As the year has wrapped up and 2023 is full speed ahead, it is the right time for property management companies to gain an overview of emerging market dynamics and start planning for the future.
The broad property management industry includes a variety of segments that all have the potential for growth, such as STR (short-term/vacation rental), long-term single and multifamily operators, PropTech, and more. While most professional managers focus on a single vertical, some adventurous types are able to find success across these verticals. In order to set yourself up for success, as a property manager, you should focus on key indicators to grasp upcoming growth opportunities in the market.
To help you understand the current state of the industry and what you should expect in the next year, we have discussed the emerging industry trends with Extenteam leaders and asked for their predictions for 2023.
A Broad Look at 2022 Property Management Industry Trends
Currently, the property management industry in the US alone generates in excess of $99 billion in annual revenue and is expected to grow even more. Though the expected market expansion seems promising for operators to grow their business and ROI, there are significant fluctuations in the market, such as increasing operational costs, workforce deficit, wage inflation, and customer demand.
Let’s take a closer look at how these factors impact the market today and get insights from Extenteam leaders.
1. Increasing Wage Inflations and Workforce Deficit Complicated Finding and Retaining Team Members
Maintaining a property management business is a demanding job. Property managers need highly skilled team members on board to ensure the quality of their operations and guest or resident satisfaction.
Since 2019, wages for the accommodation sector have increased by over 23% and worker churn remains high at a historical rate of 6.8%, which makes HR, recruitment, and staffing by far the most urgent challenges for property managers in today’s market.
Today’s property managers need effective staffing solutions like outsourced staffing to attract and retain qualified team members, improve operational efficiency, and maximize profit.
We Help You Find the Right Talent to Deal With All Your Operational Needs
While You Focus on Expanding & Scaling Your Business!
2. Demand in the Property Rental Market Is Increasing
In 2022, global inflation increased from 4.7% to 8.8%, which resulted in higher interest rates than expected. This shift translated into expanded mortgage rates and rising home prices.
One result is that in today’s hot housing market, selling or buying a house is more challenging than ever.
As house prices increased, people started looking to rent homes instead of buying. In fact, to keep up with the long-term rental demand in the multifamily and single family rental market, the US needs to build 600,000 more long-term rental properties.
The increasing demand for long-term rentals is promising. Still, with more renters that work from home, residents have started to prioritize lifestyle amenities and better experiences. This means the responsibility of property managers has risen to provide residents with better services to increase their profit.
A study shows that 29% of residents are planning to relocate to a rental community with better amenities when their leases expire, which means to stay competitive, managers need to focus more on improving their operations.
3. The Definition of Guest Experience in Vacation Rentals Is Changing
Providing a customer-centric experience is critical for vacation rental operators to keep occupancy and average daily rates up, get better guest reviews, and increase the number of repeat bookings.
Setting and managing guest expectations is more and more challenging. With the emergence of the COVID-19 pandemic and increased cost of living, the way guests work, live, vacation, and rent has transformed.
Today’s STR customers are seeking out additional benefits with the cost advantage. They prioritize the safety and cleanliness of a rental more than ever, look for more individual and digitalized experiences, and focus on traveling more sustainably.
Short-term rental managers must understand the guest expectations in the market, stay up to date accordingly, and improve the quality of all operations throughout the guest journey.
4. Technology Remains a Key Factor for Operational Efficiency)
The emergence of the COVID-19 pandemic led property managers to digitalize their guest and resident services. Therefore, operators began to utilize PropTech technologies, emerging in the industry as property management software options, IoT, and AI, all of which create opportunities to improve the effectiveness of their operations and guest satisfaction.
2023 Predictions From Extenteam Leaders
So far, we have evaluated the trends in the property management market with experience-packed insights from our leadership team. Now, let’s take a look at their predictions for key segments in the industry.
1. The War for Talent Will Continue
Between late 2020 and early 2021, the global service industry experienced a great resignation movement, narrowing talent pools in all industries. Today, the great resignation is over by all accounts. Still, the workforce in the accommodation sector remains smaller and better paid.
This situation indicates that the war for talent will remain a reality for the hospitality industry in 2023, and operators will need to find a way to recruit and retain highly skilled team members to grow their business without compromising their competitive edge.
2. PropTech Adoption Will Accelerate
It is clear that PropTech products and services will add even more value to guest and resident services in the near future. In fact, the PropTech market size is expected to account for $86.5 billion in 2032, advancing at a CAGR of 16.8% during the forecast period. Therefore, both Proptech start-ups and property managers will be looking for qualified software developers to add value to their operations.
Providing streamlined communication and improving efficiency and security of data management will be key to lowering operational costs and expanding profit and productivity.
3. Short-Term and Long-Term Managers Will Have to Adapt to Changes in Affordability and Demand
Due to increasing house prices in 2022, next year, the rental market is likely to experience a steady demand. The real challenge will not be about satisfying demand– it will be about offering affordable options, because as the cost of living increases, potential guests and residents will be looking for cost-saving rentals.
This situation might force managers in the industry to keep prices of lease renewals and offerings low to avoid pricing out reliable and potential guests or residents.
Therefore, throughout 2023, keeping efficiency high to prevent costly operations will be key to managers offering a price advantage to their guests and residents.
4. Outsourced Staffing Will Remain a Competitive Advantage
From decreasing operational costs to reaching a wider talent pool and providing a better guest or resident experience, outsourced staffing has numerous benefits for property management businesses. Because of the value it represents, outsourcing at least a portion of an operator’s staffing becomes a crucial trend to rely on for a competitive advantage.
Extenteam Is Here to Help!
With more than 15 years in the property management industry, we help our partners in the short-term rental, multifamily, and PropTech industries reach their full potential through a strategic and effective approach to outsourced staffing.
As the #1 trusted outsourced staffing provider worldwide, Extenteam is more than ready to lighten your HR workload and help you meet and keep qualified team members on board.