The Changing World of Property Management Companies

There are advantages to bigness. Since 2010, for example, clients of FirstService Residential have benefited from FS Energy, its energy advisory subsidiary. By aggregating oil and natural gas purchasing across its portfolio and recommending efficiency projects that will provide the greatest returns, FS Energy has reduced the carbon footprint of its New York portfolio by nearly 16 percent while saving clients more than $23 million.

"As the business has become more complex in recent years," says Wurtzel, "mom-and-pop companies are finding it difficult to allocate the resources necessary to succeed. Our size provides clients with a broad swath of expertise and a deep bench of professionals that few companies can match."

Wurtzel adds that FirstService's size has allowed it to develop an elaborate infrastructure — not just FS Energy but also experts devoted to financial management, compliance, closings, human resources, and training and education — that is beyond the capabilities of most small- and medium-sized firms.

When the Cooper Square name disappeared in the summer of 2013, company founder David Kuperberg, now chairman of FirstService Residential New York, vowed, "The only thing changing is our name."

Don't Count the Smaller Companies Out

Dawn Dickstein apparently didn't get the memo that a wave of consolidations and mergers is sweeping New York's real estate management world. After earning an MBA degree, Dickstein served on her co-op board as treasurer and then president for a combined dozen years, and worked as a property manager, a vice president of client accounting, and a managing director for Cooper Square Realty/FirstService Residential.

Last September, Dickstein and a colleague named Michael Mintz decided to strike out on their own. Their new company, MD2 Property Group, is currently managing two properties, with plans to grow.

"I've always felt a smaller company is more effective in providing a go-to person," says Dickstein. "As a company grows, who is that go-to person? It's difficult when you're large to provide the personalized service that many buildings want. It's easier for a smaller management company to provide one-off service."

MD2 Property Group's business model calls for giving future employees a stake in the business, much like partners in a law firm.

"I believe most board members would agree with our business model," Dickstein says. "At the end of the day, what boards want is attentiveness and responsiveness. You need managers who care, and if they have a stake in the business, they're going to care."

Dickstein also believes that property management is, first and foremost, a personal business. While MD2 has partnered with technology companies to provide state-of-the-art services, no amount of advanced technology or support staff can replace the relationship that has to exist between a successful property manager and a board of directors and residents.

"We have put a lot of effort into creating a strong back office to complement our strong managers," she says, "even though a strong manager can compensate for a weak back office. A weak manager can't compensate for anything."

So in the end, yes, the size of your management company matters. But the key is not finding the biggest company or the smallest one. The key is finding the company that's the right size for your building — and the property manager who's the right fit with your board.

Adapted from "Management in Transition" by Bill Morris, with additional reporting by Tom Soter (Habitat, January 2015)

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