We hear a lot of doom and gloom about the real estate market but latest US figures seem to signal a turnaround. For example, in 19 major markets in February, more than a third of houses sold within two weeks of being listed. In California, the turnover is even higher; in San Jose, 63.1 per cent of homes are selling within two weeks and in San Francisco it’s 56.8 per cent. Further south, in Los Angeles, Ventura, the Inland Empire, and San Diego, about half of homes went under contract within two weeks. So US property managers will have their work cut out.
Meanwhile – heading north – Canada continues to be a success story that has defied the downturn. Canadian mortgage payments are not tax deductible, a policy that has helped to buttress its property market from recession. In a territory where 81 per cent of the population live in urban areas, recent trends have seen a spike in sales of high-rises, outpacing sales of low-rise dwellings by three to one.
Googling a property
Today’s fast-moving technology is playing a major role in the pick-up. Buyers and renters are now increasingly using mobile browsers, map-based searching and social media in their search. In the US, real estate-related searches on Google.com rose 253 per cent over the past four years and 22 per cent on an annual basis in the third quarter, according to internal Google data.
Nowadays, vendors and property managers will need to meet the techno-savvy expectations of prospective buyers and renters who need to filter an offer quickly. Today’s clients won’t visit a property or office in the first instance. They will compile a shortlist based on which properties meet their specifications. And the Internet is the place to do that.
John Fucci, Senior Vice president of Asset Management Kilroy Realty, speaking at the recent Bisnow Southern California Property Management Summit, admitted that the industry had sometimes been slow to adapt to new technology. In the future, Fucci said, every device in a building should have an IP address so that property managers can anticipate a tenant’s demands. For example, if the paper towels in the rest room are about to run out, property managers should be notified on-screen in advance.
Made in Manhattan
On the subject of innovations, the Big Apple’s so-called Silicon Alley in Manhattan continues to be a hub for those wanting to set up shop in hi-tech and new media. Los Angeles, Seattle and Dallas may be rivals but New York continues to outpace them, thanks to its buzz, youthful vibe and entrepreneurial culture.
The impact on Manhattan real estate has been phenomenal. Ashkán Zandieh, director of Techstarters, the creative arm of New York real estate firm, ABS Partners, has compiled a report in which he says that the market has far from peaked and that he’s aware of $70 per square foot deals in the Midtown South area. “People that think (the boom) is not going to last are only fooling themselves,” he says.
Making the most of a tight budget
As evidence of the growing importance of the property management industry, more than 200 people attended Bisnow’s Summit. Brian Plymell, director of Property Management at Los Angeles-based Hines, stressed that a definition of success for most property management companies was “happy tenants paying rent”. On the subject of how to cope during tough economic times, Plymell cited two projects – involving an investment of six million dollar costs – that enabled the re-positioning of assets and a 20 per cent hike in rents.
Another of the conference’s attendees, Patrick Lacey, Chief Operations Officer of Property Management Associates, conceded that his managers had to spend more time managing cash flows nowadays (again, another sign of the economic crisis) but said that, at the end of the day, retaining tenants is five times cheaper than finding new ones.
Charles Hobey, Vice President of operations of Equity Office, was another attendee at the conference. Although he conceded that transactions in the equity market had sometimes been slow, he cited an example of how to get the highest return on a limited budget. His company had re-positioned an asset in Pasadena, a former headquarters of Indie Mac. They invested several million dollars in the building after receiving a letter from the federal government informing them the space would be vacated within 30 days. Yet, 18 months later, it’s now full and thriving.
Even in today’s difficult times there are success stories everywhere.