Playing both sides: Property management and leasing under one roof

Real estate firms that operate both property management and leasing divisions under one roof have a great advantage over firms that only specialize in one or the other. By working in-house through established communication links, brokers and property managers are able to accelerate the leasing process, arrange deals that benefit everyone involved and ensure occupied buildings during times of economic uncertainty.

In typical negotiations, lease transactions are often mired down by parties who can't, or won't, communicate instantaneously. For good reason, each side is primarily interested in protecting its own interests. Though all parties are ultimately looking to close a deal, the leasing broker and the property manager may have very different ideas about what constitutes an acceptable deal. Once the lease is signed, the broker gives up all responsibility for the tenant. Yet, the management side may not be fully aware of the tenant's schedule and other needs, which often results in a difficult move-in process, souring the tenant on the building before the space is even occupied.

At Adams & Company we easily bypass such hassles and eliminate weeks of waiting because every deal that we work on is administered by an in-house leasing representative, property manager and an Adams & Company principal. Prospective tenants deal with the same people from the moment space is shown, up until they occupy their space. Because the leasing and management elements of the team report to the same boss, they are equally motivated to make the entire process as smooth as possible. Since they are both involved with the tenant from the beginning there is no miscommunication or awkward handoff of responsibilities.

We know this approach works better, because we speak from experience. Prior to forming the current incarnation of Adams & Company, David was a leasing representative who frequently dealt with Ken, Adams & Company's longtime property management guru. When David and Jim Buslik, another Adams & Company principal, merged their brokerage team with Ken's management side in 1999, a successful symbiosis was born.

The strategy has helped insulate Adams & Company against the struggling market. While many buildings are operating with a large percentage of vacant space, our properties are doing better than ever. Our overall portfolio boasts a vacancy rate well below the market average and several of our buildings are fully leased -- a testament to the effectiveness of the relationships between the leasing and management teams.

Our approach to working on both ends of a deal primarily benefits the tenants that occupy the buildings we manage. For example, Adams & Company was able to negotiate a tenant's lease and move the firm from our building at 34 West 33rd St., also known as the Childrenswear Center, to another building we manage at 411 Fifth Ave.--all in the span of 24 hours.

In doing so, we freed up the 4,500 SF of space the non-specialty tenant had occupied. That enabled us to shift around several other specialty tenants in a series of transactions totaling more than 11,000 SF.

Now, because we were able to move so quickly in the beginning of the deal, our property management team is able to demolish space and build new showrooms in time for the tenants to be ready for their crucial Market Week, in January. A process that normally would have taken months to arrange will take our leasing and management teams only six weeks from commencement to completion.

Such a complex orchestration would have taken other firms months to arrange (if they could do it at all). Anyone who has tried knows that just arranging the use of freight elevators in two buildings can be a major challenge.

In another example, one can look at the Adams & Company-managed Outerwear Fashion Center, at 463 Seventh Ave. Prior to this year, the building saw very little leasing activity or turnover due to 100% occupancy with tenants that held long-term leases. During that time, the outerwear industry endured major changes. As a result, many of our tenants needed to move: small firms so they could take the larger spaces they had grown into, and larger tenants into spaces more appropriate for their now-reduced size.

As a result, in a very short period of time, we negotiated an interlocking series of deals for more than 50,000 SF in this building alone. Such a tremendous volume of activity might normally have stalled, perhaps costing the owner lost revenue, if the property management and leasing teams had not been so well integrated. The Adams & Company team that handled the deals was able to quickly and smoothly facilitate all of the leases.

In both of these cases, the deals involved specialty buildings, a vital chunk of the properties Adams & Company represents. The tenant rosters in these buildings are uniquely adaptable to movement within the building. In this unstable economic time, the specialty focus is also a powerful magnet that helps attract and retain tenants who need every advantage they can obtain in their businesses, including proximity to others in the industry.

The Adams & Company strategy also makes things easier for the property management team. When evaluating the costs of new air conditioning systems for one of its properties, Ken looked to David for help in determining tenant needs. The Adams & Company brokerage team had its finger on the pulse of the market and was able to evaluate complex tenant timetables relating to Market Week, peak and off-peak usage, and climate control preferences. Subsequently, the property management team was able to quickly and reliably determine the best course of action.

Similarly, thanks to valuable experience working with other property owners, the Adams & Company leasing team was able to instruct its own management team on what property features most appealed to tenants and what were major turnoffs, as well as how addressing those issues can help the firm stay competitive in a down market.

When the leasing representatives saw tenants dissuaded from making offers at properties that were dirty and in disrepair, they made sure their own property managers renovated their buildings, installed new windows and elevators, and refurbished lobbies. Now, Adams & Company frequently receives praise for keeping its buildings in excellent shape, everywhere from the front lobby to the less visible freight and loading areas. By merging the leasing and property management teams on its properties, Adams & Company frequently cuts out six weeks or more in unnecessary delays. Because we have long-established relationships and maintain a commitment to seeing a deal through from start to finish, we are able to build loyalty among tenants, and minimize or eliminate vacancies due to rotation in our buildings.

COPYRIGHT 2002 Hagedorn Publication
COPYRIGHT 2002 Gale Group