Job losses. Bankruptcies. Foreclosures. These are tough times for everyone, but when homeowners fall on hard times, they are often late paying their condo or co-op fees. Some can’t even afford to pay them at all. Add in contractors and vendors who have gone out of business and boards who are reluctant to spend money on repair or capital expense projects, and it can be a rough time to be in the property management industry.
Across New York City, the amount of pain depends on the time-honored rule of real estate—location, location, location. Properties in Manhattan, which have held their values relatively well throughout the downturn, have felt little pain. Managing properties like these can be done with only a little belt tightening.
Meanwhile, co-ops or condos in the other boroughs—particularly Queens or Brooklyn—are facing a variety of problems, like foreclosures and older infrastructure, which can make life tough for their property management firms and managers.
Less Pay, More Work
Two of the biggest ways the downturn has affected property managers is that it has flattened annual fees while increasing portfolio sizes for managers, says Jeff Klarfeld, senior property manager at Penmark-Halstead Management in Manhattan, and 2010 president of the New York Chapter of the Institute of Real Estate Management (IREM). “In the past, [firms] would ask our boards to do an increase in the management fees by five or six percent. In many cases, we have had to waive that for a couple years, and stay at what the previous management fee was because budgets are tight.”
As for property managers, says Klarfeld, “The workload and the portfolio of many property managers has increased considerably, because they're not hiring as many new people,” he says of some cash-strapped management companies. “A property manager who had four or five buildings previously now has six or seven.” Despite the increased workload, Klarfeld says there hasn’t been a mass exodus from the property management field. “Larger portfolios certainly should cause burnout, but with the job market as it is, most people are just holding on to their jobs.”