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Opportunity knocks in 90's for asset managers.

1991 was exhilarating but a bit threatening. The troubled economy and the remarkable changes in Europe and the Soviet Union undermined some of our most enduring assumptions. It was a year of challenge, and for Saparn Realty, Inc., a year of opportunity.

The challenge for a full service real estate firm in the 90's is to remain strong and flexible. The opportunity is asset management. Full service firms offer a wide range of services including brokerage, sales, consulting, development, and commercial and residential property management. When the market shifts, so must the energy and resources of the firm if it is to survive and succeed.

The market for sales and brokerage services is significantly less now than it was in the mid- to late 80's. The market for commercial sales, however, is improving. There are some amazing offerings available right now and sensing that the worst is over, many businesses are exploring buys for expansion or investment purposes. Residential sales are about the same, but this is to be expected since residential sales often rise in response to news that commercial activity has increased.

In great demand for the 90's is quality asset management, and for good reason. Professional management maintains asset value. It is an effective, cost-smart solution for owners who want the best return on their investment, better services for their tenancy, and more time to devote to new investment or development projects.

The key of course, is securing management with a proven track record of success. Getting the facts and figures from references is a good place to start. Owners are more than willing to provide a reference when professional management is furnishing dollar-saving solutions, preventive maintenance, and responsive, take charge, day-to-day supervision. There Row Phase I is a good case in point.

In 1991, Theatre Row Phase I, made the decision to reorganize its office structure, removing the day-to-day property management responsibilities from their staff, and transferring them to an outside professional. Kelly Zanders, administrative manager of the 42nd Street Development Corporation, and administrator of the 42nd Street Fund was involved in finding and selecting professional management for Theatre Row Phase I.

When Saparn Realty, Inc. met with Zanders, she presented us with this challenge, |We have chosen your firm, knowing that you are the personality who can replace us in the sometimes sensitive interpersonal communications with tenants. We want someone who is totally familiar with the various operating procedures and regulations particular to the city, and organized in a manner which will allow cost-effective response to the day-to-day repair and maintenance requirements and calls for assistance." Saparn was prepared to seize this excellent opportunity.

I personally went to meet the Theatre Row Phase I tenants, most of whom are in the creative arts or the restaurant business, to introduce our services, and see firsthand what needed to be done. Part of my job is to explain the role of management, establish a communication link, and clarify tenant responsibilities. When the president of the managing firm makes these important connections, the message is clear. Accountability exists at every level of the organization, and decision makers are available to be on-site when they are needed, not cloistered away somewhere in an executive office.

Kelly Zanders further noted that she would only "hire a firm with the level of experience and integrity that could be trusted without question." According to her, "Anita Sapirman and the staff at Saparn Realty, Inc. fit the bill"

Managing Theatre Row Phase I is a very rewarding experience. I remember this stretch of buildings on the south side of 42nd Street between 9th and Dyer Avenues prior to its conversion by the 42nd Street Development Corporation. The area was a dismal example of neglect and misuse. Today, thanks to the efforts of the 42nd Street Development Corporation, created under the auspices of the Municipal Art Society of New York, and now a private, not-for-profit, tax-exempt Local Development Corporation, Theatre Row Phase I houses five theatres, six resident theatre companies, a popular French restaurant, and an apartment building. The street has become an exciting incubator for the arts, attracting investment, visitors, jobs and tax revenues.

Securing professional outside management for their properties has enabled the corporation to pursue other goals, and to move closer to realizing their vision of transforming 42nd Street into a Grand Boulevard. At the same time, the corporation is able to address the needs of the Theatre Row Phase I tenancy through professional managers, as well as protect the integrity of the property itself through our preventive maintenance program.

Saving time is significant to owners, but saving money is an even more compelling reason to acquire professional management of a commercial or residential property. Our insurance division has accomplished an estimated average savings of $2,000 to $5,000 on annual insurance premiums for every client.

Saparn staff visit municipal agencies and research the history of a property. They look for existing violations, frontage age taxes, proper insurance coverage and mortgage payments. Extensive record searches have caught duplication errors of frontage bills, resulting in some cases, in payments that cost clients thousands of dollars.

Level billing is one way we give stability to an existing budget, and develop credit for the future. With level billing, energy and fuel expenses are spread over a 10-month period so there is no large outlay during the high-use months in the summer and winter seasons. If there is a credit at the end of the 10-month period, and in most cases there is, this is applied to the new year.

Level billing is just one example of how we help our clients maintain control of their resources and not be at the mercy of rapidly fluctuating oil and energy costs.

Many owners are under the mis-impression that it takes a long time for a management firm to deliver on a promise of substantial savings. Experienced, efficient managers can show you cost-saving results almost immediately.

When we took over management of 116 West 72nd Street Realty Corp. in July, 1991, the shareholders were very concerned about saving money without compromising their excellent investment, or their quality of life. They were looking for fast results, not "lip service," and they gave Saparn the opportunity to institute cost-saving strategies.

We offered references from our portfolio, information on our staffing, and an outline of cost-saving initiatives that could be implemented immediately.

Donald Cabral, the vice-president of 116 West 72nd Street Realty Corp. gave us high marks for "outlining a plan for the co-op to save money by replacing overpriced vendors, such as oil, insurance, painting and plastering, with ones more in line with the building's budget.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Building Management, Section I
Author:Sapirman, Anita
Publication:Real Estate Weekly
Date:Mar 25, 1992
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