Navigating a Shifting Real Estate Market With Industry Strategist Peter Linneman

Last modified on March 13th, 2024
By Megan Eales Monroe

When analyzing survey feedback from more than 5,000 property property management professionals for the second-annual AppFolio Property Manager Benchmark Report, a clear trend emerged: Amid shifting market conditions and persistent economic challenges, businesses are rethinking their strategies for 2024 and beyond.

To help businesses successfully navigate the year ahead, and position themselves for success, we spoke with renowned real estate industry strategist Peter Linneman on The Top Floor podcast. Together, we delve into the most important economic trends that are impacting real estate today and how to uncover new opportunities to stay competitive and drive revenue.

In addition, Peter also offers his experts insights on key findings from the 2024 AppFolio Property Manager Benchmark Report.

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Peter Linneman

For nearly 45 years, Dr. Peter Linneman’s unique blend of scholarly rigor and practical business insight has won him accolades from around the world, including PREA’s prestigious Graaskamp Award for Real Estate Research, Wharton’s Zell-Lurie Real Estate Center’s Lifetime Achievement Award, Realty Stock Magazine’s Special Achievement Award, being named “One of the 25 Most Influential People in Real Estate” by Realtor Magazine and inclusion in The New York Observer’s “100 Most Powerful People in New York Real Estate”.

After receiving both his Masters and Doctorate in Economics under the tutelage of Nobel Prize winners Milton Friedman, Gary Becker, George Stigler, Ted Schultz and Jim Heckman, Peter had a distinguished academic career at both The University of Chicago and the Wharton School of Business at the University of Pennsylvania. For 35 years, he was a leading member of Wharton’s faculty, serving as the Albert Sussman Professor of Real Estate, Finance and Public Policy as well as the Founding Chairman of the Real Estate Department and Director of the prestigious Zell-Lurie Real Estate Center. During this time, he was co-editor of The Wharton Real Estate Review. He has published over 100 scholarly articles, eight editions of the acclaimed book Real Estate Finance and Investments: Risks and Opportunities, and the widely read Linneman Letter quarterly report. He is also the co-creator of the popular, and highly regarded, Real Estate Finance and Investment Certification course, REFAI. Most recently, he co-authored (with Dr. Michael Roizen and Albert Ratner) the best-selling book “The Great Age Reboot: Cracking the Longevity Code for a Younger Tomorrow.”

Peter’s long and ongoing business career is highlighted by his roles as Founding Principal of Linneman Associates, LLC, a leading real estate advisory firm, and its affiliates. For more than 40 years, he has advised leading corporations and served on over 20 public and private boards, including serving as Chairman of Rockefeller Center Properties, where he led the successful restructuring and sale of Rockefeller Center in the mid-1990s.

Although retired from Wharton’s faculty, Dr. Linneman continues his commitment to education through his SAM Elimu educational charity for orphans and children of extreme poverty in rural Kenya. He has been married for nearly 50 years and remains an exercise enthusiast.

James Erickson

As Sr. Product Marketing Manager, James has helped bring several of AppFolio’s most important and impactful industry reports to life. These include the State of Affordable Housing Report, AppFolio Property Manager Benchmark Report, and the Renter Preferences Report. Before joining the AppFolio team, James spent nearly 10 years covering emerging markets at Forrester Research and working at several different startups. Outside of work, James enjoys golf, cooking, and all things outdoors.

Episode Transcript

Megan Eales Monroe:
Welcome to The Top Floor, the real estate management podcast that’s dedicated to keeping you one step ahead of industry trends with expert advice and actionable insights. I’m your host, Megan Eales Monroe. Together, we’ll dig deep with today’s property management leaders and industry change-makers to help you unlock new possibilities, transform your day-to-day operations, and grow your business. And, no matter the size or type of portfolio you manage, we’ve got you covered here on The Top Floor.

On this episode of The Top Floor podcast, we’re diving into the 2024 AppFolio Property Manager Benchmark Report. For the report — which is available to download now at appfolio.com/benchmark — we surveyed more than 5,000 property management professionals, in order to take a data-driven look at what’s in store for the year ahead.

In addition to highlighting key findings from the report — such as industry sentiment for 2024 and new opportunities for growth — we’re also joined by a very special guest today: Real estate industry strategist Peter Linneman.

Chances are you’re already very familiar with Peter and his work. But, even if you’re not, it’s easy to see why we were so excited to talk with him about our findings, and get his perspective on how they fit in with today’s broader economic trends.

Also joining the episode today is James Erickson, who many of you will remember from our 2023 episode on Resident Satisfaction. James played a significant role in bringing the second annual AppFolio Property Manager Benchmark Report to life, so he’ll be jumping in to ask Peter about some of the specific trends and insights from the report.

So, let’s dive in to see how property management businesses can position themselves for success in 2024 and beyond, with real estate industry strategist Peter Linneman.

Megan Eales Monroe:

Welcome, Peter Linneman, to The Top Floor podcast. We are so excited to dive into our conversation with you today about the AppFolio 2024 benchmark research report. Before we get started though, can you give us a quick point of view, I know that’s a tall order, on what’s happening in real estate right now? Specifically any kind of economic factors that are influencing where property management stands today.

Peter Linneman:

So, property management is back in popularity in terms of more important than acquisitions, if you will, whenever the capital markets get tough and the property market finds itself challenged to do acquisitions, which is certainly true today, I’ll come back to that, the operational level, property management, the figuring out the right CapEx that’s necessary to keep it going and what can be forestalled, can you get lower taxes, all those kind of property level things really raise their head, particularly as it affects CapEx. When times get a little thin, figuring out what CapEx is essential versus we can put it off a bit, really key and good property managers really understand that. Good property managers also drive tenancy and occupancy. The real estate market today is real fast thumbnail how we got here. 2019, things were pretty good in almost every sector, pretty good supply demand balance, pretty good capital availability. The pandemic happened. We shut down the economy, about 40% of the economy across the world. It opened up. Demand came back faster than supply for everything, almost everything in the world. That’s why prices went up.

Everywhere in the world, demand came back faster than supply. That was creating inflation. And by the way, that was true of property. So property, a lot of it, you had to stop construction in 2020. You couldn’t start new construction. There were no construction lenders in 2020 and there was a hesitancy to acquire anything in 2020. So the market kind of paused, like every other product in the world really. Then in 2021, demand picked up. Prices, as I said, shot up, was really great for property owners. So for example, just take apartments as a good example. There had not been many apartments created in 2020. There were not many ready to start in 2020. Gee, that was a big rent spike in 21 and early 22, really a big rent spike. And that brought on as it did in every other sector of the economy, more supply. And as that more supply started coming on and with a lag as that more supply came on, guess what happened?

The rate of rent increases kind of disappeared to the point where probably over the last quarter, and I’ll stay with multifamily just a second, the only reason I’ll stay with multifamily is it’s the most transparent because you don’t have long leases that are affecting it. You don’t have big corporate decisions affecting it. To the point where in the fourth quarter probably rents were flat, just flat, some were up by a couple of percent, some were down by a couple of percent flat. And I think that picks up the whole economy. By the way, when you really do a careful accounting of economy-wide inflation, it was zero in the fourth quarter. It was zero. It was more than zero if you look back a year earlier. But if you look from the end of the third quarter to the end of the fourth quarter, there was no inflation, especially when you adjust for housing, which isn’t strangely measured.

I think if you go to the other property sectors, what I said about is pretty true about industrial, not quite as true for retail because retail, nothing was getting built anyway, but you did have demand come back and as demand came back suddenly leasing picked up, suddenly companies were able to do capital expenditures, and so forth. And then office and office is sort of a bit blind right now. Normally when demand picks up, excuse me, when the economy grows, demand for office space picked up, that really hasn’t happened this time. So we had new supply come on that was started 2, 3, 4, 5 years ago, but not much new demand, market is very sloppy, and very hard to figure out the demand pattern going forward. People have opinions but it’s very hard to figure it out. And so that’s a sloppy sector. Therefore it’s the sector where from a property management point of view, can you guide people on what CapEx can be forestalled becomes very important because making cashflow is very difficult for a lot of office companies right now.

Megan Eales Monroe:

So we talked about some of the driving forces that property management professionals need to pay attention to. I would ask: How does this differ for property management businesses who are primarily fee-based? This describes some of our customers and listeners who are in third-party management versus those who are primarily owner-operated. We also have people in the middle boat. How would you characterize the differences in what those two groups should be thinking?

Peter Linneman:

Well, the property managers who are working for integrated companies that they’re part of, they have a more direct responsibility path to drive revenue in terms of leasing to control costs, to go to NOI and back to this what capital expenditure do we really need? Do we really need to paint the parking deck this year? Can we put that off or not? And making those judgements, driving tenancy, being extra pleasant when you encounter the tenant. I have one of my favorite examples of not great property management, goes back some years ago when I was leasing some space here in Philadelphia and I went to a building and I looked at it and to say I was shown the space with indifference is overstating the enthusiasm.

Peter Linneman:

And I took other space for whatever reasons and about three days after I made the decision, I got a call from the owner who I didn’t really know very well, but he knew quote who I was and he called me and says, oh, if I’d have known it was you… And you go, like well why don’t you treat all your customers or prospective customers like if you’d have known it was me, right? I’m joking, but I’m not. It’s those kinds of times. It’s the time where an extra smile, an extra bit of patience, focusing on how important you are to the bottom line. One of the things that happens in real robust capital markets, I think most real estate companies look at property management as you’re picking up nickels and dimes and I’m looking for dollars and $10, right, through acquisition and development.

Peter Linneman:

But when there’s no acquisitions and no developments picking up nickels and dimes, and by the way, if you can find a quarter, you really distinguish. And I think we’re in one of those moments and it’s probably a little easier to generate a bonus if you’re inside the company for such behavior. If you’re a for-fee, I think it’s a little more difficult because, yes, the ideas will be welcomed and, yes, all that, but you’re not as integrated into the process. And therefore really my advice would be really work hard because you want to be able to show you’re doing better than your peers. And we all want to do that and we can’t all be above average, but it’s a time to prove you’re above average, particularly if you’re for-fee.

Megan Eales Monroe:

Yeah. That’s great advice and that’s something that we try to talk about a lot here on this podcast and in our content is just how important it is to deliver great experience every time for the resident, for the owner, for the investor, even for vendors.

Peter Linneman:

And by the way, I have a friend who great developer, but if your dishwasher breaks good luck. If your thermostat’s not working, good luck. Right? And my joke is I don’t have any of my family live in his units because I get tired of calling him every time a random normal thing happens. You know, and to your point, having on the ball property managers who are there, proactive, they follow up, somebody calls, they’re back to them, they follow up, make sure, you know, don’t just fix the sink, call the next day and make sure it’s still working. I mean I’m taking small examples obviously, but those types of things go the extra mile and matter to people.

Megan Eales Monroe:

Yeah. And I would guess that maybe they matter even more in a more competitive rental market where it’s a little bit harder to get those leases signed. Right?

Peter Linneman:

Absolutely right. So there’s two things happening. You’re right. It’s a tougher leasing market and the layer up above is not generating much from acquisitions and development. And so they’re more focused on what’s happening at the property. It’s not to say they weren’t aware, but you have a fixed amount of hour- just think of it that way. You have a fixed number of hours. Most of the top of the company likes to spend 90% of their time on acquisitions, development, dispositions, and financings. Well, if there’s no acquisitions and no dispositions and no developments, I got a lot of time on my hand. And that’s kind of the moment you’re in. It’s a moment to shine as a property level person.

Megan Eales Monroe:

Yeah. So let’s start looking at some of the data from our benchmark report. So I wanted to ask you about this. This year, the vast majority of the property management professionals we surveyed say that they have an optimistic outlook for 2024. More than 81% said they were either very confident or at least somewhat confident about the state of their business for 2024. So maybe this goes back to what you were talking about with the state of the market. Why do you think that property management professionals are feeling so optimistic about this year?

Peter Linneman:

Well, there’s two possibilities. One, ignorance is bliss. That’s possible. Right? And this is a blissful group of people. I think obviously in light of what I said, I think they’re right on target. Will there be challenges this year? Absolutely. As you said, there is a lot of supply in a lot of markets or more supply in a lot of markets than we’ve had in a couple of years. And so that even though there is demand, you just got to work harder to get it because there’s more supply. Office is very challenged as we talk about, although we’re getting some semblance of activity happening again.

Peter Linneman):

So I think they’re right to feel good. I think the economy will grow. I think office will improve. I don’t say it completely recovers, but it improves. Multifamily, things will be a bit soft this year. It’s time to shine, but it’s not going to fall apart on the demand side, that is to say you have a chance to win customers. The worst is when you don’t even have a chance to win customers. Right? That’s the worst. You don’t have a chance to satisfy. You don’t have a chance to show yourself. I think this year because of economic growth, they’re going to have a chance, most of them, to show what they’re capable of and then it’s will they produce. So I think they’re dead on. If I would’ve said, I would’ve said right around 80% should feel that way.

Megan Eales Monroe:

So even though there’s this very generally optimistic outlook for 2024, we did see that property management professionals have slightly lower expectations around revenue, NOI, and headcount than they did when we asked the same question in 2023. Even though they’re still generally looking on the bright side, things aren’t maybe at where they were last year in these three areas. So how do we explain this? Do you have any thoughts about why property managers are expecting lower revenue, NOI, and headcount?

Peter Linneman:

So I think they’re right on target. Remember I was saying, by the way, if you went outside of real estate, you’d find a very similar reaction among shoe manufacturers. You’d find it among chip manufacturers. You’d find it… Why? Because we shut down supply. Demand came back. Prices, rent was very high. You made a lot of profit because demand was there and supply was in shortfall. That brought forth a whole bunch of new supply. And as that new supply comes on, you see prices soften and profits challenge, especially profit growth challenge. So for example, I’ll go outside of real estate just one second, corporate profits adjusted for inflation have been flat for the last year and a half. I mean little ups and downs, but basically flat, which is to say it’s basically keeping up with inflation. And of course there’s not much inflation right now.

Peter Linneman:

As I said, fourth quarter there was zero inflation. Why? Because product after product after product, that same pattern played out of supply lag. You made a lot of profit. As supply came back, you started losing profitability. As that happened, instead of hiring six people, you hired two. Instead of hiring one, you might hire zero. And if you were at zero, you might not replace somebody who retires to help you in the short term with your profitability. Still growing, but… And real estate lagged a little. Why? Because it is one of the sectors that takes a little longer time to bring online. You can ramp up bubblegum production faster than you can build a building. Right? So I think they’re dead on. The challenge is coming from the supply side much more than the demand side. Even office, I think we’ll see much better demand this year, may not be fabulous, but much better. But that doesn’t mean the income’s not going to be challenged.

Megan Eales Monroe:

So in light of those challenges, we asked property managers about what strategies they’ll be employing to try and improve their revenue for 2024. So I’ll hand it over to James here to ask a couple more specific follow-ups on that.

James Erickson:

Thanks, Megan. Yeah. So the research showed that respondents are still interested in adding new units to bring on more revenue, but unit growth looks very different for management companies who are owner operators versus fee managers. So can you help us understand the challenges currently facing owner operators? So for example, what factors like interest rates, debt financing are they up against?

Peter Linneman:

Yeah. They’re up against, well I shouldn’t say all of them. Some of them have no problem. Some of them had products. They put fixed rate debt on their products in 2019 through 2020, early 23, very early 23. They put fixed rate long-term debt on. They’re fine on those properties. If they put on floating rate debt, they did real well in 2021 and early 22. But boy are they paying the price now. So that money that would otherwise be going to owners and properties are now going to the bank. Okay? And you only have so much money.

James Erickson:

Right.

Peter Linneman:

And so checks that you would’ve written either for bonuses or for new hires or for new capital expenditures or acquisitions or developments you’re writing to the bank because the interest rate is up and the short-term interest rate in particular is up. And Sam Zell was a dear friend and in 1990, mid to late 1990, famously said the goal is stay alive ’til 95 for real estate. And in a funny way, I’ve said to people today, especially if they have fixed floating rate debt, the goal is to stay alive till 3.5. That is until the Fed gets the interest rate down to something like that. Why?

Peter Linneman:

Because that would be more normalized. That would free up a lot of cash for acquisitions, for development, for hiring, for bonuses, and for shareholders. Right now it’s all being scraped off to the banks, not all. So there’s kind of a tale of two cities though. Right? If I had good tenants or I have a good multifamily building, for example, and I have long-term fixed rate debt, I’m fine. I’m cash flowing fine. Yep. It’s hard to borrow because borrowing is expensive right now. So I’m not doing much development or much growth, so I’m being cautious. But if you had any exposure to floating rate debt or you’re in office and the property has its debt rolling over for refinance, you want every penny you can find. Your [inaudible 00:27:34] your cash.

James Erickson:

Great. So change the page a little bit. What about fee managers looking to increase the number of units they’re managing? What unique challenges or opportunities do these businesses face in the current environment?

Peter Linneman:

Well, the opportunity is what I was saying before, which is suddenly picking up nickels and dimes is everything.

James Erickson:

Yeah.

Peter Linneman:

And one of the problems, I think quite honestly, one of the problems fee managers have is inertia. Namely, you show up. You say we’re really good. I think we can manage it better than the people you currently have. And we think we can put some money to the bottom line. Now go back to what Megan and I were talking about. The top people are so busy with developments and acquisitions that they don’t have time to really spend to see if that makes sense. When they’re less busy with that stuff, you can actually get their attention more. That’s the opportunity. Now, it doesn’t make it easy. Getting new customers is always hard. Right? It’s not like it becomes easy, but at least the decision makers have more bandwidth and they’re not going to have it forever. Financing is going to come back. They’re going to get back to a period of more development. They’re going to get back to a period of more acquisition. Probably sometime that’ll start in the next six to 18 months.

So I would say strike while you can. They care about, when I say nickel and dimes, I don’t mean to be demeaning, I just mean that it’s not sexy like buying a new building or building a new building. Right? So it’s kind of sexy to get nickels and dimes right now and to try to make your case. You’ve got one of those windows, like the early nineties was one of those windows. The mid seventies was one of those windows. The very early eighties was right in 2010, 9, 10, 11 was one of those windows. Interesting, after the pandemic shut down, it wasn’t such a window. Why? Because nickels and dimes mattered, but everybody was otherwise distracted about just staying alive, all of us, right, distracted whether you’re business or otherwise. So you were spending your time on PPP or what other or how do we work remotely, et cetera. That wasn’t an opportunity. This is one of those opportunities. The window is probably a year. Doesn’t mean you’ll never get somebody after the year, but it’s kind of a year.

James Erickson:

So if I can paraphrase this theme that you’ve been coming back to a lot, the nickels and dimes. So when interest rates are high, it’s harder to buy these properties and find those $10 bills and $20 bills on the ground, but in this environment you can focus more on improving operational efficiency and maximizing revenue and profits that way. Is that what you’re getting at a little bit?

Peter Linneman:

Absolutely. Just think of it this way, think of a property that has a gross profit margin of 68%. Okay? If you can get that to 69, it’s nice, but compared to building a building with a hundred million dollar building with a 20% margin over two years, creating $20 million, spending my time doing that. But in times like this, if I can get that gross margin up a hundred basis points, 200 basis points, it all goes to the bottom line at a time when nothing else is going to the bottom line. Development fees aren’t going there because they’re not developing and acquisition is not occurring. So you’re not getting a creative purchases. That’s the point. Getting one or 2% suddenly is everything.

James Erickson:

So building on that a little bit, what are some metrics that fee managers or investors or owners would be looking for as they’re looking for a new property manager that show, hey, we are maximizing our efficiency here. We’re going to give you more return on your investment, all that kind of thing.

Peter Linneman:

So if I were to do it today, I would approach a prospective new client, if you will, with here’s the CapEx that I think you can forestall and here’s the CapEx I don’t think you can forestall. Now of course we would have to do a more detailed study once we really could do, but based on what we’ve done with other tenants, we found you can forestall a million and a half in capital expenditure on parking lots and, I don’t know, roofs and paint and do whatever. Is it ideal? Of course not. But if I can get a million at a time when interest rates are draining my capital, draining my cashflow by a million or two, that’s huge.

So that would be the first one. Second would be can you demonstrate with as much comparability as possible you get higher margins, that you can generate higher margins, not just talk about them. Can you demonstrate? Is it auditable? You know, it may be. I know because confidentiality, you may not be able to say exactly which building and this and that, but everybody can say, I’ll be nicer than the other person. I’ll be more responsive. Show me. Show me how you’re going to change my capital expenditure and find me a couple of million. Show me how you’re going to raise my margin by one or 2% in the next year. What’s your strategy and plan? How are you going to drive it? What’s your proof in that regard? Those would be the two I’d really, really focus on.

James Erickson:

Great. Love it. Switching gears a little bit, so one of the biggest year over year changes we saw in the data is that last year 70% of respondents said they were looking to raise rents without any unit or building improvements. But in 2024, only 42% said they were looking to do the same. So that’s almost a 30% drop year over year. And just curious to get your take on that.

Peter Linneman:

Well, they’re pretty smart. You go back to what I was saying, supply has come on. So a year ago supply was still in short supply and as you look forward, demand looks stronger than supply, weakening as you’d go through the year, but it was still going to be a year where demand was going to outstrip supply. It’s not that demand has gotten weaker, it’s that that forestalled supply pipeline is coming on now, that was forestalled by a year or two in 20 and 21 is coming on in 22, 23, 24. So I think they’re quite right to believe that. I kind of alluded to it with multifamily is going to going to be plus couple of percent minus couple of percent this year depending on the property, depending on the manager, depending on the market. And it’s going to be real work. It’s going to be real work.

There was a period from like December 2020 through about, I don’t know, third quarter of 21, maybe even into 22. You didn’t have to work very hard to get tenants and you didn’t have to work very hard to get higher rates. They just occurred. Now you had to be alert and revenue manage. Right? I’m not saying you didn’t have to work, but they just showed up. And again, go to multifamily is a good example. They didn’t show up in office, but if you go to industrial, retail, and so forth, they showed up. By the way, retail, I would bet if we could go behind the curtain, retail would be one of the sectors that feels pretty good and I would guess that apartments feel less good and office feels less good because it’s less transparent there. What’s happening? Why does retail feel better? Retail feels better because there’s no new supply. You still have a growing economy and no new supply. That means you’ve got some degree you can push things. So it differs, but that’s what I think is going on.

James Erickson:

Great. We’ve talked a lot in general about the need to improve efficiency and improve margins that way. Just curious, what are some specific strategies that you might recommend to achieve both revenue growth, more profitability in today’s environment?

Peter Linneman:

Let’s do the CapEx side first and then come, because it’s not, that’s kind of below the line, you know, if you will. The comment there is examine everything. Nothing is taken for granted, you know, a kind of fresh look at every dollar you thought you might spend on CapEx and don’t assume anything. Now obviously you’re going to find a lot of them you have to do. I’m not saying so that would be on the CapEx capital expenditure side. On the revenue side, be present. Being present is a large part of success in a business that’s customer facing. Be pleasant. Be present. What do I mean by be present? Nothing’s more frustrating. And again, you see it with a multifamily very vividly. You go to a property, you can’t find the lease- you can’t find the person. You go to the leasing office and nobody is there and you stand around for five minutes and you don’t quite know what to do. It’s like going to an auto dealership and you walk in and there’s nobody to help you figure out what you want to do. Right?

And I think that’s kind of true across the board. Be present. Be present. And follow up. Follow up. Follow up is, again, an all property category. A lot of people, well, first of all, a lot aren’t present. Some that are present do a bad job. Some that are present and do a good job, never follow up to see if it’s satisfactory. Follow up. Build goodwill. Those would be the types of things. I’d ask is there anything we can do that doesn’t cost much that makes the tenant happier? Of course there are things you can do that would make him hap- you can put in a whole new gym. Well this is not the time to put in whole new gyms into most building. What can I do? And ask him, by the way. It’s one of those, when in doubt, ask me. What can you do to make me happier?

And when I was teaching, one of the reasons you didn’t want to know what the students thought is you were afraid what they might say. Right? And I think a lot of property managers are that way. They’re kind of afraid what the tenant might say, so don’t ask them. Right? But ask them what one thing could we do that would make your experience better? Don’t ask them 20 things, what one thing. And if you get one good idea from 20 tenants, that was successful, if you can sort through them. You’re in the customer business. Right? That’s what people forget. Yes, it’s a process business, but it’s also you are the customer facing part of the business in property management.

Megan Eales Monroe:

Yeah. Well, let’s see. We are at time. If you have a minute to stay, is there a question that you wish we would’ve asked you or something that you were hoping to talk about today that we haven’t had time for yet?

Peter Linneman:

Well, the question I always like it when people ask me is how can you be both so good-looking and so brilliant? But I won’t answer that since you didn’t ask it. The question probably is people always get too fixated on the current, just it’s our nature. I think it’s probably evolutionary that we get fixated on the current. Because if I don’t avoid that lion right now, evolutionary, there is no future to worry about. So I do think we get fixated, hardwired to be overly fixated on the short term. I would say that the question is how do you balance out being fixated on the short term and not lose sight of the fact these are long-term assets.

And the comment is anybody can go fire five people. Right? What takes judgment is: Do I need to hire fire five people? Is there a way I can avoid firing any of them? Because there’s a long term here. Right? It’s hard to believe. You’re operating a building with let’s say 10 people currently, and you can really be operating it with five people. It’s hard to believe you were that wrong. Maybe nine, maybe eight if I re-juggle. Don’t lose sight of the fact there is a long-term and what you’re managing through is another one of those short-terms.

Megan Eales Monroe:

Although we covered some big topics with Peter — and gained his invaluable insights into how property management companies can shift their strategies in today’s dynamic real estate market — there’s still so much more to uncover in the full 2024 AppFolio Property Manager Benchmark report.

Download it today at appfolio.com/benchmark, to see what the industry at large expects in the coming year. Use the data to benchmark against your property management peers. And explore even more industry trends and opportunities to grow in 2024 and beyond.

We’d like to thank Peter Linneman for joining us on this episode and imparting his unique blend of scholarly rigor and practical business insights And a big thank you to James Erickson for joining the conversation, too.

We’ll see you next time, here on The Top Floor podcast.

Thank you for joining us on this episode of The Top Floor, brought to you by AppFolio. If you enjoyed the conversation, let us know by leaving a review wherever you listen to this podcast — we’d love to hear your feedback. Also, make sure you’re subscribed to The Top Floor podcast to get notified as soon as our next episode goes live. Until then, we’ll continue the conversation around all things real estate and association management on the Industry Insights section of our website: appfolio.com/industry-insights. We’ll see you there.

Megan Eales Monroe