Hug your property manager
By: J. David Chapman/January 11, 2024
I have taught property management and have been in the industry for over 20 years.
Property management is an $88 billion business in the U.S. with 291,978 businesses employing 846,318 Americans. But I have to tell you, the last three years have definitely been the most challenging period in my career. As I sit here today and look at the weather forecast for the weekend, I simply pray that we have prepared for the negative three-degree temperatures we will see.
Operators in the property management industry manage residential and nonresidential real estate for property owners. I like the business because it is structurally resistant to economic downturns, primarily as a result of countercyclical demand trends. When the national economy struggles, the homeownership rates trend to decline as consumers and lenders remain cautious, creating demand for rental markets, and therefore, property management. In periods of economic prosperity, the residential market segment tends to weaken as homeownership becomes a more attainable goal and the need for property management services slows. During economic upswings however, the expansion of commercial properties becomes more important to the industry. So, the property management business is nicely hedged by this countercyclical demand.
Property managers have been on the front lines of every challenge that the rental market has faced, particularly from 2020 to 2023. Covid-19 brought new challenges in 2020, and then throw in 2021’s unusual natural disasters. At the end of October 2020, we faced an autumn ice storm, wrecking trees and power lines across central Oklahoma. Roof damage, flooding, electrical risers damage, and properties littered with trees caused several weeks of unbudgeted and unplanned work for property managers and property owners.
In February 2021 we welcomed one of the worst cold snaps in the state’s history with 10 days below freezing and several consecutive days below zero. Accompanying the cold, came 16 inches of snow. Oklahoma’s buildings and homes are simply not designed for this extreme cold weather and thousands experienced frozen pipes despite property managers best efforts. We dealt with busted pipes and the resulting flooding caused by those pipes the remainder of 2021.
Property management is a great career, however 2020 and 2021 will not soon be forgotten by those of us in the industry and the owners we represent. It creates fear when we see negative three-degree temperatures in the forecast.
– J. David Chapman is professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu)