Property Management Firms: Friend or Foe?

Oct. 1, 2009
Property management groups have long been thrown into a general category of low bid prospects for commercial service agreements. Albeit there is much

Property management groups have long been thrown into a general category of “low bid” prospects for commercial service agreements. Albeit there is much supporting validity to this idea, when categorizing the various types of management groups, there are many opportunities as well. Never assume that all management firms subscribe to the same buying motives. They're customer-driven, much the same as we are.

When prospecting property management firms, you must identify three details to determine their potential. These include:

  • The property management company's buying motives
  • Their relationships with customers (building owners/investors)
  • The opportunities that exist for getting information in the hands of the final decision makers.

In every major metropolitan area there are several types of property management companies. My first preference is the local management group that manages a comparatively small number of buildings. This group would probably represent l0% of the total buildings in any given area.

These firms are drawn to higher-end building owners and occupants. Medical clinics and upper end office complexes residing in upscale commercial areas make up their customer base. They have demanding customers and building occupants who won't be satisfied with simply a “low bid” program.

One benefit in working with up-scale management firms is their tenants are more long-term occupants. This increases their value to the management company and their demands for quality service. While the local, selective management firms provide opportunities in long-term comprehensive maintenance programs, they're also a great source for Green opportunities, control retrofits, and planned replacement programs.

The second group, representing the vast majority of buildings, are national and/or regional management affiliates. They focus on multiple-building owners, often having properties in several states. They want continuity in maintenance and repair procedures, which is best provided by a national or regional property management company. For this reason, such buildings are usually not owner occupied, a huge qualifier when pursuing higher end service agreements. One problem with this group is the higher number of short term owners. Many are investors looking for bargains, increasing occupancy, and dumping the property for a tidy profit. These owners/investors are more willing to gamble on a minimal coverage maintenance program.

In larger facilities, (100,000+ sq.ft. feet), the property management company usually employs an on-site building manager. Their responsibilities typically include leasing, tenant improvements, and procuring maintenance on all facets of the building.

On-site managers would prefer to move to the more comprehensive programs including full coverage. This greatly reduces their personal day-to-day involvement and the down side risk of cost over-runs in premature replacement. However, comprehensive programs rarely fit into their budgets.

The third group consists of smaller management companies that focus on the strip malls and small walk-in office complexes. The tenants are usually short term and are often required to provide their own HVAC maintenance. This means, “how low can you go?” I'd give this group the least attention.

In general, property management companies walk a thin line trying to keep building owners satisfied, while not extending the budget. They'll tell you their main goal is to reduce costs. Because of this, they want to shield their customers from you. You can't present directly to the building owners, therefore the hidden costs of premature replacements, needless energy waste, and rising repair costs are not addressed until it's too late.

Use This Tool

I recently acquired a national study compiled by the largest property management company in North America. This has become an effective selling tool in my arsenal. The study was conducted on millions of square feet of office space in all geographical areas. The participants in the study were graduate engineers and PEs with tenure.

The study concludes that proper preventive maintenance doubles the useful life of unitary equipment while reducing energy bills (attributable to HVAC) by more than 20%. The increased focus on proper maintenance also shows a reduction in repair costs by 30%.

All this to prove what we already know. Quality, recurring maintenance doesn't cost…it pays.

Earl King is the founder of King Productions International, a commercial HVAC contracting sales consulting firm based in Texas. In addition to consulting, Earl travels the country giving talks to associations and trade groups. as well as writing this column for Contracing Questions or comments can be directed to: [email protected] or call 515/321-2426.