Publicly-traded manager enters New York area.

At the beginning of this year, Koll Management Services (KMS) entered the New York metropolitan area, naming William D. Fugazy, Jr. regional president for operations of the real estate property and asset management company.

Koll Management Services acquired the property management and leasing portfolio of Tishman Management and Leasing Services Corporation in January, thus, marking KMS's entry into the Big Apple and its surroundings, as well as Atlanta and Virginia.

Fugazy, formerly president of Tishman Management and Leasing Services Corporation in New York, noted that KMS now has an East Coast presence of 10.5 million square feet of commercial space. KMS, headquartered in Newport Beach, California, currently manages more than 70 million square feet of commercial space occupied by more than 10,000 tenants throughout the United States.

KMS wasted no time making its presence known in the New York area by recently announcing that Margolin, Winer & Evens, Long Island's largest accounting firm, leased 35,904 square feet of space in 400 Garden City Plaza in Garden City, Long Island. The deal, representing the largest new office lease in Nassau County this year, was negotiated by Joseph Farkas, KMS vice president of Leasing and Marketing.

The lease brings 400 Garden City Plaza, a blue reflective glass, five-story building completed in 1988, to 80 percent occupancy. Tenants in the 174,412-square-foot building include Scully, Scott, Murphy & Presser; Utica Mutual Insurance Co.; and Metropolitan Life Insurance Co.

Other recent assignments include: A 460,000-square-foot office building at 111 Livingston Street in downtown Brooklyn for New York Telephone Company and 2 Rector Street and 250 West Street in Manhattan.

"As part of the KMS family, we are setting a new standard of excellence in New York, where the quality of property management has remained static for decades," said Fugazy. "'The KMS corporate culture and economies of scale afforded by an organization of this size, as well as opportunities to cross lease from one city to another, have given us a competitive edge."

In addition to expanding into the New York City market, KMS also increased its portfolio with the acquisition of Chicago-based Rubloft, Inc., a transaction which became effective in July and adds 30 million square feet to KMS's national management portfolio.

"This venture is consistent with our continuing strategy of using acquisitions both to expand into new territories and to increase our strength in existing KMS markets," said William Rothe, president of Koll Management Services, adding that KMS has acquired 10 such portfolios in the past three years.

"The Rubloft portfolio, 88 buildings in 14 cities, is very strong in regions we have identified as key growth markets for our industry," Rothe added.

Fugazy explained that the central focus of Koll's management approach is based on four principles: Controlling building operations and costs, maintaining and enhancing customer and tenant service, providing superior managerial and technological support, and aggressive marketing.

"Owners should get on the firing line and answer complaints," Fugazy said. "Owners should sense the pulse of their tenants. That's what we're trained at. The tenants are the lifeblood, and quality service has to be guaranteed."

Just as the media kept drilling Bill Clinton during the presidential campaign with "It's the economy, stupid," Fugazy said, when it comes to real estate, "It's the tenants, stupid."

Koll's performance record has demonstrated that the company is concerned with client satisfaction through design and implementation of specific property operating plans defined by the needs and objectives of a respective property and its owner.

According to Fugazy, Koll's portfolio has boasted a 90 percent occupancy rate over the past five years; more than 8 million square feet leased directly by KMS managers in 1991; and a more than 78 percent tenant retention rate, including tenant expansions, contributing to high occupancies and high returns over the past five years. Koll has also maintained portfolio real estate value above the NCREIF(National Corporate Real Estate Investment Fund) property index for the last five years in both appreciation and cash returns.

In its Nov. 9, 1992 issue, Forbes Magazine ranked KMS second on the magazine's list of the nation's 200 best small companies. This is the second year in the row the company has achieved this honor.

According to Forbes, KMS placed second to Cambex Corp., a Massachusetts-based maker of IBM-compatible computer equipment, in a study of more than 4,400 companies nationwide with annual sales of $5 million to $350 million, comparing their latest 12month sales.

KMS, which went public in July of 1991 and became the only public company on Wall Street -- trading on the NASDQ board -- that is strictly a real estate property manager, posted a profit of $2.7 million in 1991 on sales of $29.1 million.

The company is an off-shoot of The Koll Company, a California real estate developer and property manager, which still owns 60 percent of Koll Management stock. Prior to its initial public offering, KMS was operated as a wholly-owned subsidiary of The Koll Company.

According to Fugazy, a key to Koll's success is that each regional director is empowered to operate a small scale KMS, resulting in decentralized operations that enable a timely and comprehensive response to the' specific needs of a client in a given geographic locale.

"Observing retention of tenants is critical and monitoring lets you forward plan and anticipate tenants" needs," said Fugazy. "'We want to know what our clients are happy about, what they're critical of. That information is of increasing value."

Fugazy stated that on a monthly basis, Koll generates a set of financial reports for every one of the company's projects, including aged receivables, capital account statements, operating analysis, budget versus actual comparisons, trial balances, subsidiary ledgers, check registers and a variety of special reports customized for clients.

"At Koll, we receive monthly tenant satisfaction reports broken down by region," Fugazy said. "You can't have the old 'mom and pop' service accounts. You need greater financial analysis to be an effective asset manager today."

KMS relies on computers for tracking preventive maintenance, work orders, and energy management to provide managers with up-to-date information to better manage their accounts.

Farkas said KMS has recently launched Koll Corporate Alliance Group, a real estate consulting and advisory service that uses a proprietary software product in conjunction with expert management counseling. The program serves as a facilities management tool, providing up-to-the-moment information on maintenance, contractors, environmental data, and lease expirations. The service is critical today, Farkas said, because scaled-down corporate real estate departments must plan for decreased space needs.

"It's a software product that's very user friendly," said Farkas. "It's on the cutting edge of technology. Everyone sees the package and they want it immediately."

Fugazy stressed that such innovations to improve the delivery of data are essential to an asset manager in order to stay on top of things and immediately develop strategies for the future.

KMS also offers a training and development program through "Koll College," which provides courses for employees to learn how to better serve clients. The emphasis at Koll College is on teaching technical skills and developing productive tenant/partner relations and improving productivity. According to Fugazy, the company spends $750,000 per year to offer intensive training to its employees.

"Koll College is not a gimmick," Fugazy said. "Everyone must conform to the Koll foundation."

Courses at Koll College cover such areas as negotiating with integrity, the principles of building operations, the latest energy management techniques, how to enhance-tenant relationships, and how to achieve customer service excellence, to name a few.

"If a porter wants to become a property manager, there are a lot of incentives," said Fugazy. "If a porter's ambition is to take my job, I say, 'Go for it."