Video Recap of Bisnow's Southern California Property Management Summit

Our moderator, Allen Matkins partner Alain R'Bibo, here with Hines VP of property management Brian Plymell, asked what improvements can deliver the most bang for the buck. Brian says two projects come to mind, both with a five-year payback. The first: repositioning a Class-B asset into Class-A with a 20% pop in rents. (With a little hard work and extra tutoring, any B student can get A's.) The second: putting fuel cells into a building Hines has under construction in San Diego  

According to PMA Commercial COO Pat Lacey (left), the value of property management becomes even more apparent in a down cycle. When rates are decreasing, one place owners look for upside is their property managers. Tenant retention is a huge measure of success because keeping a tenant is five times cheaper than finding a new one. (The devil you know is better at paying rent than the devil looking to relo.) In the small to middle market that Pat's firm operates in, his guys have to be a lot more detailed to stay on top of operating expenses and budgets. That also turns out to be a good measure for success because when they deliver those results, the owners appreciate it regardless of whether the market is up or down.

Health Care REIT VP of operations Kevin Kirn says property management is even more important in the healthcare field. Having come from a general office background, he found it interesting that for medical tenants, cost takes a backseat to service, operational efficiency, and relationships with their hospital systems. "It requires us to create a new breed of property manager"—someone who's very good at the core skills but also can have a conversation with an orthopedic surgeon in the morning and a hospital administrator in the afternoon. (Soon there will be Rosetta Stone for property managers.) Many of the REIT's properties now include surgical and imaging suites, which take building infrastructure to a new level.

Equity Office VP of operations Charlie Hobey says in the doom-and-gloom days, operating expenses were the No. 1 focus. A key change: tilting the pendulum back towards customer service and delivering value. Key in influencing tenant retention is the manager's responsiveness—it doesn't cost a lot of money to be available. Equity introduced the hot link, which isn't something you slather with mustard on a bun; it's an experiment in communicating with tenants in an emergency via the company's website, getting away from the typical phone tree. The firm has also explored Facebook and getting tenants to follow properties on Twitter.

With a portfolio of entertainment, tech, and media properties, Kilroy Realty SVP of asset management John Fucci is seeing a big shift toward collaborative tenants versus traditional office users, which brings unique challenges—managers have had to be a lot more flexible. Finding talent is another issue, and Kilroy has had success with internship programs. He noted most folks who got into the business didn't initially want to be property managers—as a real estate finance major, he planned to become a developer. (People's views change: Didn't we all want to be astronauts at one point?) But it's a great way to have a stable, successful career. When guys doing development get laid off in down cycles, property managers are still working.