The Valley property management industry has stayed busy among shifting trends created by supply chain issues, legislation and the COVID-19 pandemic.
President Todd Nathanson of Illi Commercial Real Estate, No. 1 on the Business Journal’s list of Property Management Firms, characterized the past year as “remarkably busy with an exclamation point,” saying that various mandates at different levels of government have affected property owners of residential and commercial properties.
“Understanding how these laws have changed, how tenant landlord laws have changed and being the conduit between our clients, the property owners and the tenants has never been more demanding,” Nathanson said.
Illi has had just about every single tenant requesting help with individual needs that Nathanson said are met by employees on the management side going out into the field with clients as opposed to working with them remotely.
Illi’s Encino-based property management team has a focus on commercial, multi-tenant, triple net properties with some presence in residential properties, according to Nathanson.
“Because of COVID it’s pretty universal that hiring and keeping offices well-staffed has never been more of an issue,” Nathanson said.
Illi has inherited new business as property management firms that it once worked with have closed, creating a need for more employees, more hours and a sharper focus on the properties and tenants that the firm manages.
Rickey Gelb is the owner of Woodland Hills-based Gelb Enterprises, a family of companies that includes two property management companies and ranks No. 17 on the list.
Gelb Group, which has properties in Woodland Hills, Winnetka and Granada Hills, had almost 100 percent occupancy of its properties in 2021 in what Gelb called a quiet year.
“Quiet” has been good for Gelb, which plans to enjoy its high occupancy before making any further moves. The company operates 20 office buildings in the San Fernando Valley alongside some involvement in retail and industrial properties.
“We’re not looking to expand. We think that the prices out there to purchase are way above our means,” Gelb said. “We don’t want to buy something and then have the value pile down in a year or two or three years and be stuck with some high vacancies.”
Arthur Pfefferman advises property managers through his work as executive vice president with Porter Ranch-based Coldwell Banker Commercial Quality Properties, which has led him to track a number of industry trends.
Pfefferman sees industrial properties as a hot part of the market moving forward, as well as multifamily residential properties.
“You’re going to continue to see the state push the municipalities in allowing residential in areas that they previously didn’t,” Pfefferman said. “That’s big and that’s what has happened significantly in the last two years.”
He added that office property may go back to the prevalence it once had pre-pandemic within a couple of years.
Property landlords need to be cautious with overleveraging, according to Pfefferman.
“My most sophisticated owners never overleverage so they can absorb the vagaries in the market,” Pfefferman said. “And their decisions are made more objectively because they’re not chasing the nickel.”
No mass vacancies
Among the last year’s industry shakeups, Illi has earned success through internal changes and surprisingly positive external forces, such as mass vacancies never coming to fruition.
“It was a concern, mass vacancies were predictions that, fortunately, we never really (saw),” Nathanson said. “I think better communication and creative terms kept a lot of people above water and I think we’re now safely at a point where people are learning how to deal with it.”
Even moratoriums did not impact illi to a severe extent. The management firm was successful collecting rents through the entire moratorium period as most tenants were consistent with their payments.
The Los Angeles County Board of Supervisors voted on Jan. 25 to extend countywide eviction protections that would have been removed by Feb. 1. Protections are extended through the end of 2022 and will roll out in phases.
Illi’s internal changes to better accommodate the market came in the form of restructuring its management division.
“We all feel a lot more competent about the service that we are able to provide and maximizing our bandwidth,” Nathanson said. “This was clearly a test.”