Capital Markets

By Gunderson, Kristin | Journal of Property Management, January/February 2006 | Go to article overview

Capital Markets


Gunderson, Kristin, Journal of Property Management


Power panel discusses value property managers add through understanding of properties and market by Kristin Gunderson

Property managers are as valuable as the proplerties they keep or rather, the knowledge they keep about their properties.

A panel of leading real estate executives discussed the valuable role property managers play in the acquisition and disposition process at the "Capital Markets" session offered during the 2005 IREM Education Conference in November.

They advised property managers to be informed not only about their individual properties but to be aware of the state of surrounding markets: Having such knowledge, panel members said, maximizes the value of properties as well as strengthens the relationship among property managers and other real estate team players, including owners, leasing agents, asset managers and vendors.

"As property managers, you have to almost take the bull by the horns and be the clearinghouse of all the disciplines that come to your property whether it's leasing, whether it's vendors coming to your building, whether it's dealing with the ownership," said Vince Ciavarella, CPM and president of commercial property services for Sares-Regis Group, AMO. "The property manager is that person in my opinion that pulls it all together, that takes responsibility and is challenged to not only know [his or her] property but to know the market and all the players in their market."

The panelists specifically mentioned property managers' abilities to raise rents and maximize their skill sets to add value to real estate transactions.

Raising the rent

With the market on an upswing, panelists said property managers should be prepared to raise rents: All property types' occupancy rates are improving year over year; rents are improving for some property types year over year; and all signs are positive for leasing with moderate growth and rising interest rates, according to information from CB Richard Ellis.

"You don't have to give away as much as you did," said Darla Longo, executive vice president for CB Richard Ellis' institutional group. "It's becoming a landlord market and not a tenant market, so when those tenant rep brokers come in, and they ask for their full pop, you can push back now and save your owners a lot of money. It's a shift."

Jim Walsh, managing director of the JPMorgan Fleming real estate asset management group, said it's important for property managers to follow the market and understand the prime times to raise rents-a key component to their job, making them important to the rest of the real estate team.

"Life in our industry is cyclical," Walsh said. "We believe you make money on the way up and the way down, positioning yourself to outperform the market. You can't outperform when things are flat and you are making market deals. The most important thing for property managers and leasing agents is to try and figure out when to raise rental rates-when they can push those rental rates so we can maximize the values of the properties."

Longo said the time to raise rent is now, when the market is transitioning from a recovering market to an expanding market.

"Rents are improving," Longo said. "I think the message is don't be afraid to raise the rent. We notice when it's in a transition phase, ownerships that have gone through a lot of pain in leasing are maybe a little reluctant to push the rents as much as they could."

Walsh said property managers need to be proactive when it comes to raising the rent, enhancing the value of the property and the value of the property manager to the owners or investors.

"This is where we need property managers to push the rates," he said, "and one of the best strategies we have had is to keep pushing those rates until we start losing deals. Until you start losing deals, you don't know you're at the top rental rate in the market."

Maximizing skill sets

Because property managers can have a direct effect on property values, finding qualified and knowledgeable property managers is important to owners and asset managers, the panelists said. …

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