Property management enters a new era.

Residential property managers are feeling the challenge of new companies entering the marketplace. While some management firms are losing managers who are setting out on their own with lower fees, other managers are finding they need a broader base to operate and are combining forces to offer better services to clients.

Facing negotiations with the building workers' union, building managers are also dealing with reality and getting prepared for a strike as the worse case scenario.

They are also concerned with the security of the buildings and ensuring no unauthorized people gain access.

On the commercial side, John Griffen, director of management for Edward S. Gordon, said there has been a shift from developers back to the financial institutions.

"There is a strategic analysis that has to be done for every property," he explained, to determine the building's position with regard to other properties. When a property goes back, they have to evaluate the property as to whether they hold, sell, put money in, determine if there a return on capital or if they are throwing good money after bad. "The institutional managers of assets need a lot of help from the real estate professional," he added.

Griffen noted a trend to corporate outsourcing of the management of their corporate headquarters. While ESG manages about 25 million square feet in the metropolitan area, of that 13 million square feet are corporate headquarters in New York City. "Many are occupying what they have and are growing out of the space," added Griffen, noting that is a positive sign for the city.

The growth of corporations and big bonuses for financial workers has translated to a spurt in the residential side, with many people looking to trade up their apartments.

Marcia Taranto, president of Taranto & Associates, which manages residential buildings, said although sales have increased, it is not picking up the way it was many years ago. "They still feel the apartments are a good value but are moving because their lifestyles are changing. The ones that have had to sell at a loss needed more space and had to go on with their lives or were being transferred."

Jerome Belson, president of the Associated Builders and Owners of Greater NY and his own company that owns and manages 15,000 primarily rental apartment units, said security is one of the top issues. First comes price or rental costs, and then location, and then security, he said. "You want to make sure the doors are locked and the doorman is on duty and no unauthorized people can come

Taranto said many co-ops and condos are very concerned with their financial stability. "They are budgeting closely,'" she said. "Those with J-51's are being hit with huge increases in real estate taxes and are concerned with meeting expenses and keeping maintenance and common charges low so resales will not be hurt. Money is still very tight."

Refinancings are still going on, with some buildings on their second and third go-rounds.

Belson said they are installing water meters on a case by case basis. Where they have ;an aged population there is no increase in costs, but where there is a heavy concentration of families-or doubling up, there is an increase in the metered water cost.

"We are trying to negotiate a limit on the increase per year with the city," he said. "All the conservation techniques can't overcome the fact that if ten people are in the apartment they will use more water."

Taranto is also concerned about the window of opportunity closing for water metering and the onerous penalties that will be imposed if the building does not have its meter in.

Like everyone else, Taranto complained about the overwhelming paperwork required by city agencies. "If you put up every sign you were supposed to in the lobby you would have a wall wallpapered with signs," she sighed. "You have to be super conscientious."

Timothy J. Fine, senior vice president and managing director of Charles Greenthal Group, said the management business continues to experience an expansion of smaller agents going independent. "I think the full service companies are going to be in demand because the business requires the sophistication the back office can provide.

That trend is illustrated with the upcoming joint venture between Ketrec Management and American Landmark Property. "We will have over 8,000 apartments," said Salvatore J. Carrera, president of Ketrec Management, who will take the title of Chief Operations Officer at American Landmark. "The wave of the future for large companies is the way of the joint venture in order to stabilize the management industry and to give full service to the client base," he said.

It's not just taking care of the physical plant, Carrera noted. Managers are involved in the financial health of the properties and complying with laws with regard to running co-ops and condos, including the J-51's, tax certiorari matters, Major Capital Improvements, and so forth.

"We concentrate on the whole building," he said, "but the professionalism that erupted around management is that you have to be qualified around all matters. You have to be a psychiatrist."

Fine also observed that management has to remind Boards of Directors to maintain their integrity. Where there are fee issues, even a sublease fee, there comes a time where a good manager needs to remind the boards that even the token recognition of waiving a fee would not be in their best interests, he noted.

"You don't even want the appearance," he said. "It's may be just a small fee, but I think when management explains the importance of integrity that $100 or $200 fee looms large."

The business of managing buildings also deals with employment of many people. Irwin Gumley, president of Gumley-Haft Inc., who is also president of the Apartment Owners Association and sits on the Realty Advisory Board, said that group has been meeting to plan its negotiating strategy with Local 32B-J, who represent doorpeople, elevator operators, handypersons and porters. "We've done a lot of negotiations within," he explained, as discussions among the Advisory board members continues.

Belson said he is getting prepared for a possible strike. "Every time there is a negotiation we have a Standby plan," he explained. Taranto said she already has a security company on call as well.

On the management side of things, Gumley said asbestos continues to be a problem, "because there is a lot of confusion as to what we have to do." He mentioned multi-family registration and other city requirements becoming onerous. "Every day there is another requirement we have to put up with," he noted.

Gumley also is concerned about the undercutting of fees within the industry. "There are only a certain number of clients that realize they have to pay an adequate fee or they are cheating themselves."

Belson said people have to realize real estate is not limited just to the 400 or 500 people who own commercial buildings.

"For every one of those there are 50 people supplying the real estate industry, from salt to paint to electricity to plumbing, and this Buildings NY Show vividly displays this to government and elected officials."

City statistics show for every dollar a tourist brings in, there is an eight times effect. Belson observed, "In real estate there is probably a 50 dollar effect." His company employs one person for every 40 apartments, he noted. "It's a total industry. It's just not limited to the buildings on the horizon."