During 2007, MPM Properties jumped to the seventh-largest Rhode Island-based property management firm – it had been ranked No. 14 in the Providence Business News Book of Lists the year before – based on total square footage managed.
President and CEO John J. Macliver took a few minutes earlier this week to tell Providence Business News what trends he’s seeing in property management and why an out-of-state company that buys commercial Rhode Island property might want to choose a local management firm.
PBN: How has property management changed in the last five to 10 years?
MACLIVER: Security and life safety are probably the first things that come to my mind. Since Sept. 11 and the Station [nightclub] fire there has been a greater focus in these areas. We have been working with the firms we hire to tighten security and have been contracting with companies to modify our present systems with updated technology – for example, our audio/visual surveillance equipment and security-card access systems for elevators. We have also performed upgrades to our fire alarm and life safety systems to meet the new code requirements in several of our buildings.
In addition, we have been spending a considerable amount of time trying to reduce our utility costs. The precipitous rise in the cost of gas, oil and electricity over the last few years has forced us to take a hard look at our energy consumption and implement certain energy-efficiency upgrades. That means, in some cases, it was more cost-effective to upgrade or install new and more efficient HVAC or other equipment sooner rather than later. Also, in conjunction with rising energy prices, there has been significant interest in sustainable building design and even in renovating buildings to become compliant with the U.S. Green Building Council’s LEED standards.
Another important trend we have seen is interest by out-of-town and out-of-state companies in investing here. Providence has proven extremely attractive with firms such as GTECH moving its headquarters to Providence from West Greenwich and O’Connor Capital Partners, a New York City real estate investment firm, acquiring 100 Westminster Street (formerly owned by Bank of America and, previously, Fleet Bank) and the adjacent historic bank building at 63 Westminster. In addition, Gramercy Capital recently acquired the One Citizens Plaza building when they purchased American Financial Realty Trust, the previous owner.
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PBN: What has precipitated this interest?
MACLIVER: Providence is viewed as a strong commercial real estate market. It’s in close proximity to Boston and not too far from New York, with easy access to major transportation systems. It is a city that has several top-ranked universities, hospitals and research facilities. It’s an environment that provides supportive and collaborative opportunities for major companies as well as new and growing enterprises that support them.
That puts Providence in an advantageous position – near the top of the list – as both prospective tenants and real estate investors search for markets that fit their particular niches. Providence offers several opportunities. Providence is a capital city, Providence is a university town, Providence has a substantial medical community. Another draw is the city’s willingness to form city-state-private partnerships to attract companies that will increase employment opportunities.
Add to that the extraordinary quality of life that Rhode Island offers and Providence is a clear winner in the commercial real estate market. We have great recreational venues both in and outside the city. Waterfire alone has brought in tens of thousands of out-of-state and international visitors. There is probably not a better area for boating than Narragansett Bay, anchored by Newport. We have the beaches, Cape Cod nearby and phenomenal amenities – great restaurants, theaters and many other cultural, historical and entertainment attractions.
If you’re a company already growing in Rhode Island or just coming to Rhode Island, Providence is the place to be. The universities and hospitals are expanding and the new GTECH headquarters has added to the momentum. It’s a place that offers an educated work force and is attractive to major companies that want to locate their operations here.
PBN: Do you manage properties for out-of-state firms? What properties do you manage?
MACLIVER: Yes, we manage many Class A office buildings, including One Citizens Plaza for Gramercy Capital, as well as 100 Westminster and 63 Westminster for O’Connor Capital Partners. Other locally owned properties we manage include eight of Brown University’s buildings that are mixed-use commercial and education facilities, 121 South Main St. and seven buildings in the Jewelry District. We also manage other office buildings such as One Smith Hill, the Charles Orms building and the Altus Center (Delta Dental of Rhode Island’s headquarters) as well as several Providence parking facilities. Elsewhere in Rhode Island and southeastern Massachusetts, we also manage other office, commercial and retail facilities.
PBN: What are the benefits to an out-of-state firm hiring a local property manager?
MACLIVER: It’s often the most efficient and cost-effective way for an out-of-state firm to manage its commercial property. An experienced, local property management firm already has developed relationships with reliable vendors and knows the cost of doing business in the area. A local firm is rooted in the community and is familiar with the codes and regulatory procedures. A full-service property management company – with financial, construction, marketing, leasing, maintenance and facility management professionals onboard – offers a single point of contact for providing all the multiple services required to run a commercial property. They provide many in-house services and bid out contracts for other services – such as elevator, waste removal, and security – to suppliers that they know are reliable and cost-effective.
There are many other advantages. For example, MPM is a local property manager with an intimate knowledge of the market, which gives us a much better handle on the leasing market. It provides us with the experience to ensure that rents, operating expenses, etc., are consistent with the local market. Pursuant to property assessments, and because of our knowledge of the local real estate market, we can more easily determine if a property value needs to be appealed.
PBN: Does the Providence tax rate affect the commercial property market?
MACLIVER: Providence has a unique challenge: About 50 percent of the land is public property or is owned by nonprofits. Despite this tax base challenge, the commercial real estate market in Providence has been steady over the years, so property taxes haven’t affected it appreciably. The city and state have always tried to work with the business community to mitigate differences between the tax burdens in the city versus suburbia. A few tenants have moved from Providence, but, overall, the major companies that are located in the city realize this is the place where they can generate the level of business they require.
MPM Property Management, LLC, headquartered in Providence, is a multi-faceted commercial property management firm serving Southeastern New England. For more information, visit www.MPMproperties.com.
