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Property managers adjust to market changes.

The property management business has undergone major changes over the last few years -- changes that have profoundly affected our business. Four major trends shape the property management and leasing business today: a growing need to establish size, an emphasis on maintaining an owner's perspective, the ability to attract and retain tenants, and -- of course -- the need to perform well.

Property management has become a volume business. To make a profit requires economies of scale in terms of systems, offices and staffing. You can't make money by managing one building in one market and one building in another. Profit margins are too small to bear start-up costs in every region.

It's no accident that larger, institutional companies are getting into property management and leasing. They have relationships with national tenants that will benefit their leasing efforts everywhere. These companies tend to have the more advanced accounting and reporting systems that owners now need to keep up with their portfolios.

The second key to successful management is maintaining an owner's perspective. Property owners today are often sophisticated investors with large real estate portfolios. They need managers who can view their properties as long-term investments. Managers that can provide market information and investment performance analysis will have an edge in winning business.

All of these services help win contracts. But more than anything else, the strongest selling point a manager can offer is the ability to obtain tenants. And they can't be just any tenants. As we all know, competition for stable, credit-worthy tenants is intense in this market.

In the 70's and 80's, owners needed national brokerage networks to expose their properties continually to new tenants. Today, they need management companies that can retain the ones they have. Tenants are now smarter, more sophisticated, more demanding -- and fewer. Competing for them will require a new level of market knowledge and rapport. Retaining them will mean considerable savings in terms of lease commissions, build-out expenses, and marketing costs.

To retain tenants you'll need on-going attention to detail and tenant service every day, every hour, every minute. Tenant retention programs help -- programs like anniversary gifts, flowers, lobby events, and concierge services. But most important is being there when tenants call and being responsive to their needs. That's easier said than done. But that's what will separate the wheat from the chaff in terms of surviving in the property management business.

Finally, owners want excellent performance. Quality level and service sell better than pricing. Top professionals and effective systems cost money but are worth it in the long run. Ultimately, top performance is always recognized and rewarded. We try to strive for it in everything we do.
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Title Annotation:Review & Forecast, Section IV; small profit margin requires volume approach to property management
Author:DiRuggiero, Ralph J.
Publication:Real Estate Weekly
Date:Jan 27, 1993
Previous Article:Proactive approach key to property improvements.
Next Article:Zund Realty reports leases.

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