Strong Property Management Skills Key in Slumping Economy

“With more and more distressed commercial real estate assets expected to come on stream as a result of serious liquidity and other problems, the need for superior real estate management, marketing and leasing skills—and a proven record of performance—will become increasingly and acutely apparent, says Pamela M. Monroe, President of the Institute of Real Estate Management (IREM)

Monroe and a group of IREM volunteer leaders who experienced the real estate market turmoil in the late 80’s and early 90’s recently convened to share their observations relevant to the current financial crisis. Here are some of their thoughts:

Ø The culprit that triggered the S& L crisis of the early 1990’s was overbuilding; too much supply; not enough demand.

Ø Today’s culprit is excessive leverage and unrealistic appreciation expectations.

Ø While real estate is cyclical, not all property types are at the same place in the cycle at the same time. One property type may be doing well while another may be suffering from overbuilding.

Ø The starting point for managers when dealing with distressed properties, no matter what the circumstances, is to analyze them for best use—short term or long term—based on the owner’s goals.

Ø Advice should be property-specific and location specific.

Ø The end-product of comprehensive research and analysis should be a management plan that includes an analysis of marketplace dynamics; identification of the property’s problems and challenge; identification and analysis of possible solutions; and, finally, a recommended solution that reflects the owner’s goals.

Ø The “devil is in the details,” and thinking “out-of the box” is essential.