State of the State: An Overview of the Commercial Real Estate Management Industry


The overall commercial real estate management industry is poised for growth. Because their home markets are generally improving, investors are starting to look outward for opportunities. Occupancy rates are climbing and staying high. And that of course, feeds the need for more management services.

Good news if you’re trying to start a business or gain an edge on the competition: the top 50 companies account for 25% of all revenue. Compared to other industries, that’s pretty fragmented. And there’s an expected annual growth rate of about 4% per year until 2019.

But, if you’re going to succeed, you need to operate efficiently and provide good customer service. That’s what’s going to keep your profit margins high.

How Leading Companies Continue their Winning Ways

This is how they do it from a high level:

  • Use cloud-based software to manage relationships and track administrative functions
  • Focus on using newer equipment that offers better energy savings
  • Improving security systems
  • Using big data and predictive analytics to make more informed decisions
  • Making smaller offices with collaborative workspaces
  • Offering managers compensation incentives for reducing operating expenses or increasing tenant occupancy levels

Biggest Challenges to the Commercial Real Estate Management Industry

Unfortunately, the biggest challenge is completely out of any company’s control: the state of the economy. If the overall economy’s not good, consumers don’t spend and companies don’t make money. So, occupancy levels fall during difficult economic times.

The other big challenge, fortunately, is under business’s control: balancing their own needs with tenant needs. To succeed, companies must continue to lower operating costs while keeping tenants highly satisfied. One of the keys, then, is finding good clients who don’t place excessive demands on the real estate management company.

Beyond those larger challenges, additional ones include:

  • Having a reliable team of service vendors behind the scenes
  • More people telecommuting from home, which means less need for office space

Future Opportunities

With increased growth, additional opportunities are present, and especially so in the industrial sector:

  • Manufacturing and e-commerce are growing in demand, leading to more demand for real estate management services
  • Companies who learn how to cost-effectively reduce energy use for their tenants will win new business from industrial customers
  • Commercial property managers that learn how to teach their customers to use limited space more efficiently will be the winners of tomorrow

Clearly, commercial real estate management has exciting opportunities both now and in the future. Hope this inspires some innovative business ideas for you!