry International’s New York City office, first entered the property management world, IBM’s revolutionary hoteling concepts were just beginning, and while consulting firms like Deloitte were implementing hoteling, it never took deep roots among corporations. LoPinto sees that changing now and is confident that organizational transformations like these will alter the facility and property management career path.
“Office space is going to be used differently,” he explains. “Configuration of office space is going to change, and the physical requirements associated with running a business are also going to change.”
Property and facility managers will increasingly work with the C-suite to find the best ways to manage and adapt to changes in organizational structure. “One of the things we’ve seen is that people are attracted to a career in property management once they know more about it,” says William Grillo, senior managing director and principal at Cassidy Turley in Washington, DC. “It’s not a profession that many people think about right away, but it’s a very accommodating career path with great potential for growth.”
Springboards of Upward Mobility
LoPinto refers to facility and property management as foundations and says there’s no better way to learn the ins and outs of a commercial building than managing it day-to-day.
Funk agrees and believes that much of the commercial real estate bubble burst had to do with people not understanding how buildings operate, as billions of dollars were pulled out of commercial properties when it was time to refinance.
Education and training are also key parts of the learning curve. Tony Long, president of Asset Services for CBRE, notes that “real estate professionals today need to be in a constant state of continuing education about the assets they manage and the overall market.”
Serving in the facility or property management role also offers professionals a chance to gain skills for future commercial real estate opportunities. Funk explains that many corporations ask a member of their property or facility management staff to serve on investment committees. “That kind of experience can be an introduction for a young person into acquisitions and other commercial real estate roles,” he says.
In most organizations, facility and property managers are involved with almost every aspect of the building, from managing tenant relations and energy costs to managing leases. “You start to understand the lease and clauses, and you understand what tenants are looking for,” says Apple-Dunne. After being exposed to professional situations like lease negotiations, property managers walk away with a better understanding of commercial real estate transactions from start to finish – an advantage for a career path like brokerage.
“Property managers are exposed to points of leases that may seem minor at the time of negotiation,” says Apple-Dunne. “For example, reaching agreement on certain operating expense exclusions can be very time consuming. But having that property management background as you move into another commercial real estate role helps you understand these nuances.”
For new college graduates with aspirations for investing or developing, property management is a good way to get started. “You can’t always find a job right away as an investor, but you can often secure an opportunity on the property management side of the business, which can end up being an effective entry point into investing,” says LoPinto.
Depending on the organization, property managers may also spend some of their time doing due diligence and underwriting, which can also pave the way for careers in private equity. “We see that transition a lot,” says Funk. “It’s tough to break into private equity, but property management is a way to get a foothold.”
Property managers with a few years’ successful experience can find new opportunities because most companies are open to moving the best performers into the positions that most interest them. Donna Bernardi Paul, human resources senior vice president and principal at Cassidy Turley in Washington, DC, says that her organization is more than willing to let high-performing property managers explore other areas of career interest. This approach keeps the company functioning well and the star employees happy.
Cassidy Turley recently had a property manager who expressed interest in moving into brokerage – until he talked to the company’s brokers and learned more about the job. “We have newer recruits and interns experience different disciplines within the company. They spend time with property managers, accountants, facilities engineers, etc., so they can see what goes on behind the scenes,” says Grillo.
Because buildings will always need management, Apple-Dunne says a property or facility management role can be a more stable place than development or brokerage.
“In those fields, you have hot times and cold times,” she says. “You don’t have those extremes in property management. In economic times like these, when there’s not as much leasing activity or commercial development, property and facility management are the only paths into the commercial real estate industry. You might love the career, or you might want to use it as a launching pad for something else, but it gets you experience either way.”
Joe Markling is chair and chief-elected officer of the Building Owners and Managers Association (BOMA) International and Managing Director, Strategic Accounts, CBRE. He can be reached at [email protected].