IBJNews

Commercial brokers trying property management in hard times

Back to TopCommentsE-mailPrintBookmark and Share

The commercial real estate slump is prompting several Indianapolis brokerages to add property-management services to their portfolios or bolster existing ones.

Rising vacancy rates are driving the trend. Overall office vacancy in the metro area rose to 20.6 percent at the close of 2009, up from 18 percent the year before. The retail market fared nearly as poorly.

More tenant vacancies increase the chance of foreclosure, causing lenders to grudgingly assume ownership of properties that need management services until buyers are found.

Brokerages increasingly are seeking those property management opportunities to supplement a loss of leasing activity, though they admit the work is less lucrative than tenant representation.

And some management opportunities are coming from cash-strapped developers looking to save money by consolidating brokerage and property-management services with one firm rather than contracting them separately.

Jeff Henry, managing principal of the local office of St. Louis-based Colliers Turley Martin Tucker, Indianapolis’ largest commercial brokerage, is noticing the trend.

“We’re seeing people who wouldn’t normally be in that business, get in that business,” he said. “But that’s not unusual in tough economic times when companies are looking at other income avenues.”

One brokerage that’s branching out is Resource Commercial Real Estate. The Indianapolis-based firm, founded in 2005, launched its property-management division just last fall and has recruited a couple of industry insiders to lead it.

Jim Logan, president of Resource’s property management group, previously held executive positions at local developers REI Investments Inc. and Browning Investments Inc.

He’s joined by Dave Ciechanowicz, whose experience includes stops at Lauth, another developer, and at brokerages CB Richard Ellis and Sitehawk Retail Real Estate.

Resource Principal Tom Osborne said the firm so far is managing one property that he declined to name because a court still is untangling receivership details.

“Lenders don’t want to own or control properties,” he said. “But when they do, they’re looking for someone to get in there and help them.”

Resource is in discussions to manage a few other large buildings, with a goal of having 1 million square feet of space under management within the next year.

Logan, a 25-year veteran of the property-management business, said the challenge of leading Resource’s upstart division attracted him to the company.

A wealth of competition shouldn’t disappoint.

Checking the pipes

Count Ambrose Property Group, a local developer and broker, among the new entries to the property management field. Firm partners Aasif Bade and Pat Chittenden launched Ambrose in 2008, and the property management division only a few months ago.

Bade is a former executive at Indianapolis developer Duke Realty Co., while Chittenden cut his teeth in the construction industry.

“There are a lot of distressed properties that we’re trying to get our hands on,” Chittenden said. One they bought is a multitenant building in Richmond that they also manage.

Ambrose manages two other properties, including an office building at East 96th Street and Gray Road.

The pair recruited Phil Armstrong, another former Duke manager. He oversaw management of nearly 1 million square feet of office space at Keystone at the Crossing, as well as more than 1.5 million square feet of industrial property at Park 100 on the northwest side.

Chittenden acknowledged the firm has struggled a bit to secure property-management deals with other building owners, but the partners remain upbeat.

“We’re more than willing to go to a building once or twice a week just to make sure the pipes don’t burst,” he said.

A key challenge the upstart divisions face is competition from larger brokers and developers with well-established property-management services.

The local office of Colliers Turley has 30.5 million square feet of space under management, according to statistics provided to IBJ. Duke trails just behind with 29.8 million square feet.

Financial services key

Not far behind the two behemoths is NAI Olympia Partners. The local broker offered property-management services until about seven years ago when the executive in charge, Bill Stoops, joined Veritas Realty LLC and took the work with him.

Olympia re-entered the property-management business about three years ago when a group of investors bought the Disciples of Christ building at 131 E. Washington St. and turned management responsibilities over to Olympia.

The building now is nearly fully occupied, as the rate has climbed about a third, said Olympia principal Gus Miller. He attributed the firm’s hands-on management of the structure to the leasing success.

“The critical element is the property manager,” he said. “That’s who takes care of the tenant.”

Olympia since has grown the division and is managing more than 20 properties, including the Indiana State Teachers Association building on West Market Street downtown.

The growth led Olympia to add Ken Petruska and Audrey Lawson to buttress its property-management division.

Petruska arrived in early January from local developer Kite Realty Group Trust, where he managed a portfolio of 8 million square feet nationally.

Olympia’s leasing of 30 South Meridian, which Kite managed, impressed Petruska enough to make the leap, he said.

Lawson arrived in spring of 2009 and brought critical accounting and finance experience from Lauth and Colliers, as well as from the former Backer & Backer PC real estate boutique.

To be sure, property managers provide more than simply ensuring the grass gets mowed and the garbage collected. A large part of the job involves financial obligations, such as providing monthly reports on building assets, tracking insurance costs and even appealing property tax bills.

Danny Marr, a Veritas co-founder, said, “It’s not at all glamorous. It’s rolling up the shirt sleeves.”

‘Hard to justify’

Marr should know. He launched Olympia Partners in 1990 and helped start Veritas in 2003, at which time Stoops from Olympia joined him to lead Veritas’ property-management efforts.

Veritas manages 41 properties and 3.2 million square feet in seven states. The firm’s portfolio is retail driven and includes Markland Mall in Kokomo and Fair Oaks Mall in Columbus, as well as Chapel Hill Shopping Center at 10th Street and Girls School Road.

Marr described the growth of the firm’s property-management division as “slow but steady.” Yet, its property-management work last year outpaced leasing activity, due to the soft commercial real estate market, Marr said.

Veritas employs a certified public accountant, property managers, maintenance technicians and support personnel.

That investment in employees is a big reason why property management seldom becomes hugely profitable, he said.

“If you don’t have a couple million square feet under management,” Marr said, “it’s hard to justify.”•

ADVERTISEMENT

  • Property Management
    http://www.wmdouglas.com is the Raleigh HOA Association Management I was talking about
  • CT Condo Association Services
    I use a Charlotte NC Property Management Company and they are on top of their game.
    • Acorn Group has over 100 combined years of Managment Experience!
      Opening up a management firm is not easy and can be an overhead nightmare. We have been working in Property Management for over 40 years and have a combined experience of our Property Managers in excess of 100 years.

      We have professionals with the RPA designation from BOMA and CPM designations from IREM.

      We also hold the prestigous AMO - Accredited Management Organization - credential from IREM.

      We believe in customer service and taking care of the customer is the #1 priority. When times are tough, if you own property, you need to rely on proven professionals that know what they are doing.
    • Agree
      Our company launched an alliance in March of 2009 with our long itme real estate counsel, and Schneider Corproation to handle Asset & Property Management for financial institutions. To date not one financial institution has been willing to embrace the over 50 years of experience in this field we can offer.It is a great idea and it should be handled by professionals who are members of ICBOR & IREM and have the experience to handle these assets as receivers or asset managers to ensure minimizing losses and maximizing market opportunities.

    Post a comment to this story

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
     
    Subscribe to IBJ
    1. The Affordable Care Act is not the reason for the slow recovery and lack of high paying jobs for low skill workers. This is a trend that has been going since the early 80's. The recovery is real in the sense that GDP has been growing steadily at a rate of roughly 2.5% since the recession ended in late 2009 (newsflash, the stimulus worked) and the unemployment has been steadily dropping. The reason issue we are facing deals with a skills gap (not enough workers with the right credentials / experience) and wage stagnation due to corporate America being focused solely on maximizing profits for shareholders and not caring about the American middle class. Why should they? Multi-billion dollar mutlinational companies keep offshoring their profits in order to avoid paying taxes (which makes our deficit worse) they convince Americans to fight amongst themselves. If you want to create jobs and reduce the deficit, raise the minimum wage and change corporate tax laws. Of course, if you want to continue to belive that tax cuts for wealthy create jobs (which they don't) and allow corporations and the wealthy to continue to make you cover more and more of the costs of maintaining infrastructure, funding the military and other government services, then keep voting Republican. Hopefully someday you wake up and realize what's been going on since Reagan took office.

    2. Helloooooo, my name is Kate. I am so joyous to share this wonderful testimony about what Dr. Osoijiakhena, a great spell caster, did for me and my family. I wedded a year and 6 months ago, we were very happy during this whole period, i really love my husband so so much. I started noticing changes when he started coming home late at night, he stop paying attention to me, i later found out that he was having an affair with another lady, i dont know what she did to get to him but she really got a hold on him. He started spending weekends with her, and threaten for divorce. I was so heart broken and devastated, i spent many night thinking on how to get my husband back. A friend took it upon herself to to introduce me to one Dr. Osoijiakhena, a great spell caster, who once helped her with a spell that reunited her family and helped her husband secure a very prolific job. Though i had my doubts and never believed, but i decided to give it a try because i was helpless. I contacted Dr. Osoijiakhena, the Spell caster, to help me reunite my family by bringing back my husband from that other woman and break whatever hold she had on him. He only just told me that it's a minor issue, once i provide and do everything he will ask me to do, then i will have my family back again. I did everything he required. And he did it!!!!! My husband returned back to me and pleaded for forgiveness, and i also secured a well paid job in a big company, just as the great spell caster, Dr. Osoijiakhena said. I am so so happy to share my testimony on this wall. I am using this medium to tell every one that has same or similar problem to try the great Dr. Osoijiakhena through his mail: drosoijiakhenaspell@gmail.com......he is so real!!!!! He can also help you with: (1) IF YOU WANT YOUR EX GIRL/BOYFRIEND TO RETURN BACK TO YOU (2) IF YOU WANT YOUR HUSBAND/WIFE BACK (3) IF YOU WANT TO BE PROMOTED IN YOUR OFFICE (4) IF YOU WANT YOUR MAN OR WOMAN TO LOVE YOU (5) IF YOU WANT A CHILD (BARREN) (6) IF YOU WANT TO BE RICH/WEALTHY (7) IF YOU WANT YOUR HUSBAND/WIFE TO BE YOURS FOREVER (8) IF YOU'VE BEEN SCAMMED AND WANT YOUR MONEY BACK (9) IF YOU ARE HAVING DELAY IN GETTING MARRIED (10) IF YOU HAVE A COURT CASE AND WANT TO WIN (11) IF YOU'RE A DRUG ADDICT AND YOU WANT TO REALLY STOP (12) IF YOU CANNOT IMPREGNATE A WOMAN (STERILE) (13) ALL TYPES OF DISEASES I advise you to contact the great Dr. Osoijiakhena, the spiritualist for solutions via his email: drosoijiakhenaspell@gmail.com

    3. Sergeant McNally is buried in Cathcart Cemetery on a hill known as McNally%u2019 Hill. The Cemetery is in a natural bushland setting and is very well maintained.The emergency department at Ararat Hospital is known as the John McNally Emergency Department. Cathcart is approx. 4.6 km from Ararat and is approx. 345 m above sea level.

    4. My spring chicken of a Mom is turning 75 years young. She is a big fan of Frankie and I think she would get a big kick out of the film. I wanted to take her to the Broadway play but am priced out. Thanks for your time and consideration. Oh yea, Wildwood! Joie

    5. I thought this company would go bankrupt in 2013/2014. I predicted that four years ago. I was wrong. It will take another couple of years, but they will get there.

    ADVERTISEMENT