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Worry-Free Ownership
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From janitorial
services to intelligence services, property managers offer it all.
By Peter Downs
If your image of a property manager comes from old television shows,
you are in for a surprise. “We are not the janitors anymore,” says
Henry Voges, senior property manager at Jones Lang LaSalle. Property
managers still oversee the physical care of properties, but they
also do much more. They are sales agents, financial analysts and
investment counselors.
The major responsibility of property managers today is to keep a
building fully leased, Voges says. That means property mangers need
to understand the market and the competition. They have to know
the strengths and weaknesses of their own buildings, and the buildings
they compete against.
When he started out in the business 20 years ago, “property management
was very simplistic and straightforward,” he says. “It was taking
care of the physical aspects of the building: making sure the HVAC
worked, the offices were cleaned, and the sidewalk got shoveled
when it snowed; and making sure the rent got collected and the bills
paid. That was it.”
Jones Lang LaSalle manages 3 million square feet of office space
in St. Louis, mostly for out-of-town institutional investors, such
as real estate investment trusts (REITs).
“Our owners don’t know the St. Louis market,” Voges says. “They
rely on us to tell them what the market is, what the competition
is doing, and what they need to do to remain competitive.”
Whether owners are targeting high-tech firms or lawyers as tenants,
they expect the property manager to know what it will take to land
them. When the Millennium Center, which Jones Lang LaSalle manages,
had a 50,000-square-foot vacancy earlier this year, the manager
sought to fill it with a law firm. “We know from the market they
like to have large conference rooms, but they don’t like to pay
for them,” Voges says. “Their thinking is ‘why have a 3,000-square-foot
room we only use four times a year?’ We had vacant space on the
first floor, so we remodeled it into a conference room. That helped
us land Evans & Dixon,” Voges says.
The Westin Group manages a variety of property types for individual
owners, including office buildings, service centers, warehouses,
shopping centers, storage centers, and apartment complexes. Westin
Group does not work for institutional investors such as REITs or
large banks. But Elisa Mullins, director of property management
for Westin Group, says the demands on her firm are very much like
the demands on Voges’, and foremost among them is keeping the building
fully leased.
Keeping a property leased is really only a means to a goal, she
emphasizes. “Owners have different goals,” she says. “Some are short
term, some are long term. Some live off of the income, some invest
in other things...An office building owner may want to use the income
to catapult into another building. But other owners don’t want any
growth. They just want to keep everything the same. They built for
a reason: to help specific types of tenants grow and move out...
“So the property manager has to clearly determine what the owners
want and then execute that plan.”
Many individual owners, even if they are local, do not have the
time to keep up with all the information needed to run a building.
That’s part of the manager’s job. “You have to know the market and
let them know what is happening with other buildings,” Mullins says.
“You have to give them options and feedback, but you also have to
be proactive and take care of things before they become problems.
And when there are problems, owners want to hear about it from you.
They don’t want to be caught off guard and hear about the problem
from a brother-in-law’s wife’s sister, who happens to work in the
building.”
Another big part of the job is enforcing the lease. One of the major
reasons individual owners hire property managers is “they don’t
want to be the bad guy,” she says.
The basic package of property management services remains the same,
says Cathie Crowley, senior real estate manager for CB Richard Ellis.
An owner “should absolutely expect a property manager to collect
the rent, pay the bills on time, and contract for maintenance services,”
she says.
Beyond that, there is a menu of services, and different owners may
select different items from the menu. “Some owners have you do financial
accounting, and some want you to be the construction manager on
tenant finish work,” Crowley adds.
The basics of customer service and tenant satisfaction haven’t changed,
Voges agrees, but delivering them has become more complicated over
the past 20 years, in part because of new laws and regulations.
“We’re expected to know a little bit about everything,” he says.
“We’re expected to understand the ADA [Americans with Disabilities
Act], and how it affects build out of tenant space or the renovation
of a bathroom. We’re expected to know indoor air quality issues
and asbestos regulations. And the Y2K fear meant we all had to learn
building systems.”
The greater complexity of modern building systems and building regulations
is a powerful argument for hiring a property management firm, instead
of hiring an individual to perform that function.
“If I were an owner, the biggest benefit of a firm such as ours
would be the broad based knowledge that is at our disposal,” Mullins
says. “With such a gamut of building types, we see a lot of different
problems, and we have a lot of contacts, contractors and suppliers.”
Crowley agrees, “When you hire me, you get our support staff, our
building engineers, our construction managers, etc. When you hire
CB, you get my experience and that of our 9,000 other people. It
is one stop shopping. If I don’t know something, somebody here will,
so you don’t have to shop for it.”
As the economy slows, it becomes even more important for owners
to have a good property management firm, Voges adds, because “as
leases come up, tenants will have more and more choices.” So understanding
their plans and needs, and what the competition is doing, will be
even more important.
Peter Downs is a free-lance writer and editor of Construction
News & Review. |
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