2024 Trends in Commercial Property Management

1/4/2024 (Permalink)

Stay ahead of the curve with 2024's Commercial Property Management Trends

Commercial property managers have had their hands full over the past few years, responding to the pandemic and all the resulting changes. In 2024, as the commercial property rental landscape continues to evolve and adapt, property managers can take proactive steps to find and take advantage of the opportunities within these challenges.

The dynamics of the economy, changing tenant expectations, and continual technology innovations have combined to create a profound transformation in commercial real estate. Innovation and adaptation are the friends of commercial property managers, and the following points discuss some of the trends to look for in 2024.

Advancements in Technology and Automation

Technology for Tenants

As people shop online more and package stealers continue proliferating, many properties have added smart-locker storage for tenants to receive their packages safely. This trend is expected to grow, and tenants will look for additional technology integration, such as SMS notifications and other tech-related options that enhance their convenience.

Keyless entry is another growing trend that tenants appreciate. More commercial properties offer digital amenities like free WiFi and 5G integration, and this trend is expected to continue. For areas where theft is an issue, video doorbells and security cameras can set your property apart. Landlords and property managers can also use security cameras to manage and monitor the property around the clock remotely.

Operational Software

Operating commercial properties involves many moving parts, and commercial property management trends in 2024 will continue to emphasize automating, streamlining, and improving workflows with SaaS and cloud-based software platforms. Cloud-based property management software connects operational teams online, increases effective communication, and offers tenant portals for more efficient repair requests and other tenant needs.

Managing properties using virtual tools such as Zoom interviews or property tours is becoming a norm, and integrating AI and IoT will continue to grow. IoT, or Internet of Things, refers to tools that typically use WiFi or Bluetooth to automate activities. Property managers are implementing IoT tools such as automated or smart lighting, smart laundry, smart locks, automated lawn care, and smart temperature control.

AI will enhance property management by refining processes such as more personalized tenant experiences where AI anticipates tenant needs and preferences. Property management software may also use AI to improve virtual property tours to help tenants more effectively imagine themselves in the unit. AI tools may offer insights that drive coordinated smart building systems, such as assisting in adapting their operation to environmental conditions based on the property’s occupancy patterns. These adjustments can save on energy consumption and other resources while reducing costs.

Continued Evolution of Tenant Preferences and Market Dynamics

More Multifamily Units

The rents for multifamily units often cost less than those for single-family dwellings, driving increased demand for additional multifamily units. Renters are also migrating to states with lower taxes, and while they want the lower rents of a multifamily unit, they also want more spacious homes with additional amenities. Tenants for all types of rental properties also demand more services and amenities in exchange for the rising cost of rent, including high-speed internet, in-unit washers/dryers, and HVAC.

More Property Management Services

Demand for more professional property management services should continue to increase in 2024. Tenants expect and desire the expertise of knowledgeable management, especially when dealing with property repairs, disputes, and other issues in multi-unit settings. Tenants also demand the technological tools often provided by professional property management, such as online portals for repairs, questions and issues, and the ability to pay their rent online.

Commercial property management trends in 2024 also emphasize using tools like improved and streamlined tenant screening processes and advertising available units on multiple platforms, including social media.

Updating Business Strategies and Addressing Economic Factors

Managing Costs to Improve Profit

In 2024, commercial property managers will benefit from prioritizing profitability while keeping costs under more strict control. Acquiring new properties can increase revenue and profits through operational synergies. In contrast, new services like outsourcing to high-quality vendors such as a reliable restoration company can save on labor costs and keep properties in tip-top shape to command improved rents. Adopting technology such as specialized property management software can also reduce labor costs by automating some of the back-office administrative work of property management.

Considering Economic Factors

During rising inflation, property managers must constantly monitor and reduce costs wherever possible. Additionally, the new year is a great time to focus on scaling up the business by implementing growth-hacking strategies and considering refinancing options to take advantage of potential federal interest rate cuts.

For 2024, although there is no guarantee, sources predict the Fed will continue to reduce mortgage interest rates. Savvy property managers and owners will poise themselves to refinance more expensive loans and leverage the increased value and higher equity in existing properties to make additional investments. Lower interest rates often stimulate economic activity, which may create opportunities to improve occupancy rates and achieve higher rents, especially if the rental market remains tight.

Political and Regulatory Challenges

Taxes (and Other Costs) Go Up While Loopholes Disappear

Commercial property management trends in 2024 include strategies to offset the effects of rising taxes and closing financial loopholes for commercial property landlords. Property managers can expect changes such as government measures attempting to capture more real estate-related revenues. Governments may pressure property managers and landlords to lower or normalize rents to aid housing crises in higher-priced housing markets.

Additionally, landlord insurance for rental properties is undergoing changes that affect tenant evictions and other issues while becoming more costly. Commercial property managers can potentially lower the cost of the policy by increasing the deductible, prioritizing as many safety features on the property as possible, and requiring renters to carry renter’s insurance. Safety features include updates like carbon monoxide sensors, tankless water heaters, and fire-resistant roof coverings.

Political Motivations

Politicians may focus on a growing homelessness problem and the lack of affordable rents in many areas. Leading up to the 2024 election, some politicians may highlight a need to enforce regulatory compliance among landlords and property managers as part of their platform.

A Consolidating Industry

The entry of large corporate property management companies may challenge independent or smaller property management firms. Sometimes, these larger companies have more extensive resources to provide cost-effective services, increased marketing resources, and value-added options such as financial reporting for multi-unit properties or property portfolios. These firms may also offer lead-generation services and additional brand-building for properties under their management.

Win by Staying Ahead of the Changes

Successfully navigating the changing climate of commercial property management relies on property managers recognizing trends and proactively embracing and managing them. While preparing to take your properties into 2024, consider these trends and how to extract opportunities from them to improve and grow your business.

From integrating technology that automates operational work and provides additional tenant amenities to anticipating and staying ahead of economic shifts, vigilance is critical. Reducing costs by outsourcing work to commercial restoration services and other third parties is one of many strategies that can help you leverage innovation and position your business to handle the changing landscape in property management more effectively.

Stay agile and informed; the coming year of challenges and opportunities will reward your property management business with success and prosperity. At SERVPRO of Alhambra, we can help you with water damage cleanup, mold remediation, cleanup from fire and other damage, and general cleanup. Call us today at (626) 283-5875!