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
Jan 17, 2025 - Investors Bullish on Neighborhood Shopping Centers
- In the wake of the pandemic, open-air shopping centers are having a moment, according to The Wall Street Journal. As demand has swung back to in-person shopping, neighborhood shopping centers have been fuller than ecommerce warehouses, according to CBRE. The most desirable retail spaces are those anchored by grocery stores, as grocery store foot traffic was 12% higher in the third quarter of 2024 than during the same period in 2019, according to Globe Street. The types of establishments filling the space adjacent to grocery are ones that face little threat from online retail, such as nail salons, medical centers, yoga studios, and coffee shops. Flexible work arrangements have led to more traffic for neighborhood shopping centers.
- Fitch Ratings’ US CMBS delinquency rate rose by 22 basis points to 2.98% in December 2024 from 2.76 in November. The December rise was driven by a rise in office maturity delinquencies and a reduction in resolution volumes. Commercial mortgage-backed securities (CMBS) are fixed-income investment products backed by mortgages on commercial properties rather than residential real estate. The delinquency rate is the percentage of commercial real estate loans that were 30 or more days past due or in foreclosure. A rising delinquency rate indicates that an increasing number of commercial property owners cannot pay the mortgages on those properties. Current and prior-month delinquency rates for December and November were: Office: 7.18% (from 6.28% in November); Retail: 3.96% (from 3.80); Hotel: 3.43% (from 3.64%); Multifamily: 0.77% (from 0.79%); Industrial: 0.37% (from 0.15%); Mixed Use: 4.43% (from 4.03%); Self-storage: 0.05% (from 0.01%); and Other: 1.00% (from 0.97%). An increase in commercial foreclosures can boost demand for commercial appraisal services.
- Even with a nationwide glut of office space, there’s still a shortage of the high-quality space that some firms want to lease, according to The Wall Street Journal. At the end of 2024, the national office vacancy rate was more than 20%, according to Moody’s. However, many business districts lack enough top-tier space with amenities like proximity to transit hubs, high-end fitness centers, outdoor spaces, and nearby restaurants. High-quality office space is in higher demand as growth sectors such as technology, transportation, entertainment, and finance call on employees to spend more time in the office and hope to lure them with upscale perks and experiences. In the third quarter of 2024, occupancy in top-tier office properties was 22% higher than at the same time in 2019, according to CBRE. Over the same period, occupancy for all other types of office space fell 5%.
- An oversupply of life sciences real estate that took hold in 2024 is likely to persist in 2025, according to real estate firm JLL. The surplus of life science and lab space is putting downward pressure on rents and slamming the brakes on new construction. Historically, life sciences property rents start to move upward during periods of increased construction activity, and JLL doesn’t expect that to happen for another four to five years. Rent growth in secondary life sciences markets will be challenging to the point that some properties – even ones that have yet to come online – may be converted to office or tech-focused space.
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