Rough year for property managers

By: J. David Chapman/February 18, 2021

I have taught property management and have been in the industry for over 20 years. I love the business and it has been a meaningful part of my real estate company. 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, managing property in 2020, and now 2021, has definitely been the most challenging period in my career.

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 rate tends to decline as consumers and lenders remain cautious, creating demand for rental markets, and therefore, property management. In periods of economic prosperity, the rental 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 in 2020 and 2021. We have been spread thin trying to prevent the spread of COVID-19 within our properties, while simultaneously trying to avert the damage that missed rent payments have on owners and properties. Then, throw in this year’s unusual natural disasters.

At the end of October, 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.

This week, we endured 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 have experienced frozen pipes despite property managers’ best efforts. We will be dealing with busted pipes and the resulting flooding caused by those pipes in the coming weeks.

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.

J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).