Why Ethics and Education Are Crucial to Asset Management

Mellen: “Good property management is always in demand regardless of the cycle we’re in, and it’s not overly affected by the different business cycles as far as the job market goes.”

SAN DIEGO—As asset values rise, ethics is more critical than ever to property management, and education is hugely important in order to help maximize value and minimize risk, the Simon Cos.’ VP and 2016 IREM president Chris Mellen tells GlobeSt.com. We sat down with him for an exclusive chat about some of the ethics and education issues facing professional management in real estate today.

GlobeSt.com: Why is ethical, professional management critical in today’s CRE marketplace?

Mellen: IREM is having its fall conference in San Diego next month, and it will have the theme “Because Management Matters.” IREM was founded on ethics and that’s been one of our core values since we were founded back in 1933. Basically, back then, ethics was extremely important because of the Great Depression and real estate coming into one ownership, etc. Today, it’s just as important—if not more so—because of the value of the assets we manage as certified property managers (CPMs). We have a fiduciary relationship with owners and investors, with ethics in mind as a cornerstone. Each September is designated as IREM Ethics Month, and the chapters can revisit that with members, using programs that enforce ethical professional management and maintain it as a bedrock of our real estate industry.

GlobeSt.com: Why is educated asset management important?

Mellen: First of all, it’s important because our executives need to be knowledgeable about real estate trends and management and what the most important things are to do: maximize value, minimize risk and partner with our clients to help them achieve their investment goals. Education is necessary to achieve these goals, and it’s especially important for CPMs versus other industry credentials to have a comprehensive education program.

GlobeSt.com: What are the greatest challenges property managers face today?

Mellen: There are a few really big challenges. One of the largest challenges is the changing market demographics. The population is shifting; Baby Boomers are retiring and Millennials coming of age and moving into the business sector. Market demographics remains a definite challenge due to evolving consumer demands. The economy is another challenge because it’s cyclical and we’re always anticipating the next real estate and business cycle. also a challenge. Third is technology, which is continuing to evolve, and property managers need to be continually educated to stay at the forefront of that.

As a side note, I believe that real estate and asset managers prosper regardless of which cycle we are in—good management is always in demand regardless of the cycle we’re in, and it’s not overly affected by the different business cycles as far as the job market goes. Good property managers always in demand. They’re in demand in good times, maximizing NOI, and in slow periods to maximize income and at least sustain and increase value.

GlobeSt.com: Where are there untapped opportunities in property management?

Mellen: Property management is changing all of the time. It’s not a static industry; there are always new opportunities and new ways of doing business. A lot of that I believe is coming from technology. Not that communication and face-to-face interaction aren’t important, but a few years ago way we were delivering our service without the current technology, and today we’re delivering service 24/7, working off devices like smartphones and tablets. Because we’re so tech savvy in our industry, this creates more opportunities for us. The other thing is, I believe we’re going to have another downturn. History has shown us the cyclical nature of real estate and the economic cycle. don’t know what severity we’ll experience, but it presents opportunities for creativity, thinking outside the box, being creative and innovative. This will create more opportunities for maximizing value in the properties we manage through energy efficiency, the rehab of older properties and reuse.