Possibly the most interesting component of Realcomm 2003 was the perspectives that emerged relating to Property Management. If one looks carefully at this business there are a tremendous amount of paper-based, manual systems that are costing operators billions of dollars. All of the pressure for improved financial performance, combined with the parochial, unautomated nature of the business, makes Property Management a prime target for increased automation. Part 1 of this series will cover the business trends for Property Management that are emerging as a result of technology and automation.

Third Party Property Management Firms Being Pressured By Owner/Operators
Because improved operations have such an impact to the bottom line and owners rightfully have their own best interest in mind, they are more aggressively utilizing automation in their business practices. The results are compelling and the operating efficiencies of owners are beginning to significantly surpass that of 3rd party Property Management firms.

Property Management As A Loss Leader - Can It Generate A Profit?
For many years, full service organizations used Property Management Services as a loss leader to attract other business opportunities such as Brokerage transactions. With the Brokerage business having its own issues with profitability, full service companies are becoming less inclined to take low margin Property Management business with the hope of getting the potentially profitable Brokerage business. With the Brokerage potential diminishing, many Property Management firms are asking how long Property Management will remain viable if it cannot generate a reasonable profit margin.

Elimination Of Outdated Job Functions
One of the most significant trends of this year's conference in reference to Property Management was that many of the traditional job functions, which involved the manual collection, organization or distribution of data are being rethought. Just like the airlines industry is doing away with ticket counter personnel in lieu of ticket kiosks, the Property Management industry is rethinking how to use onsite property managers, leasing agents, maintenance staffs, and security personnel. Automation is playing a critical role in connecting tenants with the required service and it might mean one less human contact.

Consolidation of Operations - Call Centers
One compelling case study coming from this year's conference was Equity Office's EOPlus program. The beta market for this program was in Boston and involved the consolidation of 57 property operations into one centralized call center. The result was astounding -- a 17% decrease in operating costs and a significant increase in customer satisfaction. EOP had such success with their first rollout in Boston that they are now in the process of implementing the concept across the nation.

Paperless Operations Becoming A Reality
At Realcomm 2002 in Las Vegas, a major property manager from Florida was lost when the discussion moved to document imaging, electronic management and the idea of multiple sites to insure fault tolerance. This year, the topic took quite a different turn. Some of the nation's most leading edge Property Management companies spoke to a capacity filled room about the benefits of being paperless. Just imagine the time and dollar savings when the onsite, tenant, broker, lawyer and owner all have access to the same document electronically, not to mention the reduced legal exposure. What a difference a year makes.

Intelligent Buildings Changing All The Rules
Once the makings of a Star Trek script, Intelligent Buildings are becoming more mainstream. This year's conference involved discussions on lower costs, higher occupancy, better retention, improved security, and happier tenants, all because of intelligent or automated buildings. Over the next five years Intelligent buildings could very well raise the benchmark for buildings and redefine the word "trophy". A building that is not connected to the Internet and able to deliver all the operating benefits and efficiencies provided by extreme automation will simply be considered a lesser class property.

Home Depot VS Local Hardware Store
One subtle yet important theme that emerged from Realcomm 2003 was that of dominance. Just like we saw the small local hardware store disappear because of the operating efficiencies of giants such as Home Depot and Lowe's, we wonder if the small Property Management companies will lose their competitive edge to the industry giants who are aggressively rethinking the business and using automation to redefine their business processes. We believe there is value in the small, hometown businesses, but in order to remain effective, they too must embrace the new tools of the trade.

If there was one consistent message from this year's conference in respect to Property Management it was that things are changing. This is not like the 2000 or 2001 dot.com hysteria but rather, slow, pragmatic, well thought out change. Next week we will investigate the technologies that are impacting these very compelling business trends.