June 2, 2023
Property managers play a crucial role in the financial health of properties and CRE portfolios. We're examining the duties, challenges, and set of skills it takes to get the job done. Plus, how Prophia is making that job a lot easier.
Commercial real estate property managers often have to wear numerous hats at once. They must always be knowledgeable of the maintenance and improvement needs of each property in their charge as well as hold various rent and fee collection dates in mind. They must be versed in legalese as well as tenant advocates with an action-oriented mentality. And above all, this task list takes a high level of organization and accountability.
If you’re curious about becoming a property manager or how Prophia can make the job and duties of a property manager that much easier on a daily basis, read on and discover something new about this very essential role in CRE.
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What Is a Property Manager?
What Does a Prop Manager Do?
What Are Some Challenges of Prop Management?
Optimizing Prop Manager Tasks
The Property Manager's Skillset
Common Prop Management Success Metrics & KPIs
What Is a Property Manager?
A property manager in CRE is an individual or, sometimes, a company that is responsible for overseeing the day-to-day operations and management of real estate properties on behalf of the property owner. Their primary role is to ensure that the property is well-maintained, tenants are satisfied, and the financial aspects of the property are managed efficiently.
The specific duties of a property manager can vary depending on the type and size of the property, as well as the agreements made with the property owner. However, on any given day, the property manager responds to requests from tenants, works symbiotically with the building’s operations team to ensure everything is running smoothly, and helps plan finances according to upcoming projects, building vacancies, etc.
What Does a Property Manager Do on a Weekly Basis?
Managing property maintenance, finances, and tenant relationships might be a significant part of the property manager’s job, but there are additional responsibilities these individuals carry out on a regular basis to ensure every squarefoot of a commercial asset is up to snuff—from compliance standards to the appropriate positioning in the market.
Management duties: Tenant relations, building financials, and property maintenance
As we mentioned, maintaining tenant relationships is one of the major responsibilities of property managers in CRE. These individuals act as a point of contact for tenants. They handle inquiries, address concerns, and ensure tenant satisfaction. This includes leasing units, collecting rent, handling evictions if necessary, and managing tenant turnovers.
In addition to working with tenants, property managers also oversee the maintenance and repairs of their commercial properties, coordinating with contractors and service providers to ensure that necessary repairs are carried out promptly and within budget. They may even conduct regular inspections to identify any maintenance issues.
One of the biggest responsibilities of a property manager, however, is managing finances like rent collection, budgeting, and financial reporting. They may also be responsible for setting rental rates, conducting market research to determine competitive prices, and managing expenses.
Administrative duties: Legalese and lease abstracts
In addition to the daily and weekly management of things like building repairs, upgrades, and responding to tenant inquiries, commercial property managers are also responsible for a number of administrative duties that play an incredibly important role in building management and profitability.
Somewhat regularly, property managers perform lease abstraction to distill the pertinent information in on-going commercial lease agreements to capture all relevant concepts, terms, tenant rights, and encumbrances. This exercise allows property managers to effectively manage relationships with tenants, save time in the due diligence process, and ultimately help manage the property’s ROI.
Lease abstracts are an essential part of property management duties additionally, because they allow prop managers to condense all of the contractual legalese into a format that is easy-to-read. It is however important for property managers to understand and be current on relevant laws, regulations, and building codes they would encounter in the standard commercial lease.
What Are Some of the Challenges of Prop Management?
Property management, like many roles in CRE, requires individuals to be multifaceted in their skillset and highly capable. While there is some universality to the types of challenges prop managers face on a daily basis, factors like the property’s location, market, property type, and clientele can make each property management role slightly different.
For instance, commercial properties in areas of the country with extreme weather or earthquakes will have to undergo more routine maintenance and building inspections to ensure the structure is adhering to safety compliances.
Additionally, industrial properties will have entirely different maintenance requirements and compliance levels than office buildings or shopping centers. Properties in volatile markets might require a different vacancy strategy than one in markets with more steadiness.
Tenant relationships play an important role in a property manager’s success metrics, so dealing with complaints or inquiries that are immediate in nature can make a property manager’s job people-facing and constantly pulling these individuals in different directions.
Prophia Is on the Transformative Edge of Lease Management and Abstraction
While chasing stray emails and discovering buried dates is a small sliver of a property manager’s daily, time-consuming tasks, perhaps the most time-expensive exercise is lease abstraction. This is largely because many lease abstracts are run by hand, requiring property managers to read and synthesize dense commercial contracts to generate a new summary any time an amendment, clause, or simple date is changed throughout the life of the lease (which happens frequently).
There are already tools available to CRE professionals for accounting purposes as well as due diligence, but Prophia is a first-of-its-kind tool capable of automated lease abstraction. Simply drag and drop the lease into the platform and Prophia will automatically sift through and extract key terms contained in the lease to generate an interactive and accurate lease summary. The AI recognizes over 200 key terms, making it one of the most powerful CRE generative AI tools currently on the market.
With enhanced search features, property managers and CRE professionals can easily search their uploaded leases and the intuitive AI layer will lead them directly to critical lease concepts and data points. Prophia gives CRE prop managers time back as well as the organizational arsenal they need to run all of their daily admin tasks as well as the strategy exercises they need to ensure commercial properties are appropriately funded, maintained, and tenant relationships are strong.
What Kind of Skills Does a Property Manager Need?
We’ve touched on a bit of the skills property managers need to effectively carry out the duties of this multifaceted role. Having strong communication skills is essential for managing and interacting with tenants as well as communicating effectively with various stakeholders and contractors connected to a given property. Being able to communicate diplomatically is also a useful skill for property managers as their tenant communication, at times, can be over disputes or complaints.
Additionally, they must be very knowledgeable and up-to-date on legalese, building codes, compliance and more to properly maintain their properties. This knowledge also comes in handy for managing vacancies and filling units with tenants who comply with the building owner or landlord’s agreements and local ordinances.
These individuals must also have a strong understanding of financial management principles and be able to handle rent collection, budgeting, expense tracking, and financial reporting. Knowledge of basic accounting practices and software can be beneficial. And in addition to knowledge about finance, prop managers must also possess an understanding of effective marketing and leasing practices to ensure vacancies are turned over promptly and effectively.
A level of technical competence is also preferred in this role as property managers often utilize various software applications and online platforms, like MRI, Yardi, or Prophia (sometimes all three) for tasks such as financial management, record keeping, and marketing. While not an exhaustive list, these skills come highly recommended for individuals seeking to become property managers.
What Are Some KPIs or Metrics for Success for Property Managers?
While specific KPIs can vary depending on factors such as property type, goals, and objectives, there are many universal property management KPIs that individuals managing commercial buildings will likely be expected to maintain as a metric for success.
Finance KPIs: Occupancy rates, rent collection, and operating expense ratio
One of the most important financial metrics for property managers is occupancy rates. This KPI measures the percentage of occupied units in a property. It indicates how effectively the property manager is filling vacancies and attracting tenants. A high occupancy rate is generally desirable, as it signifies a healthy rental income stream.
Like the occupancy rate, rent collection is another indicator of a property’s financial health by tracking the percentage of rent collected compared to the total rent due. A high rent collection rate is important for maintaining consistent cash flow and financial stability and reflects the property manager's ability to ensure timely payment from tenants.
The operating expense ratio compares the property's operating expenses to its income. It helps evaluate the efficiency of cost management and expense control. A lower operating expenses ratio indicates effective budgeting and financial management.
These various financial metrics can be used to assess the property's performance, such as net operating income (NOI), cash flow, return on investment (ROI), or gross rent multiplier (GRM). What’s more, these indicators of performance reveal a property manager's ability to generate income, control expenses, and maximize profitability.
Timeline KPIs: Maintenance, repairs, and projects
Maintenance and repair timeliness measures how quickly maintenance and repair requests are addressed and resolved. It assesses the property manager's responsiveness to tenant concerns and the overall condition of the property. Timely maintenance contributes to tenant satisfaction, helps prevent further damage, and can even help property managers build the reputation of a given property and stand out among other available spaces in a competitive market.
Tenant KPIs: Retention rate, tenant satisfaction, and average length of time to fill vacancies
In addition to running property finances, property managers also use tenant retention rates to evaluate the percentage of tenants who renew their leases. High tenant retention rates indicate tenant satisfaction and the property manager's ability to provide a positive working experience. It is often more cost-effective to retain existing tenants than to seek new ones.
Average length of time to fill vacancies is a KPI that reflects the property manager’s ability to quickly fill vacancies as well as the prop manger’s efficiency in marketing, screening applicants, and completing the leasing process. A shorter time to fill vacancies indicates an effective building management strategy and streamlined processes—both of which can be managed on Prophia’s intuitive and dynamic platform designed for CRE professionals.
Above all, when it comes to tenant KPIs, tenant satisfaction is highly important, albeit, a little subjective. Property managers can run this assessment through surveys, feedback, or reviews and cross-reference with tenant retention rates to paint a picture of tenant satisfaction. This KPI can also identify areas for improvement while contributing to long-term tenant retention and positive word-of-mouth.
The responsibilities and duties of property managers are varied and can look different depending on the market in which they work or the type of property they manage. What’s more, the spread of a prop manager’s tasks are very important to ensure that commercial properties are running smoothly and are properly financed.
If you’re a property manager and you are tired of managing your workload in disparate sources or chasing loose emails in your inbox, Prophia can automate and streamline the most important tasks of property management. To get started on the path to better data and task management, reach out to someone on our team or learn more about Prophia’s AI capabilities that are fundamentally changing the way CRE professionals carry out daily tasks.