Maintaining occupancy rates has moved to the No. 1 threat for property managers, according to AppFolio’s third annual Property Manager Benchmark Report. This has increased 20% from 2023 and has overtaken inflation as the top concern.
Rising insurance costs was cited as the next biggest threat by 40% of property managers, especially in the disaster-prone Southwest and West regions. AppFolio noted its data is in line with research from Deloitte Center for Financial Services, which projected that insurance costs for commercial real estate could increase by nearly 80% nationwide by 2030 and could double for businesses in higher-risk states.
The report, which is based on insights from over 2,000 property management professionals, also found that labor and supply shortages as well as employee churn have decreased as threats since 2023.
The surveyed professionals cited deploying the same strategies in the past. Nearly half of the respondents, 48%, said they are focused on reducing costs, while 42% each said they are streamlining maintenance operations and training staff to improve efficiency.
However, property managers also are turning to technology. AppFolio noted the largest year-over-year increase for improving efficiency was seen in the adoption of artificial intelligence (AI) tools—rising from 17% in 2024 to 28% this year. Adopting new technologies increased from 31% to 36%, and making better decisions using data increased from 28% to 32%.
AppFolio took a deeper dive into the AI insights, finding individual usage increased from 21% in 2024 to 34% this year.
“The percentage of property managers saying they are planning to use AI in the future has remained static, but we see a significant drop in the respondents who say they have no plans to start using AI,” noted the report. “The use of AI has also increased significantly across companies of all sizes (with larger businesses making the biggest gains) and among the gamut of property management roles.”
The survey found the most common use of AI for respondents is resident communication at 60%, and over half—51%—used it to improve resident satisfaction, an 8% year-over-year increase.
In addition, while fewer respondents reported being unfamiliar with the technology, 40% said they are skeptical about the reliability and accuracy of AI, up from 34% last year.
The biggest concerns for implementing AI included security and data breaches at 41%, up from 36% in 2024; regulation and compliance at 33%, up from 28%; and employee training at 30%, up from 27%. Nineteen percent reported having no concerns about AI, down from 21% last year.
Other key findings include:
- 70% of property managers reported they track resident satisfaction, up 10% from last year;
- Bringing maintenance in-house saw the biggest increase for opportunities to cut costs, rising 13% year over year to 29%;
- 40% of professionals said they are more concerned about online fraud incidents than a year ago, and 37% reported they are more concerned about data security; and
- In the past year, 79% of respondents said they experienced payment fraud and 88% experienced data issues.
“Like many others, the property management industry is working to navigate a challenging macroeconomic environment without losing focus on its most important priority. In our case, that’s the resident. AppFolio’s latest report highlights an important milestone in our industry when it comes to quantifying the resident experience: 70% of property managers now track resident satisfaction, a 10% increase from last year,” says Sean Forster, industry principal at AppFolio. “With the now widespread ability to measure satisfaction, there’s a growing emphasis on enhancing the resident experience. Many operators are recognizing that technology plays a crucial role in setting a new standard for resident experience. Now we’re seeing the majority (51%) of operators use AI and automation to help them streamline operations without sacrificing a personal connection with their renters.”
