About Us - Recent Press | Halstead Property

Relocation market strong

Hiring is up and the rental market is tight, though many jobs coming from smaller firms not paying for a move

By Philana Patterson

James Conigliaro helps several Wall Street firms with relocations. With the rental market tightening and with a strong corporate hiring environment, the relocation end of the real estate brokerage business may be poised for a strong summer in New York.

Hiring is strong across the board, says Brian Drum, president and CEO of Manhattan-based executive search firm Drum Associates, which helps corporations such as investment banks, insurance companies, real estate and information technology firms find new workers. Still, he adds one caveat -- much of the new hiring is coming from smaller firms and those companies aren't as likely to provide funds for relocation.

Typically, May through August is the busy season for firms that find apartments for new hires and transferees as companies add recent graduates to their ranks. Hooking up with companies to help move employees to New York can secure a healthy stream of income for real estate firms. Investment banks, law firms, advertising agencies, and other large corporations often provide funds to move new hires and employees. In most cases, real estate firms pocket the same commission -- or a slightly discounted one -- that they would with a client who walked in off the street. Firms that charge clients 15 percent of one year's rent to help secure an apartment might reduce the commission to 12 percent for corporate clients.

It's such an important part of the business that firms such as Citi Habitats and Manhattan Apartments have trained staffers dedicated to working with transferees. There are even certifications that industry professionals can earn. Sharon Michnay, who is director of business development at Halstead Property and who runs that firm's relocation effort which counts Lehman Brothers and Morgan Stanley as clients, has two designations: CRP for certified relocation professional and GMS which stands for global mobility specialist.

After September 11, it got easier to find an apartment in Manhattan. Many landlords paid concessions to agents to find tenants. "Those days are long gone," said Cynthia Besteman, corporate relocation manager at Manhattan Apartments. The market has tightened in the last six months as sales have slowed.

"Fewer people are buying and people are staying in apartments longer," Besteman said. Last year at this time, she had 10 apartments for clients to choose from on the Upper West Side. "Now I have three."

But the market hasn't gotten so hot that would-be renters have to jump on the first available apartment they see.

"It's not to the point of the tech boom where people had to run around with cash in their back pockets to give to their landlord -- and even then they might be too late," said Michnay. Right now, people are able to see "a healthy number of apartments to feel good about their decision," she said.

An influx of international workers into New York City is also fueling business. About 70 percent of Manhattan Apartment's relocation business is international, Besteman said.

How payment is handled depends on what kinds of arrangements companies have made with transferees. Some have defined corporate relocation policies that can provide as little as $2,500 in assistance to as much as $25,000 or more, and others negotiate an amount as part of a new hire employment package. Some companies pay firms directly while others give transferees a lump sum to spend on moving costs. Real estate companies don't typically discount commissions on sales.

Brokers secure relocation business in a number of ways. In some cases, relocation firms, such as WHR Group or SIRVA -- which handle everything related to cross-country moves, including hiring movers -- contract with specific real estate firms. At Citi Habitats, chief operating officer Gary Malin will sometimes notice a hiring trend and put together a proposal for a specific company in an effort to win its business.

"I reach out to the human resources departments to tell them what my analysis has shown and tell them about how we can make the relocation process better," Malin said.

And, in many cases, direct relationships with corporate clients are initiated the old-fashioned way -- word of mouth. If a client has a good experience, often she'll tell someone in her human resources department, and the company will contact the real estate firm to inquire about their services.

Securing good relocation services is important to corporations because moving is a time-consuming and often stressful process. If the major details surrounding a move aren't completed before the transferee starts the assignment, it can hurt productivity.

For people buying, the restrictions surrounding co-ops are unlike what many transferees have experienced, and, on the rental side, few people have experienced broker fees or the level of documentation that New York landlords require to secure a lease. "No one else's real estate market operates the way ours does," Michnay said.

Another issue that agents have to explain to people who are new to the area is that it's tough -- if not close to impossible -- to secure a rental more than a month ahead of time and that many landlords want tenants to make at least 40 times their monthly rent, Malin said.

Sometimes companies contact firms that handle relocation before a new hire has even accepted the assignment. "They want to make sure that we're ready to go months before the worker hits the ground," said James Conigliaro, vice president and general manager at DJK Residential, who works with the relocation department of several investment banks and has around 70 percent of his clients from Wall Street.

Some brokers even work with headhunters who are trying to help their clients decide if they even want to accept a job, or to help them figure out how much salary their desired lifestyle will require.

The relationship real estate firms develop with a client also goes much deeper than just finding a unit in a building. The level of attention a client requires depends on where he is moving from, his personality, his familiarity with New York, and whether or not he has a spouse or children. Agents often identify schools for the kids. International transferees typically require the most attention. Besteman's staff has helped clients set up bank accounts and get mobile phones.

"We've taken people to the Department of Motor Vehicles, we've done things like finding the closest Buddhist temple to their apartment -- whatever the transferee needs," Conigliaro said.

Easing the shock of the New York market

Relocation agents can sometimes find themselves helping transferees to New York with the sticker shock they invariably experience.

"Coming from London or Paris -- they just don't have a concept of the size [of apartments] we have here," said Cynthia Besteman, corporate relocation manager at Manhattan Apartments. "A lot of people coming from Latin America, for the income they make, they have a five-bedroom home and a cook and a nanny. They have these phenomenal lifestyles, and they are hoping to get an apartment with a room for the cook and the nanny, and they get a rude awakening."

The shock often requires that agents take on a role that's part agent and part therapist.

"It's different than a move from New York to Atlanta, New York to Chicago, or New York to Denver," said Brian Drum, president and CEO of Manhattan-based executive search firm Drum Associates. The cost of living can be as much as 25 percent to 30 percent higher than many other cities, he said.

"I tell them that the first day, that they'll get more depressed than they could ever imagine," Besteman said. She goes on to tell them that once they get over the shock and find a place, most of her clients will "love the place they're in."

Copyright © 2003-2005 The Real Deal

Post Date: 5/1/2006

> Return to Recent Press List