Property Management Trends: Hot Links, Priuses, Birkenstocks
An all-star panel shared secrets to keeping buildings full at our first SoCal Property Management Summit last week.If you think property managers just stock restrooms and chase away kids doing the Harlem Shake in the parking lot, think again. Videos courtesy of our friends at Allen Matkins.
Our moderator, Allen Matkins partner AlainR'Bibo, here with Hines VP of property management Brian Plymell, asked what improvements can deliver the most bang for the buck. Brian says two projects come to mind, both with a five-year payback. The first:repositioninga Class-B asset intoClass-A with a 20% pop in rents. (With a little hard work and extra tutoring, any B student can get A's.) The second: putting fuel cells into a building Hines has under construction in San Diego. Video.
According to PMA CommercialCOO Pat Lacey (left), the value of property management becomes even more apparent in a down cycle. When rates are decreasing, one place owners look for upside is their property managers. Tenant retention is a huge measure of success because keeping a tenant is five times cheaper than finding a new one. (The devil you know is better at paying rent than the devil looking to relo.) In thesmall to middle market thatPat's firm operates in, his guys have to be a lot more detailed to stay on top of operating expenses and budgets. That also turns out to be a good measure for success because when they deliver those results, the owners appreciate it regardless of whether the market is up or down. Video.
Health Care REIT VP of operations Kevin Kirn saysproperty management is even more important in the healthcare field. Having come from a general office background, he found it interesting that formedical tenants, cost takes a backseat to service, operational efficiency, and relationships with their hospital systems. "It requires us to create a new breed of property manager"--someone who's very good at the core skills but also can have a conversation with an orthopedic surgeon in the morning and a hospital administrator in the afternoon. (Soon there will be Rosetta Stone for property managers.)Many of the REIT's properties now include surgicaland imaging suites, which take building infrastructure to a new level. Video.
Equity Office VP of operations Charlie Hobey says in the doom-and-gloom days, operating expenses were the No. 1 focus.A key change: tilting the pendulum back towards customer service and delivering value. Key in influencing tenantretention is the manager's responsiveness--it doesn't cost a lot of money to be available. Equity introduced the hot link, whichisn't something you slather with mustard on a bun; it's an experiment in communicating with tenants in an emergency via the company's website, getting away from thetypical phone tree. The firm has also explored Facebook and gettingtenants to follow properties on Twitter. Video.
With a portfolio of entertainment, tech, and media properties, Kilroy Realty SVP of asset management John Fucci is seeing a bigshifttoward collaborative tenants versus traditional office users, which brings unique challenges--managers have had to be a lot more flexible. Finding talent is another issue, and Kilroy has had success with internship programs. He noted most folks who got into the business didn't initially want to be property managers--as a real estate finance major, he planned to become a developer. (People's views change: Didn't we all want to be astronauts at one point?) But it's a great way to have a stable, successful career. When guys doing development get laid off in down cycles, property managers are still working. Video.
More than 200 joined us at the Montage Beverly Hills, where the panel also discussed technology. Kevin notes thattransferringelectronic medical records throughout a healthcare system has meant the broadband capacity that Health Care REIT needs in its buildings has increased dramatically. What's on John's technology wish list? A carrier-neutral wireless repeater so that tenants can finish their cell phone convos in parking garages or elevators. Also,wireless cameras that can be moved around area great security aid. Recently, cameras placed in cars throughout a parking garage helped managers identify who was responsible for vandalism.
Sustainability was a hot topic.Pat says the 1,200 to 1,500 SFtenants thatcomprise the majority of his portfolio aren't excited about energy costs; they're just trying to "keep their widgets going." Brian says when Hines first rolled out a program to recognize tenants on this topic, it found that 20% were enthused. The next 80% required someone from the property management side who was passionate aboutsustainabilityto find the right person in the tenant's office who "drives a Prius and wears Birkenstocks" and then spreads the culture within the company. (Who knew sandals were required?)
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What will be the next big property management trend? Let us know at firstname.lastname@example.org.