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
Sep 23, 2024 - Aging Elevator Fleet Ripe for Replacements
- Building owners and operators are facing a period of cyclical elevator replacement, according to Bisnow. Elevator equipment manufacturers estimate that of the 23 million elevators in service globally, 7 million are 20 years old or older. The useful life of an elevator is between 20 and 25 years. The number of elevators that are ripe for replacement is expected to accelerate in the coming years. In 2023, Otis Elevator saw replacement demand rise 17%. Hybrid work has also contributed to demand for elevator replacement amid the so-called flight to quality in the office market. Demand for office space has shifted to the highest quality properties, which has forced lower tier buildings to modernize to attract and keep tenants. Similar trends are boosting demand for elevator replacements in the multifamily market.
- Developers who were bullish on lab space real estate projects during the pandemic are finding the market is oversaturated, according to The Wall Street Journal. Early in the pandemic, developers moved quickly to build lab space with special climate control, anti-vibration, ventilation, power, and fire safety features. But the market for such spaces has become bloated by a glut of new properties coming online. More than 59 million square feet of new lab space has been built since the first quarter of 2020, and there’s another 19.1 million square feet in development, according to real estate services firm JLL. Compounding the issue is a drop in demand. Many life-sciences, biotech, and pharmaceutical firms have pulled back on investments amid high interest rates, tight lending standards, and economic uncertainty. Lab space properties that cannot find tenants are being marketed as offices in some markets.
- The effort to reshore strategic segments of the US manufacturing sector is attracting investors who hope to cash in on the resurgence, according to The Wall Street Journal. US and foreign firms have earmarked nearly half a trillion dollars to construct new factories to build semiconductors, electric cars, and other products, according to real estate data analytics firm Green Street. Property developers are flocking to the Sunbelt and Rustbelt where the new manufacturing projects are springing up. Developers are betting that manufacturing investments will have knock-on effects for housing, shopping centers, and other development opportunities. The manufacturing boom is a welcome turn of fortune for developers as the office sector languishes due to hybrid work, and the retail real estate market has been lackluster in recent years.
- 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.
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