As 2016 comes to a close, it’s natural to start thinking forward into the new year. Let’s take a look at some of the major trends and influences that will affect the property management industry in 2017.
2017 economic climate
The number one issue on everyone’s minds at this time is, of course, the presidential election and how it will affect the economy. No one knows for sure how a Donald Trump presidency will play out. But many industry experts are feeling optimistic.
“I have a positive outlook upon the presidential change,” says Spencer Caldwell, owner at RentVest, a property management firm that manages over 2,000 properties in Arizona, Texas and Nevada. “Mr. Trump has dealt with the financial and real estate markets his whole life. His being an inexperienced politician is causing a lot of uncertainly that could impact housing negatively initially, but as the ball gets rolling I expect it to level out. We’re expecting a good strong 2017 with positive growth in the market.”
Another point of consensus is that we’re very likely to see a rise in interest rates in 2017. “Interest rates have [already] gone up since the election, although not enough to have a significant impact,” comments Property Management Association Executive Vice President Tom Cohn. “It always depends on what the Fed’s going to do. Rates have been so low so long they’re very likely to go up at some point soon.”
Maintenance and management trends for 2017
The hottest trending issue in property management is the integration of technology to assist both with communication and with maintenance.
“Property management companies have been slow to adapt in the technology and communication space, but I’m seeing it becoming the new industry standard,” Caldwell says. Forward-looking property management companies are starting to utilize tools such as:
- Video virtual tours and 3D floor plan imaging to allow potential tenants to preview a property online
- Online rental application processing
- Online rent payment
- Maintenance request apps
- Technology-assisted package delivery
- Smart controls, such as programmable thermostats, lighting and irrigation
Such tools streamline the rental process and make it easier for staff and tenants alike to communicate and coordinate. However, as these technologies see more widespread adoption within the industry they are likely to raise initial tenant expectations.
“Due to the increase in online tools that residents have for interactions with the office, the maintenance staff has a larger role in providing customer service which leads to a greater influence on a lease renewal decision,” says Paul Rhoads, CAMT, National Maintenance & Safety Instructor at the National Apartment Association. “Especially as rents rise, residents expect faster and more complete service and repairs.”
Rhoads also points out that the shift in technology will require office staff, maintenance, and repair technicians to become more computer savvy. In some cases virtual learning is actually replacing traditional hands-on training. This may make recruiting competent technicians even more challenging than it has been in the past.
“There is a large knowledge shift away from hands-on skills that are still very essential to the role a technician plays. As training is in many cases shifting from in person training to online, the industry can expect that technicians who are not comfortable with this method of learning will be less informed.”
Finally, look for sustainability issues to continue to trend in importance throughout the industry. Energy efficiency, environmental practices, responsible use of materials—these trends are here to stay.
“Increased enforcement of regulations will continue to affect maintenance procedures and processes,” says Rhoads. For instance, EPA and DOE restrictions on air conditioning equipment have caused drastic price increases to repairs and replacement of existing equipment. “These regulations require increased time for repairs as well as time for research to ensure the solutions suit the situation.“
However, environmental regulations can lead to cost-effective solutions. For example, water use restrictions in California have resulted in landscape trends that require far less ongoing maintenance, such as gravel, wood chips and artificial turf.
The Millennial generation is the largest in history, and as Millennials come into their income-earning power, they are having a strong impact on the residential market. This generation is extremely mobile; many are delaying childbearing and prefer to rent, either apartments or houses, rather than own. In 2017 and beyond, look for the needs of this generation to gradually take precedence over those of the Baby Boomers.
On the commercial front, retail is expected to remain flat, but office rental is experiencing a decline as companies go increasingly virtual.
“One of biggest trends we’re seeing is reduced demand for office space, even in growing companies,” says Cohn. “We’re seeing less square footage per employee as more people work from home and technology allows people to stay connected. Look for the office to continue to transform as the way people work transforms.”
No matter what type of property, one type of amenity has become virtually indispensable.
“Tenants all want more internet access. They want to know if internet or wifi is included,” says Alex Macedo of San Ysidro Investment Company, who manages 38 multifamily and retail properties in San Diego, CA.
Design and amenities
For 2017, look for modern, clean lines and light colors to dominate.
“We’re moving away from the old traditional craftsman look and seeing a big focus on using materials and design elements to create a beautiful space,” says Pete Asmus, founder of The TurnKey Investor.
For higher-end properties, trending materials include granite and quartz countertops. Also look for carpet-free flooring including bamboo, cork, and durable engineered wood tile. White and light-colored walls are coming back in fashion, as are white kitchen cabinets.
In terms of amenities, the sky is the limit for higher end properties.
“We’re seeing an explosion of amenities on all types of properties, both in offices and in apartments,” says Cohn.
New multifamily buildings in particular are offering similar amenities to resorts and 5 star hotels. Think dog parks, dog wash stations, rooftop pools, lounges, fire pits, theaters, libraries, chef kitchens, outdoor lounges, and spas. Some are even partnering with restaurants to offer delivery similar to room service.
No one knows for sure exactly what surprises the coming year may bring. But experts are hopeful that 2017 will prove to be a promising year for the industry.
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