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Macklowe Org. shares lessons learned.

Profile/Manhattan Pacific Management Company

Macklowe Org. shares lessons learned

While they had toyed with the idea of third-party management, it was not until last year when the Macklowe Organization acquired the management portfolio of Marty Raynes that they decided to share their secrets to operational success with the rest of the industry.

Manhattan Pacific Management Company Inc. is a new entity of the Macklowe Organization that has merged the managing of the 20 or so buildings owned by the parent company -- roughly half residential and half commercial -- with the 80-plus Raynes contracts -- predominantly residential and valued at over $3.5 billion. And they are seeking new commercial, co-op, and condo assignments.

Kent Swig, executive vice president of the Macklowe Organization, is president of the new management company. "We've taken his buildings and our management expertise and put them together... We had the basic structure here already to operate buildings."

The name reflects the company's bicoastal portfolio. Besides New York, the Macklowe Organization owns properties in Los Angeles, Arizona, Colorado, Oregon, and Washington. "Manhattan Pacific is a name that's less than one year old, but the services we've been providing are over 30 years old," said Kent Swig, president of Manhattan Pacific Management Company, Inc.

In addition to contracts, some of the Raynes staff merged with Macklowe to make a corps of 110 professionals. Michael Farrell is executive vice president, is responsible for the operation and maintenance of the entire Manhattan Pacific management portfolio.

According to Swig, they offer services "through an owner's eye" with an emphasis on "quality control and cost control."

One of the management innovations the Macklowe Organization has developed is their system of handling preventative maintenance, which Swig cites as a building's largest expense. They have been able to control work to a minimum, Swig said, by maximizing "each piece of work." Together with their Department of Informational Services and their maintenance staff, they have listed each piece of preventative maintenance done in a year designed their own software that schedules out the tasks on a daily basis. According to Swig, they have reduced costs by 20 percent.

They also track all commercial tenant and resident complaints. Each complaint is logged with the date, time, name of person who answered the complaint, who is going to answer it, and when it was fixed.

Manhattan Pacific also offers the Macklowe Organization's "collective buying power" with its Macktel Purchasing System, which offers pre-negotiated bulk rate discounts on a per-unit basis for all supplies. Each purchase order is posted in the computer system for review by each individual building. Owners can research the information using whatever variables he desires, for example, purchases over $100; purchases over $50; purchases for preventative maintenance, etc.

Swig said this system represents "tremendous savings which go right to our buildings."

Timely rent collection, Swig said, is a top concern. "We very vigorously pursue the collection of rents," he said. Manhattan Pacific has a collection group which reports immediately to inhouse counsel when there is payment problem. Consistently late payments, Swig said, can result in hundreds of thousands of dollars in lost interest.

Manhattan Pacific tracks space, visually and numerically, through its Space Management System. Each building has its own "book", updated monthly by the director of its CADD (Computer Aided Drafting and Design) department. The books contain tenant profiles, floor plans, tenant specific plans, stacking plans that indicate visually where and when space is expiring and rental rates as they compare to the market, a lease expiration schedule, a space detail report, and spreadsheet for cash flow, rent roll and present value monitoring.

Swig said accurate and timely information of this sophisticated level is of utmost importance to owners so that they may make educated decisions.

When purchasing a property on the West Coast, Macklowe was able to gain an understanding of the building's space that the sellers didn't have. "In three weeks we knew more about their building than they knew in three years. And they told us."

They also make an effort to provide tenants with information through their procedures manual. "What we do for owners we also do for tenants...if you have better relationship with tenants they'll probably renew." After all, Swig said, renewal is the cheapest type of deal to make.

Swig said Manhattan Pacific also boasts an impressive leasing track record and relationship with brokers. Avenue of Americas Plaza at 125 W. 55th Street, owned and developed by Macklowe, is significantly leased and other large leases are pending. The building includes as its tenants National Bank of Canada (45,000 square feet), Kredietbank (33,000) and Katz Communications (180,000 square feet.) Developed on behalf of ownership by Harry Macklowe Real Estate, the company's development division, and built by, McGraw Hudson, the firm's construction arm, the project was built in 11.5 months, saving a lot in construction costs, Swig notes.

"We have a knack for being able to negotiate very complicated leases," he said.

Swig said they also have very rigorous employee training and application processes. They require and pay for each manager to pursue the Building Owners and Managers Association's (BOMA's) Registered Property Manager course and get their certification.

"We believe that training people is very important so spending the money is critical."

The firm also has a very careful evaluation system for new applicants. Using a psychological test developed with a company in Nebraska, Macklowe can search out those applicants that have the pro-active, "entrepreneurial" approach they look for. Swig said the Hotel Macklowe in its first year boasted less than 19 percent turnover. Turnover in a hotel's first year is usually close to 100 percent.

While concentrating on new accounts in New York and Los Angeles right now, Swig said they are not limiting their plans for the future.

"We'll grow in other cities if the opportunity arises."

The Macklowe Organization has developed over $2 billion worth of property during the past 10 years. It is the owner and developer of some of Manhattan's most impressive commercial and residential buildings, including: Two Grand Central Tower, The NYNEX Building, Metropolitan Tower, and the recently opened Hotel Macklowe. The firm is comprised of seven operating companies specializing in real estate and development, construction, property management, purchasing, hotel development and management, and telecommunications.

PHOTO : Kent Swig President Manhattan Pacific Management Company, Inc.
COPYRIGHT 1991 Hagedorn Publication
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Manhattan Pacific Management Co.
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Article Type:company profile
Date:Jun 5, 1991
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