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News release

CHICAGO, IL

Innovative Property Management Strategies Increase Net Operating Income and Attract Tenants to Properties

Jones Lang LaSalle property management teams successfully turn around properties with unique cost management tactics and adaptive reuse projects


CHICAGO, Feb. 2, 2012 – As commercial real estate owners and investors continue to struggle keeping their buildings profitable and occupied, they are increasingly turning to their property management teams for innovative strategies that increase net operating income and attract tenants.

“We never want to rest on our laurels, but in this economy, especially, we cannot afford to be anything but innovative for our clients,” said Dan Pufunt, President of Property Management at Jones Lang LaSalle. “Our management teams are constantly brainstorming and collaborating with our leasing teams to develop specific asset-based strategies designed to drive operating efficiencies, increase tenant satisfaction and retention, and thereby maximize asset value.”

Jones Lang LaSalle’s dedication to reducing operating expenses has helped revive Teamster City, a 200,000-square-foot asset in Chicago, during the course of the last three years. The management team reduced operating expenses at the complex by more than $700,000 in one year, and doubled the net cash flow back to its client from $580,000 to about $1.1 million.

It saved the client $450,000 over a three-year period by simply bidding out the asset’s electricity contract. In fact, the same electricity provider that had been servicing the property was awarded the contract again—just for a substantially lower price.

“No potential opportunity for savings can be dismissed,” said Tim Casey, Jones Lang LaSalle’s General Manager for Teamster City. “Sometimes the most innovative ideas are simple ones put into practice. For Teamster City and for all of our clients, we find out what their needs are, where they are in their asset lifecycle, and we bring in our people and our services to add value.”

Contract negotiation was a cost-saving solution for yet another Jones Lang LaSalle property management client—but in this case, on a much larger scale. The client was intent on reducing its elevator service maintenance costs—an area that had already been squeezed to the point that additional savings seemed impossible.

However, the management team leveraged Jones Lang LaSalle’s size and developed a “Request for Proposal” for a multitude of its accounts in 15 states and 32 cities. Vendors—wanting the substantial amount of business—were willing to offer deep discounts to the firm’s clients, including the client that spurred the management team to action. In the end, that particular client experienced an annual savings of 34.9 percent in elevator maintenance service costs.

“You have to think outside of the box,” said Susan Pai, General Manager for Jones Lang LaSalle in Los Angeles. “You can’t just say ‘We’ve tried everything,’ and call it a day. We kept going until we found a solution to pare down these costs and satisfy our clients. A positive return on their investment is a positive return on our investment.”

Cutting costs are critical to improving the net operating income at a property, but increasing occupancy is equally important at an asset with space to fill—a challenging task in some areas since the start of the economic downturn. However, adaptive reuse of empty spaces and even entire properties has proven to be an effective solution in many instances—drawing new tenants into assets they previously would not have considered.

In Santa Monica, Calif., a Jones Lang LaSalle property management team is in the process of taking a foreclosed upon office property and repositioning it to house incubator technology companies—a sector that is quickly growing in the Santa Monica area. With plans to renovate the lobby and plaza courtyard to make them more modern in 2012, the team has already experienced more leasing activity from its target market. Occupancy has improved from 70 percent to around 90 percent, based on pending leasing activity, since the management team has taken the helm.

“We were looking to reposition the building from its tired look to something creative,” said Michael Prabhu, Regional Manager of Property Management for Jones Lang LaSalle in Southern California. “We wanted to make the building more attractive to technology and creative firms, which are driving the leasing activity in the Santa Monica market.”

“Cutting costs and repositioning properties are just a couple of ways to add value to clients’ properties,” Pufunt said. “By having open conversations with clients and by listening closely to their needs, property managers have the potential to generate a slew of ideas and opportunities to improve an asset’s net operating income. That’s why it’s imperative to have an experienced and dedicated management team in place.”

To see further examples of innovative ideas to improve buildings’ performance, visit Jones Lang LaSalle’s Property Management Performance web page or Real Value website. For more news, videos and research resources on Jones Lang LaSalle, please visit our U.S. media center web page.

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.