Published on February 22nd, 2024
By Marc Frenkiel, Brittany Benz

In a real estate landscape where change is the only constant, success depends on having a finger on the pulse of the market and industry at all times. To stay relevant and prepare your business for what’s next, you must understand how and why the property management industry is shifting. 

“The property management industry is entering 2025 at a moment when rising vacancies, growing competition for renters, and increasing concerns around fraud and cybersecurity are creating a more challenging business environment. These challenges, however, also present an exciting opportunity to innovate, streamline operations, and deliver even greater value to residents and property owners alike.” – 2025 Property Management Benchmark Report

Here are the top property management trends that are impacting the market today:

Competition Is Increasing as Construction Peaks and Household Formation Cools

In response to the soaring demand for housing amid rental shortages over the last few years, multifamily residential developers have increased construction to a 50-year high. In 2023, the number of new multifamily apartment units under construction hit 1 million for the first time, and this construction trend  is expected to continue with strength. 

Coupled with Apartment List data that suggests the rental market has recently cooled because of slowing household formation in response to concerns about the economy, it’s safe to say that competition in the rental market is fierce. As a result, maintaining high occupancy rates is top of mind in 2025. Squeezed margins, more competition as vacancy rates rise, and the changing environment of an increasingly-modern “AI era” all contribute to the factors that today’s property managers are facing.  

To stay competitive against brand-new units and modern built-in amenities, existing properties will need to find ways to differentiate themselves to continue to attract and retain residents at the same rate. One powerful way to do so is by easing the pressure on renters’ wallets.

The AppFolio Property Manager 20254 Benchmark Report found a continued  increase compared to the previous year in the rate of property management companies offering “flexible rent solutions,” which include security deposit alternatives, flexible and/or online rent, and instant payment solutions. These solutions serve to mitigate the risk of delinquencies and maintain high occupancy since renters seek out these services — especially with inflation putting more pressure on household budgets. 

Artificial Intelligence Continues to Improve and Become More Accessible

AI truly took center stage this year, with 28% of respondents leveraging AI tools to improve efficiency year-over-year, up from 17% in 2024. 

Research from our 2025 Benchmark Report shows that the adoption of artificial intelligence (AI) technology is just beginning to accelerate. Thirty-four percent of property management professionals surveyed for the report currently use AI, which is an increase from 21% last year. 

Leveraging this cutting-edge technology can help streamline and automate operations, leading to elevated occupancy and business growth. The data shows that improving efficiency continues to be  the benefit that property management professionals are most excited about. 

 

Costs Remain Elevated

Although the rate of inflation continues to unpredictably fluctuate , key property management expenses such as insurance (which has become an even greater top threat, year-over-year ), taxes, interest rates, and unit turns remain stubbornly high. In fact, 39% of polled property managers ranked “rising insurance costs” as a top threat in 2025 when compared to 29% in the previous year. 

To combat this trend, the 2025 Benchmark Report shows that property management companies are focused on raising topline revenue via portfolio growth while reducing costs by filling vacant units faster, negotiating better rates with preferred vendors, negotiating bulk discounts on orders, adopting smart AI solutions, and consolidating software platforms. 

Data Security and Fraud Are of Increasing Concern

Property management professionals are more concerned with data security and fraud this year and have experienced more security issues. According to an NMHC Pulse Survey:
“Nearly all respondents to NMHC’s Pulse Survey on fraud (93.3% of the total) reported experiencing fraud in the past 12 months…The vast majority of respondents (70.7%) also reported experiencing increased fraudulent applications and payments in the past 12 months.”

Data from our 2025 Benchmark Report corroborates these findings, with year-over-year increases in concern about fraud incidents, data security, and actual incidents of security breaches and/or fraud.

Employee Turnover Has Slowed, but Hiring Remains a Challenge

From working weekends to being on call after hours for maintenance emergencies to weathering customer service highs and lows, property management is a demanding job that sees higher-than-average turnover rates. Continued demands for higher wages to combat fluctuations in inflation, a better work-life balance for flexibility, and broader opportunities for career growth only add to staffing complexities. 

While labor shortages as well as employee churn have decreased, it is important to keep talent management as a top priority. To attract and retain top talent in today’s tight labor market, property management employers need to rethink what they can offer teams and how to make work more meaningful. While this does include offering more competitive wages and benefits, employers should also consider some of the strategies outlined in the AppFolio Hiring and Retention Report.

Continuing Nurturing Your Team Members’ Careers

As a leader, the first step you can take in nurturing your team members’ careers is to question the assumption that you can’t create career paths for every role. This takes getting to know your team members’ hopes, aspirations, and ambitions, as well as some outside-the-box thinking. 

Once you’ve found promising future leaders, our data shows that bringing them into the fold is a meaningful way to make them happier at work. Forty percent of survey respondents reported not being satisfied with visibility into strategic decisions and goals, while 77% said this is important to them.

Become More Efficient and Productive With the Team You Have Now

Boosting operational efficiency without hiring additional team members is significantly less challenging with the right technology. In the Hiring and Retention Report, employees not in leadership positions reported 36% of their time is spent on “busywork.” They also said 15 hours per week — or 38% of a 40-hour work week — could be optimized or streamlined through technology.

Automating busywork can enable team members to focus on more complex, creative, and high-level tasks. 

Additionally, the largest year-over-year increase of the 2025 Property Management Benchmark Report was the percentage of respondents adopting AI tools to improve operational efficiency, with an 11% increase since last year. It will continue to be critical for teams and property management leaders to embrace this acceleration of AI adoption while facing industry pressures and challenges. 

Keep Your Property Management Company Competitive in 2025 and Beyond

Here are some actionable steps you can take to address the five trends we’ve discussed:

• Stay competitive by understanding how residents’ needs have shifted and meeting their new expectations.
• Find ways to eliminate inefficiencies across your business and leverage new AI technologies to maximize output without cutting budgets or impacting growth.
• Look for ways to protect profitability amid rising costs by filling vacant units faster, negotiating better rates with preferred vendors, negotiating bulk discounts on orders, and consolidating software platforms. 
• Prioritize software that provides important security and anti-fraud solutions, including screening tools that can flag fraudulent information on renter applications and bank-grade cyber security certified by SOC 1 Type 2 and SOC 2 Type 1 and 2 certifications.
• Attract and retain professional talent by offering competitive wages, encouraging and investing in your employees’ career development, and helping them work more efficiently.

By embracing these emerging trends, pivoting your business strategies, and putting the right solutions in place, you’ll be better able to attract great talent, serve your residents, and gain a head start over your competitors. 

Download the 2025 Benchmark Report to compare your outlook for the year ahead with that of your peers and put trends that you may not have been aware of on your radar so that you can prepare, overcome, capitalize, and grow in 2025 and beyond.