In real estate, deciding which upgrades are worth the costs

July 12. 2011 1:27PM

In real estate, deciding which upgrades are worth the costs

As businesses continue to look at operating more efficiently as the economy recovers, Integrated Business Systems reports a "real change" in the number of clients who are upgrading technology as they prepare for a better market.

The Totowa-based property management and accounting systems provider is adding staff and preparing for more commercial and residential real estate managers to upgrade their technology.

"While the real estate industry came to a standstill, technology continued to advance with products and solutions that offer enhanced efficiency and functionality," said IBS President Mike Mullin. "Our clients are highly receptive to new tools that can make their day-to-day operations more profitable."

Mullin said the company believes the increase in activity by new and current clients since January shows confidence in the real estate market.

IBS client Levin Management Corp., based in North Plainfield, has a relationship with the company dating back decades, according to Rose Evans, vice president of property management. Evans said Levin's established business allowed the company to continue to invest in properties during the economic downturn, in addition to new technologies to help their managers be more responsive to tenants.

But when looking at some upgrades to technology, Evans said maintaining personal customer service with the company's tenants outweighed adding new products.

David Silver, Levin marketing director, said he was not surprised to hear IBS was seeing more confident clients, because "they have a deep understanding of what property managers do."

"Overall, in the retail arena, there's been a real growth in confidence among the people in the industry," Silver said.

But Martin Laderman, president and CEO of residential-focused MEM Property Management, said his clients are more interested in physical upgrades than technology upgrades.

"I see associations being proactive in the sense that it's better to do improvement and maintenance than repairs," Laderman said. "We don't think the market is going to get much better."

"With condo associations, you don't want to gamble … condos by nature are more conservative," Laderman said, adding that maintenance is his company's focus right now, "so we don't have to replace in the near future. We don't know what the cost is going to be in the near future, and we don't know if we're going to have the money."

In addition to physical upgrades, Laderman said his company is increasing its efficiency through renegotiation of vendor contracts, hiring front-office staff with construction backgrounds and staying on top of administrative costs.

"Engineering studies for buildings are good for five years," Laderman said. "To get an engineering study could be $20,000. An engineering study will give you the life expectancy, and how much money to put in reserves — and a lot of associations a few years ago were hesitant to spend that money."

Despite a low confidence in the condominium market, Laderman did say his Jersey City-based company is continually "selectively expanding" through an office in the Somerset section of Franklin and increased interest in South Jersey markets.