Commercial Property Managers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 16,000 commercial property management companies in the US maintain and manage real estate assets, such as office buildings, industrial buildings, warehouses, and other nonresidential buildings. Firms generate the majority of revenue from property management services, which include general maintenance, engineering, operations, landscaping, janitorial, and sustainability services.
Dependence on Subcontractors
Commercial property managers typically rely on subcontractors for certain types of services, such as plumbing and electrical repair, HVAC maintenance, or waste pick-up.
Competition from Property Tech
Advances in real estate and property tech have made property self-management less complex and more feasible for commercial real estate (CRE) owners.
Industry size & Structure
The average commercial property management firm operates out of a single location, employs about 11 workers, and generates between $1 million and $2 million annually.
- The commercial property management industry consists of more than 16,000 firms that employ about 172,000 workers and generate about $27 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for over 40% of industry revenue. About half of all firms generate less than $500,000 annually.
- Large firms with commercial property management operations include CBRE, JLL, and Cushman and Wakefield. Large firms often have global operations.
Industry Forecast
Commercial Property Managers Industry Growth
Recent Developments
Aug 22, 2024 - Work-From-Home Levels Remain High
- According to a recent survey by the US Bureau of Labor Statistics (BLS), the percentage of workers who work from home has increased over the last year. In June 2024, 22.3% of the US workforce teleworked on a non-seasonally adjusted basis, up from 19% in June 2023. The share of workers who teleworked increased even though the total number of workers remained essentially unchanged. However, over the same period, the average weekly hours for remote work fell from 28.7 to 27. The BLS attributed the drop in weekly hours spent working from home to wider adoption of hybrid models where workers divide work between the office and home. Between June 2023 and June 2024, the percentage of workers who telework full-time fell from 53.2% to 48.4%. Remote work can put downward pressure on office space demand.
- Department stores have struggled to regain their footing in the wake of the pandemic and are losing customers to discounters, specialty stores, and luxury retailers, according to The Wall Street Journal. There are currently about 500 vacant department store locations throughout the US, and that number is poised to rise amid Macy’s plan to close 150 underperforming stores over the next three years. Other legacy department store brands are plotting strategies to remain viable, including the parent company of Saks Fifth Avenue buying Neiman Marcus, and Nordstrom’s possible bid to go private. The hollowing out of department store space comes as retail, more generally, is experiencing record-low vacancy rates.
- An uptick in foreclosed and seized commercial properties may be a signal that the commercial real estate market could be nearing a bottom, according to The Wall Street Journal. In the second quarter of 2024, the volume of commercial properties in foreclosure or seizure reached $20.5 billion, up 13% over the previous quarter, according to data firm MSCI. The level of defaults in Q2 2024 was the highest of any quarter since 2015. High interest rates and low office occupancy have been a drag on the commercial real estate market, and have pushed defaults to near record levels. Until recently, the desire to avoid expenses and losses from foreclosures and hopes of a market turnaround have made lenders reluctant to seize troubled properties. However, more lenders are deciding older office building values are unlikely to improve even if interest rates move lower.
- The health of the US commercial real estate (CRE) market is mostly solid, except for the beleaguered office sector and a minor slowdown in industrial property demand, according to a July report by Moody’s. The office sector continues to face significant headwinds as hybrid work models weigh on demand. Office vacancies in Q2 2024 hit a record-setting 20.1%, marking the third consecutive quarter that vacancies hit new all-time highs. Despite signs that consumers may be pulling back on spending, the retail vacancy rate in Q2 held steady compared to the same period in 2023, and asking rents saw a slight increase. The market for industrial space has softened compared to the pandemic years when warehouse construction boomed. Industrial vacancies increased about 1.2% in Q2 2024 compared to Q2 2023, but asking rents have remained steady. In multifamily, a large wave of new supply cooled rent growth in the second quarter, but demand seems to be catching up to the flush of fresh inventory while vacancy rates remained mostly unchanged year-over-year.
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