NEW YORK CITY—Asset management could use demystifying. Its role in commercial real estate is vital, yet the practice is still met with confusion or uncertainty, which in turn impacts communication across and recruitment in the sector. Understanding what exactly is involved, however, can help clarify the relationship between asset managers and property managers, and improve communication and understanding between the different parties. That's the argument from Dustin Read, PhD/JD, whose recent publication for IREM Real Estate Management: A Process and a Profession, looks to take away the mystery. It is based on interviews with over 90 top executives working in asset management or in conjunction with asset managers.

The views expressed here are drawn directly from the text, and are the author's own:

Asset management, definable as both a process and a profession, is critically important to the success of large real estate investors. It is nonetheless poorly understood outside, and to some degree inside, the real estate industry due to the use of inconsistent terminology and differences in the organizational structure of companies specializing in the ownership and oversight of income-producing properties. The confusion is problematic to the extent it prevents talented individuals from pursuing careers in asset management or impinges upon the development of supportive services for those already working in the field. It can also contribute to a lack of understanding between those managing real estate as an investment vehicle and those operating it on a daily basis when the two groups lack a true appreciation for what the other does.

Clarifying the roles asset managers play in different types of organizations is therefore important for a number of reasons:

Defining the unique body of knowledge required for success in real estate asset management can help establish it as a professional service, providing a status that will attract talent to the industry.
Understanding what is expected of real estate asset managers can help education providers better tailor their offerings to meet evolving industry needs.
Differentiating real estate asset management from property management in more clear and concrete terms can improve communication and understanding between these two groups.

To better define the asset manager's place in the real estate industry, IREM® commissioned a research project examining the activities of these professionals in different settings throughout the US.

What this study found is that the asset management process typically involves a series of interrelated functions or activities designed to enhance the financial performance of income-producing properties. They include: (1) acquisition support; (2) business planning; (3) leading a team; (4) budget preparation; (5) lease/capital expense approval; (6) promoting operational efficiency; (7) market research; (8) financial analysis; (9) disposition assistance; and (10) reporting/surveillance.

These functions can be delegated to a number of different parties in a number of different ways depending upon the structure, culture and strategic objectives of a given real estate firm. Some individuals holding asset management titles engage in all of these activities and have considerable autonomy to make property-level decisions. Other asset managers have much narrower job descriptions and far less discretion. These differences make it difficult to define asset management as a profession in universally accepted terms.

The education, training and skills required for success in asset management depends largely upon which approach a real estate company adopts in practice. It may also influence where a company sources asset managers and the support systems put in place to foster their professional growth.

Despite the existence of alternative approaches to asset management, many of the executives interviewed shared a common belief that there are excellent career opportunities in the field for those who are decisive and have a relatively high level of financial acumen, effective communication skills and the ability to motivate people. This was perceived to be true for both entry-level jobseekers and seasoned professionals due to the ongoing institutionalization of the real estate industry and the growing need for asset management services. The greatest opportunities appear to exist for those who have an interest and the aptitude to work in an environment that serves as a bridge between the worlds of real estate finance and operations.

The full research results are contained in the 2017 IREM® publication Real Estate Asset Management: A Process and A Profession. The research is intended to serve as a starting point for future study of the asset management process, as well as a means of stimulating conversation about the steps that can be taken by trade associations, educators, and other interested parties to support the ongoing growth and development of asset management as an attractive and rewarding career option.

The views expressed here are drawn directly from the text, and are the author's own:

Clarifying the roles asset managers play in different types of organizations is therefore important for a number of reasons:

Defining the unique body of knowledge required for success in real estate asset management can help establish it as a professional service, providing a status that will attract talent to the industry.
Understanding what is expected of real estate asset managers can help education providers better tailor their offerings to meet evolving industry needs.
Differentiating real estate asset management from property management in more clear and concrete terms can improve communication and understanding between these two groups.

To better define the asset manager's place in the real estate industry, IREM® commissioned a research project examining the activities of these professionals in different settings throughout the US.

Instant Insights /

Removing the Mystery From Asset Management

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