New Market, Same Skills
Civic Asset Management, a commercial-property-management firm, has weathered real-estate cycles since 1989. But in recent years, the Scottsdale, Ariz., company lost about 30% of its business as nervous property owners losing tenants decided to save some money by taking over management responsibilities themselves, says Civic Asset President Tom Kuffler. A construction slowdown and tighter credit standards for commercial investors also mean fewer new properties for his company to manage. "My fear is that it's getting worse," he says. "I think 2009 is going to be a complete bloodbath."
However, the company is now recovering because Mr. Kuffler recognized a one-time opportunity as a survival strategy. A lender contacted him about acting as the receiver of a commercial property that was in foreclosure. Mr. Kuffler says he was familiar with the process from receivership work he did long ago. He signed on for the role, through which he could appoint his own company to manage the property during the months-long foreclosure process. Commercial properties in foreclosure risk losing tenants because the grounds and interiors often aren't maintained, he says.
Mr. Kuffler has since been marketing receivership services to his existing real-estate industry contacts, such as lenders and lawyers. "It started as a trickle, but now it's a steady stream -- and I'm saying 'Holy cow,' " says Mr. Kuffler.
Lenders usually ask a court to appoint a receiver when a property is in decline and can specifically request Mr. Kuffler, he says. "We stabilize the project and smooth the ownership transition between the borrower and the bank," he says.
Mr. Kuffler was a receiver for 700 units in 2008, and expects to close the gap on his 30% decline in management business this year. He says that receivership will account for 50% of Civic Asset's business this year.
"Businesses have to think about how to transfer their skill sets in a recession," says Mr. Powell, the Centreville, Va., business adviser.
Andrew Barden, a Los Angeles-based business adviser, says many companies harbor a perception that there's less money available during a recession, when in some cases it simply moves to a different market.