A lot of people experienced the real estate crash a few years ago. Many lost their homes, many lost their jobs. Even those who were not home owners were able to witness the hardships that occurred for many homeowners and financial institutions. Home values quickly declined, and the market is still recovering from that period. Additional waves of foreclosures followed the first, leaving many homes unoccupied and inhabitable. What happens to a home once it is given back to the bank? The bank is responsible for taking care of it. What happens, though, when hundreds or thousands of homes are given back to the bank? The bank must then find a company that is capable of taking care of all of these houses.
Run down houses can severely affect a housing market. It can bring down the value of all of the surrounding homes, including the home itself. After the real estate crash, however, the banks simply did not have the ability to keep up with all of the REO properties. When you add in the bank owned commercial real estate properties, there were way too many houses to keep up with.
The market is increasing from that real estate crash. U.S. commercial property values have increased 42% since hitting their post crash trough in 2009, according to the Moody?s Real Commercial Property Price Indices. Currently, the strongest CRE sectors are clearly multifamily and industrial. The U.S. apartment sector absorbed 125,000 rental units in 2012, easily eclipsing the pre recession annual average of 45,000 units. National apartment vacancy is currently a razor thin 4.8%, and demand for industrial space has also exceeded pre recession levels.
With the increase in housing values and commercial property values, tenant representation companies and property management companies have shifted their focus onto managing apartment units and multi family units. Property owners who are now owners of these multi family units are often unable or unwilling to keep up with all of the minor repairs and renovations of the units. They are also responsible for collecting rent each month and for marketing for, interviewing and then accepting new tenets. Commercial real estate companies are responsible for marketing these properties to investors or multifamily property owners, The REO properties property management companies may also care for a property while it is listed for sale.
The commercial sector is essentially bifurcated between large buildings, generally over $2.5 million in value, and smaller buildings under $2.5 million in value, small strip malls, stand alone convenience stores, etc. These may or may not be REO properties. Either way, the property management companies are responsible for all aspects of the property ownership, generally on a contract basis.
The real estate market hit an all time low a few years ago. Many people lost their homes, turning them back over to the banks. The banks become overwhelmed, but the market has increased since this crash. Property management companies have since shifted their focus from maintaining REO properties to maintaining multi unit family homes. They are now working for real estate companies that are selling the properties or the investors who are attempting to find tenets for their multi family units.
