What Lies Ahead: Property Managers

AKAM

Michael Rogoff, President

39 Years in Business

It is increasingly vital for residential service companies to utilize best-in-class software and to leverage data so that clients can make informed decisions while fulfilling existing and future mandates and regulations. Innovative property management companies will continue to make investments in software and data analytics to have the best tools available for their internal team and clients.

Alexander Wolf & Company

John Wolf, President

57 Years in Business

Due to the rules and regulations related to facade inspections, elevator testing, pool regulations and minimum wage requirements, more time is required to effectively manage properties. These various new regulations also affect the operating budgets by increasing costs. Management needs to work closely with boards to explain the additional requirements and address these issues from a budget standpoint and an operational standpoint.

Argo Real Estate

Gustavo Rusconi, Director of Management

70 Years in Business

The continued promulgation of local laws and compliance issues are placing an undue burden on buildings not only to physically comply but also to finance implementation without bankrupting shareholders and unit-owners. Additionally, the new requirement that boards must pay prevailing wages in order to receive the property tax abatement is having a huge and, in some cases, negative financial impact on sales, values and affordability. It also places pressure on the continued employment of building staff, as reductions will be necessary to control skyrocketing costs.

Brooklyn Home Management

John Rouse, Owner

12 Years in Business

There are many benefits to living in a well-managed condo or co-op in New York City. But there are also challenges, including skyrocketing utility costs and mandates imposed by the Climate Mobilization Act. These challenges, however, offer opportunities for those buildings that plan and act with haste to set themselves apart. There are branding issues in play: with 75% of buildings in the city receiving a C or D rating for energy efficiency, those that can improve stand primed to take advantage of a higher market value, since an A or B rating carries more than a “green living” cachet. The savvy real estate agent and buyer will recognize it is a sign that maintenance or common charges, as impacted by utility costs, will be lower over the long term.

Buchbinder & Warren

Lori Buchbinder, Owner

64 Years in Business

Compliance has become the critical issue. Frequently we find a board will delay timely compliance due to either the “education” phase, as they parse the new law or regulation to find possible loopholes or exclusions for their particular building, or by delaying the actual undertaking of a project or the necessary inspection. Boards may look upon their management firm as “insurance” and insist that any costs associated with noncompliance be borne by the management firm. That creates undue stress on property managers who are trying to perform their duties but must set other important matters aside so as to avoid the Draconian penalties for noncompliance.

Century Management Services

A.J. Rexhepi, Managing Partner

50 Years in Business

The expectation that management companies can continue to add on to existing services without a significant correction in fees, which only cover additional staffing to perform the work, is like filling up a glass of water to top and thinking that water won’t spill over. Focusing on compliance, energy and project management is a must over the next decade, and the desired service can be achieved only with smaller portfolios and more eyes on projects. Increased efficiencies, better technology and streamlined protocols help, but they don’t solve the issue. Management companies need to hire more people so that teams aren’t inundated, and clients need to pay for those services. Otherwise, there won’t be enough paper towels to clean up the mess this spillover will create.

Cornerstone Management Systems

Leonard M. Fox, President

20 Years in Business

It requires a team effort to craft an effective game plan to help clients comply with the deluge of new city and state regulations. It has been and continues to be a difficult and time-consuming process to field a winning team. We have to bring our staff up to speed on each of these new requirements, and upper management needs to become expert in these matters. We need to constantly review professionals and contractors to assure that they have updated their capabilities to efficiently and effectively provide the needed services. And we need to educate boards on these often costly obligations to enable them to plan and budget accordingly.

EBMG

Mark Levine, Principal

26 Years in Business

It’s challenging to keep proper track of all of the new regulations and changes and how they will affect the bottom line for our clients. While buildings need to pay for the increased legwork and filings with experts, management companies that are taking care of these issues while not receiving an extra fee for doing so are also impacted. Generally speaking, contracts with clients are broad enough to cover these compliance items, but in some cases management companies are expanding entire departments to handle all of these new details while not obtaining any new revenue. The problem that I see happening in the near future is that the industry may continue to contract as smaller companies aren’t able to keep up a full-time staff dedicated to these items and larger companies buy them and increase their scale.

Ferrara Management Group

Robert M. Ferrara, President and CEO

8 Years in Business

Locating qualified property managers continues to be a challenge. Factors such as nightly meetings, non-emergency calls after hours and on weekends, and instant response to emails and tasks have taken a toll on professionals wanting to enter this field. Holding virtual meetings, operating associations as a business and being supportive to their management teams will help boards succeed in retaining managers and be a successful association.

Fairfield Properties

Alvin Wasserman, Director of Asset Management

48 Years in Business

Property management has become more complicated when advising boards on compliance with the myriad new rules. In the wake of the Surfside, Florida, tragedy, for example, Fannie Mae is extending minimum reserve requirements that may also affect the bottom line for cooperatives. Property managers need to educate and guide board members in conjunction with competent professionals who can provide solutions, and they also need to balance building-systems knowledge with communication skills.

FirstService Residential

Michael Wolfe, President of Property Management

40 Years in Business

There is no out-of-the-box solution for buildings to comply with Local Law 97 (the Climate Mobilization Act). Whether this entails the replacement of mechanical systems or optimizing existing building components, building systems are highly interdependent, so improvements to each system must be considered holistically. One of the greatest considerations for boards and owners is how to finance energy retrofits and efficiency improvements, which may easily balloon to five-, six- or seven-figure investments. However, buildings that take a proactive approach to meet carbon-emission targets to reduce or eliminate any penalties will have major advantages, all based on time. The best management companies are equipped to help their clients identify prescriptive roadmaps that maximize emissions reductions and reduce costs. This includes identifying Con Edison, National Grid and NYSERDA incentives that offset costs, as well as leveraging industry relationships to obtain the most competitive bids for efficiency projects.

Hoffman Management

Mark S. Hoffman, Principal

32 Years in Business

Clients do not understand the extra time and cost that managing agents incur to meet the new rules and regulations as well as all of the older requirements. New local laws continue to stream down at an incredible pace — the one requiring lead paint inspections on all apartments is just the most recent example of this trend.

Jordan Cooper

Paul T. Brensilber, President

25 Years in Business

The greatest change to owners and the management business has been new and greatly added compliance, which has to be addressed on an ongoing basis, along with high costs. Flexibility in adopting plans is critical, as are timely filings with agencies. Wherein previously financial reporting and operational goals were foremost, now compliance is in some ways more relevant. Compliance and adherence enter into all phases of management.

Gumley Haft

Daniel Wollman, CEO

30 Years in Business

One enormous element of pressure facing many boards in the coming years: changes and challenges to the New York City co-op and condo tax abatement program, which has allowed partial rebates of property taxes to apartment owners. Over the past number of years, there have been a series of changes to the program that have affected eligibility requirements and eliminated recipients. For nonunion buildings, recent legislation requires boards to pay prevailing wages, plus a supplement, to their employees in order to maintain the abatement. In all likelihood, this may force many nonunion buildings to forgo the abatement, which they have used as a budgeting tool.

Impact Real Estate Management

Stuart Halper, Vice President

25 Years in Business

Because of growing infrastructure demands, we see financial issues increasing in the coming years. One thing we’re keeping our eye on is interest rates. Many buildings with balloon loans maturing are going to have to pay higher mortgage payments. We’re also staying on top of new local laws. One law just passed requires parking garages be inspected by an engineer for safety. And buildings 75 years or older will need to put money aside to update their gas lines. So we think the next few years are going to require even more attention to finance and infrastructure.

Maxwell-Kates

Max Freedman, CEO

36 Years in Business

Keeping boards regularly apprised of regulations to enable timely compliance and avoid fines is a challenge. Anticipating this need, we invested in a dedicated compliance function, which has taken the strain off our managers so they can remain focused on day-to-day needs of the building communities we serve. We have also expanded our roster of engineers, architects, contractors, attorneys and accountants, and deepened relationships with city and state agencies, including the Department of Buildings and the New York State Energy Research and Development Authority, to help drive time and cost efficiencies for our clients engaged in capital-improvement projects. For industry players to succeed in this environment, investment in more compliance resources is table stakes, as is the training and education of our property managers who are on the front lines orchestrating these projects.

MD Squared Property Group

Dawn Dickstein, Chief Operating Officer

8 Years in Business

The rules and regulations have resulted in significant increases in workload for management. Where compliance formerly was a minor role in management, it has become increasingly time-consuming and labor-intensive, resulting in higher management costs for co-ops and condos. In addition, co-ops and condos are being required to invest significant funds toward complying with the regulations. The business pressure for the co-op and condo boards will be to increase maintenance and common charges while finding ways to borrow funds for capital needs.

New Bedford Management

Thomas Thibodeaux III, Chief Financial Officer

36 Years in Business

The business of managing co-ops and condos is one that is constantly evolving. Being knowledgeable about boilers and budgets will only get you so far; you need a company with a full support staff of professionals and not a manager trying to wear 12 hats. There can definitely be a cost to that level of service, but it will save a building tenfold in the future. A management company has to be able to look at the changes coming down the road and how they will affect its entire portfolio. The evolution in the industry has placed a lot more responsibility on management companies, and it has forced many of them to reinvest in their technology and staff — or get left behind.

Orsid New York

Chelsea Shapiro, Director, Business Strategy and Growth

66 Years in Business

As our industry continues to evolve, it is becoming increasingly focused on compliance, which is driving up related expenses for clients. New local laws and amendments to existing laws designed to make buildings safer — such as the Facade Inspection & Safety Program, gas systems inspections, additional elevator inspection requirements and increased fire-safety compliance — will certainly impose costs. So will the Climate Mobilization Act and related energy initiatives. State labor laws continue to drive up insurance costs, and new prevailing wage laws also create increased payroll costs.

Rudd Realty Management

Frederick Rudd, President

38 Years in Business

Life for all of us was much simpler 45 years ago when I started as an assistant property manager. The checklist was a mere quarter-inch thick. Today it is over two inches thick. The City Council waves its magic wand, and a new regulation comes into law. Each law changes and morphs into a more complex and detailed version. One thing is for sure: There will always be more regulations and more fines for noncompliance. We must work harder to avoid these fines.

Siren Management

Jeffrey Heidings, President

29 Years in Business

Management has become far more time-consuming and rigorous in order to maintain timely compliance. There is a tremendous burden on management now, the greatest it has ever been. It will only continue and may increase as the Climate Mobilization Act and other initiatives by federal, state and local governments expand the responsibilities of co-op and condo boards to meet the new requirements in their buildings.

Sandberg Management

Louis Sandberg, President

27 Years in Business

I believe the largest financial impact facing our buildings is the Climate Mobilization Act. Our buildings are now scrambling to hire consultants to implement changes in energy needs to meet upcoming deadlines. Some are converting to allgas or dual-fuel to improve their energy grades, while others are installing heat-timer systems with sensors to save energy. All this puts a strain on properties’ capital budgets. Some boards will have to decide whether to drain their budgets to make these changes or just pay penalties if and when imposed. Tough times ahead!

Venture NY Property Management

Anes Radoncic, Managing Partner and Owner

17 Years in Business

A change in rules and regulations is tough on any business, and we simply must adapt. No excuses. The only issue we see affecting the industry as a whole is management fees. They will naturally need to rise with an increase in compliance and regulations. More compliance = more staff = more money.