The Evolution of Property Management Companies
Jan. 5, 2015 — Back in the summer of 2013, Gerard J. Picaso, a veteran property manager of New York co-ops and condos, was having a get-acquainted meeting with a board president and treasurer who had just hired Picaso's firm. At one point the board president asked, "What happens if you and your partner get hit by a bus?"
"Depends on how big the bus is," Picaso replied.
"Let's say it's very big."
At that moment, Picaso had a revelation. "I realized my partner, Susan Axelbank, and I had a plan if something happened to one of us, but we had no plan if both of us were gone. It was really something to think about when you get to be a certain age."
Picaso, who is now in his sixties, has been in the property management business since the 1970s, and has run his eponymous company since 1982. A few months after that thought-provoking meeting with the board president and treasurer, Picaso got a call from a long-time acquaintance who is now with Halstead Management Company, one of the largest firms in the city. She told Picaso that Halstead wanted to purchase the assets of Gerard J. Picaso Inc. and bring his company on board.
"I did a lot of research into Halstead, and I couldn't find anything bad," Picaso says. "In fact, it was all good."
The Halstead offer was part of a trend that is reshaping the landscape of New York City's property management business. Simply put, the big companies — most notably Halstead and FirstService Residential New York — have been buying up the assets of smaller companies and merging with them. Picaso's research and the condition of his company led him to understand the forces driving this trend.
Picaso Makes a Move
For starters, when he received that phone call from his friend at Halstead, Picaso knew that the lease on his Broadway offices was about to expire — and a healthy rent increase was inevitable.
He also knew that his relatively small company — 22 employees handling 44 buildings — could not provide all the services offered by a big firm like Halstead, which manages 250 buildings.
And he learned that the principals of the companies bought earlier by Halstead are all still with the company, a reassuring sign that there has been no seller's remorse.
So Picaso agreed to the merger, and on September 1, under a five-year contract, he became managing director and executive vice president of the Gerard J. Picaso Division of the Halstead Management Company. Picaso and his employees moved from their old Broadway offices into Halstead's Lexington Avenue location.
"I do think this is the way of the future," Picaso said three months after the move. "I think it's a trend because the smaller companies find it harder and harder to survive. They don't have the money to upgrade their technology. Halstead has resources we would never have — energy consultants, engineers, a legal department, a human resources department."
How has Picaso's life changed? "It's much simpler now because I don't have to worry about paying the rent and running the business anymore. That was very time-consuming. Now I have a lot more time to manage buildings, which is what I and my staff love to do."
Adapted from "Management in Transition" by Bill Morris, with additional reporting by Tom Soter (Habitat, January 2015)
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