Thanks for the input and suggestions everyone! I do like the fact that Gunnar is protective! That is one of the reasons I love German Shepherds. My main concern is that I was originally going to have to move to a different apartment in order to have a GSD because the apartments where I live had them on their list of banned breeds. I think that list is ridiculous by the way.Anyway, they changed their policy and allowed me to get Gunnar and stay at my current apt. I was just a little concerned if the neighbors consider his behavior aggressive or just annoying that they may start complaining to management at the building and force me to have to move. If I lived in a house it really wouldnt be an issue. I do definitely need to work more on his obedience however. When he starts reacting to someone walking by or another dog, he just focuses totally on that and doesnt really listen at that moment if I tell him to stop or sit. Again, I really dont mind his behavior that much, its just that right now he really doesnt distinguish between what is a threat and what isnt. He just reacts to almost everything when we are outside on the apartment grounds. If we are somewhere else he is not so bad except barking at other dogs. Thats not as much of an issue.

I understand. Here in CA GSD are on the aggressive dog list of most homeowner's insurance policies as a bad risk and a lot of them will drop you if you have one....not pay more, just drop you.

He is still a puppy and just needs you to work with him. Since you are on this web site, I am assuming you are concerned about his well being. I am sure he is going to grow up to be a great dog.

James;
A 7 month old dog is not being protective. He is unsure. I would NOT pet the dog during this behavior, trying to calm him as the dog interprets this as praise and you would be telling him that being unsure is good. I would immediately start marker training him (get Ed's video)and give him something else to focus on instead of the things that he is unsure about. I would not allow others to touch an insecure puppy (lots of threads on this site about that subject). You need to become his source of comfort (become his leader). Good temperment is NOT breed specific. This is really a pet peeve of mine. Bad temperment is not acceptable in any breed. Puppies go thru lots of stages, for example between 6-9 months fear period, but we certainly want the dog to not "over react to his environment". We as owners need to see our dogs for what they are and then give them what they need to prosper in this world!
Good luck and Happy Training!
Roni