Managing buildings — a job that often encompasses everything from fixing toilets to making sure a property is up-to-date on its permits — is not exactly the most glamorous sector of the real estate market in New York.
But it does provide essential grease that helps keep the market moving smoothly. And in these strained economic times, good management can play a crucial role in retaining rental tenants and making co-ops or condos attractive to would-be buyers.
With that in mind, The Real Deal has compiled its first-ever list of the biggest building management companies in Manhattan, ranked by both building and unit volume.
The survey covers residential buildings — co-ops, condos and rentals — managed by third-party companies. Thus, large owner-managed complexes like Stuyvesant Town are not included, nor are firms like the Related Companies or Glenwood, which only manage their own buildings.
The data was collected last month through property management company surveys and real estate trade organizations, including REBNY, as well as other industry publications (see source note for more details).
According to the findings, Douglas Elliman Management — which counts 44,000 units in its 250-building portfolio — ranked as the biggest firm by number of units. Cooper Square Realty came in second, with 35,000 units in 200 buildings, and Charles H. Greenthal Management came in third, with 23,853 units on its books.
The research, meanwhile, found that Andrews Building Corp. manages more buildings than any other company in the city. The firm has 300 buildings on its watch, with a total of 6,325 units. The buildings that Andrews manages tend to be smaller than those managed by companies like Elliman and Cooper Square, hence the firm’s relatively low unit count.
Building managers say the meat and potatoes of their work involves supervising building staff like doormen and desk operators, as well as making sure buildings are in compliance with Local Law 11, which mandates periodic updates to ensure that properties are up to code.
While that may seem somewhat mundane when compared with developing flashy new condos and brokering high-stakes deals, the building management profession is largely focused on adding value to properties — a reality that impacts desirability, and prices, across the board.
According to industry leaders, adding value can encompass anything from overseeing pricey capital improvement plans, such as lobby and hallway renovations, to implementing the newest computer systems.
James O’Connor, the president of Douglas Elliman Management, said his top-ranking company has a systematic approach toward tracking accounts, permits and the like.
“I don’t know how the smaller shops are doing, because in today’s market you have to have built-in resources” that a large firm has, said O’Connor of his 200-employee firm. He also said that Elliman knows how to deal with recessions like this one, because it’s “been through downturns and upturns before.”
O’Connor said about 175 of the buildings Elliman manages are co-ops, while 45 are condos and 30 rentals.
Brian Peters, the senior managing director of the property management division for Rose Associates Property Management, said in this difficult market, especially, a management company can have an enormous impact on the success of a building and on its vacancy rate.
“It can help keep residents satisfied and in their apartments,” Peters said. “Having a vacant unit is the most expensive thing.”
Rose Associates’ management division has the fourth-largest portfolio of units with 19,360 in Manhattan. Peters said about half the buildings Rose manages are rentals, and the other half are owner-occupied.
Peters said that historically, there had been a symbiotic relationship between brokerage firms and management companies, but that has changed since condos have risen in popularity over the past 15 years or so.
“You would see a firm like a Brown Harris Stevens or an Elliman capturing a very significant portion of the [sales in] co-ops they managed because they had a relationship with the boards,” he said.
However, as the condo boom took hold and pure brokerage firms like Corcoran were established, brokerage arms and management arms became increasingly independent.
Paul Herman, the president of Brown Harris Stevens’ residential management division, noted that now, “my division is absolutely distinct from the brokerage.”
Still, membership has its privileges.
“If you’re managing a building well, hopefully they will go with Brown Harris Stevens [to broker sales],” he said.
Brown Harris Stevens manages 152 Manhattan buildings with about 9,000 units. It ranked as the fifth-largest firm by number of properties and is tied for eighth by number of units.
Most of the firm’s portfolio is comprised of co-ops.
Management company executives say there are obvious differences between managing rental buildings and managing co-ops or condos.
Jonathan West, president of Charles H. Greenthal Management, said working on a rental is largely dictated by the landlord and sometimes involves capital improvements that assist in deregulating rent-
stabilized units.
“It depends on what the landlord wants to achieve,” West said. “If it’s a stabilized building, sometimes we oversee renovations so the rent passes the $2,000 mark and is no longer stabilized. We add value to the asset through those means.”
On the flip side, building managers say their work in co-ops and condos involves the challenge of reaching a consensus among the various personalities on boards.
“Boards are very involved in terms of costs being held down, and we need to use their resources very carefully,” West said. “But landlords need to continuously upgrade their assets, because every day an apartment sits empty, it’s lost income.”
The history of the building management industry has some dark chapters: In the 1990s, for example, the Manhattan District Attorney’s office conducted investigations that ultimately led to scores of co-op and condo managers pleading guilty to taking bribes.
Rose’s Peters notes, however, that “the industry has really recognized corruption as an issue, and there’s a lot more self-policing these days.”
If dubious activities are indeed in the past, the heads of management firms say technological advances and green technology are clearly the industry’s future.
Douglas Elliman’s O’Connor said that while New York’s residential market is not as up to speed on green technology as the commercial market, it is headed in that direction.
“We manage the Riverhouse, in Battery Park City, which is Gold [Leadership in Energy and Environmental Design] Certified, and we’re going to school on that building.
“Our goal is to become as green as possible.”
Peters calls the greening of residential buildings “a coming trend” and says the handful of Gold and Platinum LEED-certified buildings Rose manages are “incredibly sophisticated, and as challenging to manage as any large-scale commercial property.”
Steven Wagner, a principal at the law firm Wagner Davis who specializes in co-op and condo law, says green initiatives are one of the biggest trends in building management because implementing energy-efficient standards often comes with financial incentives.
Wagner said a number of his clients are taking advantage of the New York State Energy Research and Development Authority programs, which provide funding for green upgrades.
“It’s really benefiting buildings like Mitchell-Lama properties that wouldn’t have had the money to do the upgrades otherwise,” he said.
Peters also noted that 80 percent of Rose’s portfolio now uses a computerized system that tracks all the deliveries to a building; in many of the buildings that means the system is tracking between 7,000 and 10,000 “events” per month.
“We see it increasing resident satisfaction, and we think it’s where the industry is going,” said Peters. “But we still have owners who won’t pay for it.”