The project is now fully capitalized, and construction is underway! Now it’s time to build out the team that will operate Harbor Yards on a day-to-day basis.

The responsibility will fall to Adam to hire two primary teams: property management (responsible for managing the operating expenses) and leasing (responsible for driving revenue).

In this chapter we’ll walk through Adam’s process for hiring JBRE, the global real estate services firm, for both property management and for leasing services, and get to know each of the key team members JBRE will in turn hire to operate the building.

Hiring property management

Adam will first have to consider whether or not he is hiring a large, national services firm, like JBRE, or a small local player, like Smith Brothers.  There are pros and cons to each as JBRE provides a large menu of services and can be competitive on pricing, whereas Smith Brothers might have better local connectivity and relationships.  

Regardless of their choice, the key responsibilities of the property management team are:

• Managing the building team & vendors – on site (e.g., security) & offsite (e.g., window washer)
• Servicing tenants (e.g., tenant work orders)
• Collecting tenant rent
• Managing the annual and monthly budgets
• Reporting to Adam

For their services they’ll be paid a fee equal to 2-3% of the revenue across the commercial real estate project.  So if the building revenue is $12.5mm, the property management fee will be $250,000 (if the terms of the agreement are for 2%).

When hiring Patrick, the property management company (spoiler alert: it’s JBRE, in this case), will be looking at/for:

• The quality of the previous building where he worked, and his title in that building
• The amount of time spent in the local market
• Tenant references from past tenants in his buildings

Once hired, Patrick will be required for hiring the rest of the building team, specifically:

Patrick will also be responsible for working with Adam to execute on the construction and management of the amenity plans for Harbor Yards, which will include a fitness center, tenant lounge with F&B, and flex space.  And he’ll be responsible for hiring and overseeing an amenity operator, F&B operator and coworking operator.  

Hiring a leasing brokerage firm

Next, Adam will first have to consider whether or not he is hiring a large, national services firm, like JBRE, or a small local player, like Smith Brothers for leasing.  Like property management, there are pros and cons to each as JBRE can likely provide broader services and has access to better market data, but Smith Brothers may have better local relationships.

Regardless of their choice, the key responsibilities of the leasing team are:

• Providing market intel on current tenants in market
• The quality of the tenant rep broker relationships (i.e., being well-connected/liked)
• Ability to negotiate lease terms and their overall deal creativity

For their ir services they’ll be paid a fee equal to 6-7% of the total deal value of a commercial real estate lease. See below

They’ll ultimately need to split this with the tenant rep firm if the tenant is represented by another firm, and the lion’s share of the fee will go to the lead broker–in this case, Ollie.

When hiring Ollie, the property management company (again, spoiler alert: it’s JBRE), will be looking at/for:

• Quality of current & past assignments
• Personal reputation within the market
• Likability (Adam has to want to work with him every day)

They’ll look at similar requirements for Rachel (with focus on her placemaking capabilities in past projects) and a bit different for Alfred, who will be relied upon primarily as a tour guide for interested individuals looking to rent an apartment.

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