CRE N Illinois

David Petersen: Gaining the clients' trust

Property management has become an important profit generator for real estate brokerages in today’s troubled economy. Midwest Real Estate News recently spoke to David Petersen, chief executive officer of the asset management group at Chicago’s NAI Hiffman, about the importance of this business.

Property management has become an important profit generator for real estate brokerages in today’s troubled economy. Midwest Real Estate News recently spoke to David Petersen, chief executive officer of the asset management group at Chicago’s NAI Hiffman, about the importance of this business.

Midwest Real Estate News: Are you still seeing a big demand for property management services? David Petersen: It continues to grow. There was a little bit of a lull in the last two months of 2010 where you had that moment when you wonder if everything is changing. But immediately with the change of year, with companies having their new budgets in place and operating plans in motion, things got busy again. We are also seeing now some movement with portfolios of buildings trading. We’re seeing some industrial portfolios and some office building portfolios trading. With every one of these there is generally an opportunity for us to compete and win our share of those opportunities.

MWREN: Why are those portfolios moving now? Petersen: I think it’s a combination of factors. It’s the buyer and seller becoming comfortable with the new normal as it relates to pricing, as it relates to working with lenders and as it relates to the product quality that is coming to market right now. There was nothing happening to speak of in 2010, and there was absolutely nothing happening in 2009. So you have all of these buyers. They are seeing opportunities here. We are seeing new players in the market. We are somewhat at the crossroads of buyers and sellers agreeing on pricing.

MWREN: So this is an exciting time in the property management business? Petersen: There are some great products coming to market. And there are still opportunities with those that have not weathered the occupancy storm well. They are maybe sideways with the lenders. So there are still some opportunities to buy below value. A number of players are stepping into the market and buying notes. They might be buying that note for 65 percent of the value of the real estate. They win either way. They win by virtue of the owners continuing to pay their mortgages and making the spread on the debt they owe, or they ultimately end up owning the real estate, making things work that way, too.

MWREN: Property management is a pretty competitive field these days. How do you set yourself apart? Petersen: What a client is buying from any property management firm is the talent and the experience. It has to start with having a talented staff in place. A lot of companies will put a senior person in the top seat. Then, under orders to cut costs, they’ll use a more junior staff person to execute the day-to-day activities under that watchful eye of a senior person. Our approach is to be sure that we have senior staff across the board. There is a cost for that, but if we want to differentiate ourselves we need that senior level talent across the board. The second piece is to really formulate that integration between the leasing teams and property management teams. That’s not something you can dictate. You can’t just say, ‘We are now going to be integrated.’ You have to create that from a culture standpoint. You need to have key management people in the leasing meetings. You have to ask leasing people to be involved in management strategies. You have to ask them where it is important to spend capital dollars for assets.

MWREN: It sounds like a lot of work. Petersen: We are all attempting to gain the trust of our clients. Doing that obviously involves doing what you’re supposed to do. But I also think it’s rising above that and trying to add some additional value to that relationship. You have to exceed those expectations from the client. Our clients have a high expectation of the need to have as little bureaucracy in our delivery process as humanly possible. They want to know that the people they are working with have authority to make commitments to whatever it is that they need. If they say we need a new computer in the management office, they want to be reassured that it won’t take four months of approval processes to get that done. The next week, you want to be able to send an e-mail saying that you are mailing them from that new computer.