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Property management to see modest expansion.

At American Landmark we feel that the property-management market has bottomed out, and are optimistic about the future. We have increased our management staff, and are positioned for an industry upswing.

1992 saw the consolidation of the industry with rising efficiency, and fees remaining fairly constant. We predict modest expansion for property management in 1993 and most growth in our company will come from increasing market share.

However, 1993 should still be viewed as a year of modest expectations, and a continued return to basic values. Property managers will be challenged to work within greater constraints than ever before. Operating smart and efficiently will be the key factors. Some of the areas where savvy managers will make a difference are: (1) Equipment and component maintenance and replacement strategy; (2) improving energy efficiency; and (3) coping with increasing government regulation without eroding the bottom line.

Clients still will expect an unparalleled degree of professionalism from real estate managers. Successful ones not only will come equipped with state-of-the-art systems, but also will bring a holistic view to their assignment. Owners will expect advice on a par received by corporations from their investment bankers.

For example, we recently took over the management of a large residential complex. At the outset, it was clear that there would be a cash shortfall for the year, but it was politically inadvisable to increase maintenance costs. We analyzed all the possible sources of cash, and recommended an aggressive program to collect tenant receivables, renegotiate payment schedules for certain capital programs and renegotiate escrows associated with the second mortgage.

With these actions, we balanced the cash budget for the year. Such strategic thinking is the level of expertise that clients demand.

Also in the rental market, be aware that expectations of residential tenants will not diminish at all in this competitive environment. In fact, the opposite is the case. Rental property owners will be squeezed between rising costs and demanding tenants. We help our clients by economizing everywhere except where it affects the tenant. We focus on energy efficiency, insurance premiums (which will rise in 1993 as a result of the massive natural disasters of last year) and property-tax assessments. We often increase expenditures where it's meaningful to the tenants, such as lobby and elevator upgrades.

Certainly, the primary focus of 1993 in property management will be the preservation of the property's value. This requires the careful husbanding of cash flow. Good judgment is essential.

American Landmark manages more than 4,700 condo and co-Op units throughout New York city.
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Title Annotation:Review & Forecast, Section V; property management market expected to improve in 1993
Author:Brecher, Oskar
Publication:Real Estate Weekly
Date:Jan 27, 1993
Previous Article:Positive signs exist for buyers.
Next Article:Lack of construction draws spotlight in '93.

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