IREM reports on key challenges facing the industry.

The Institute of Real Estate Management (IREM) has published a report on the key challenges facing today's real estate management professionals as well as some practical suggestions and best practices for addressing them. Titled "Transforming Real Estate Management: Four Strategic Issues," the report is the result of a year-long effort during which IREM called upon its members to identify, analyze and prioritize the major issues changing the dynamics of the real estate management profession. As prioritized by IREM, technology is the Number One issue, followed by workforce development, business competition, and risk management.

The report observes that technology has penetrated every aspect of the property management business, a phenomenon driven largely by the need to increase productivity and strengthen customer relationships. It notes that whenever there is a question about how to improve Service or reduce costs, technology increasingly seems to be part of the answer.

The report shows that part Of the challenge is finding concise, unbiased, relevant information on emerging technologies specific to property management--then determining how. to apply that new-found knowledge to provide effective, efficient solutions that lead to business success. It expands on the following tips contributed by IREM members to address the technology challenge:

* Make information readily accessible to staff.

* Transition to a paperless office.

* Position technology as a value-added tenant and resident service.

* Incorporate technology into a risk management program.

* Enhance owner reporting and transparency.

* Stay up-to-date on evolving technologies.

* Improve responsiveness to tenants and residents.

* Invest in staff training to ensure that technology is used to its fullest.

* Make technology part of the company's strategic vision.

The report notes that a serious shortage of talent looms on the horizon, challenging all industries, including property management. AS a result, real estate managers are being forced as never before to focus on identifying, attracting, developing, rewarding and retaining qualified staff--a task made even more challenging in the face of declining profit margins, higher labor costs and competing career options.

The report references a study by human resources consultant RHR International in which 65 percent of the companies surveyed reported that they expect to lose 50 percent or more of their senior managers over the next four years. It also cites findings by consultant CEL & Associates that the overall employee turnover rate in the multifamily property management industry was 31.8 percent in 2004-creating a challenge of overwhelming proportions. It then elaborates on these suggestions provided by IREM members to address the workforce development challenge:

* Make employee recruitment a continuous process.

* Recruit young people early and creatively.

* Hire with patience and discipline.

* Start out right.

* Grow and reward existing staff.

* Seek diversity.

* Create an atmosphere that promotes work/life balance.

* Create a human resources culture that supports organizational goals.

The report observes that the property management business is highly competitive and becoming increasingly so, as evidenced by shrinking profit margins, mounting demands from property owners and clients, and rising expectations among tenants and residents. It notes that many owners now regard property management as a commodity service, creating constant pressure to lower prices. In response, some companies choose to compete more effectively by minimizing costs while others choose to differentiate their services, hoping to command a premium price.

According to the report, the growing challenge to property management is to consistently demonstrate the worth of the value-added services provided to clients or risk having a competitor step in and offer the same service at a lower price or present a higher value proposition. It then expands on these tips from IREM members to address the business competition challenge:

* Make marketing a continuous process.

* Identify new business opportunities.

* Develop a clearly defined value proposition and target market.

* Maximize return on each client.

* Understand and leverage the key drivers of value.

* Get proactively involved in business referrals.

* Know the competition.

* Deliver outstanding customer service.

* Streamline company operating costs to support lower fees.

* Instill a business development mindset among staff.

Taking and managing risks play key roles in how organizations create profits and value, the report observes. This is especially true of the real estate management business, having the usual risks associated with running any business, as well as the unique risks associated with the properties being managed and those who live, work, show, and do business there.

The report notes that in a post-9/11 world--with security a major concern and the Cost of all kinds of insurance rising--property managers have found themselves facing a new balancing act: how to address the need for greater business security while at the same time accommodating, demands from residents and tenants that their properties be easily accessible. It states that through it all, including increasingly unpredictable events such as Hurricane Katrina, having a solid risk management program in place is critically important. Finally, the report expands on these suggestions from IREM members to address the risk management challenge:

* Treat insurance costs as a controllable expense.

* Read insurance policies carefully, even the fine print.

* Implement risk management inspections.

* Have an emergency preparedness plan for the company and each property.

* Make tenants and residents aware of their role in managing risk.

* Adopt measures to minimize lawsuits.

* Pay attention to building access.

* Regard other stakeholders as your risk management partner.

* Acknowledge that employees are capable of illegal acts, and act accordingly.

A copy of "Transforming Real Estate Management: Four Strategic Issues" is available at no charge, in PDF format, at http://www.irem:org/ pdfs/iremfirst/irem4issues.pdf.